Nearly two and a half years after lawmakers first introduced the Expropriation Bill in the National Assembly, it now sits with the National Council of Provinces (NCOP).
The ostensible motivation behind the Bill is undoubtedly laudable; no one can deny the indelible mark left on our society by our history of racial oppression and exclusion from land ownership. However, the Bill in its current form will only exasperate the problem, and weaken the property rights of existing property owners, especially for new entrants into land ownership. Therefore, it will worsen the situation instead of creating more inclusive land ownership in South Africa.
At its heart, this expropriation Bill undermines the property rights protected in the Constitution. In particular, the goal of normalising nil compensation for expropriation (as the current version of the Bill does in sections 12(3) and 12(4), together with an inappropriately narrow definition of expropriation) will fundamentally alter the property rights foundation on which our economy is built. Even our Constitution – crafted to right the wrongs of history – only allows for nil compensation in limited cases subject to the court’s jurisdiction. This framing recognises the norm of compensation while allowing for expropriation without compensation in exceptional instances that merit this radical intervention as a method of last resort. The consequences of nil compensation will not just materially and negatively impact farmers and land owners; there will also be a cascading range of impacts to the detriment of the broader economy and, ultimately, society.
The most destructive consequence of the Bill will be to undermine food security. Agriculture is a cyclical sector. At the bottom of the cycle, which can last up to several years, farmers rely on secured loans to access the operating capital that pays staff wages and input costs. Loans are also needed to finance capital expenditures. The most valuable asset against which farmers can borrow is their land. But when land is liable to be expropriated without compensation, banks will be reluctant to accept the title as a reliable form of security for loans, significantly impacting farmers’ ability to manage farms productively and cultivate the food we so rely on.
Putting the Expropriation Bill into perspective – it’s not the ugly ogre some make it out to be
However, the most significant implications of this shift will be on aspiring entrants to the sector who are least likely to have other personal assets of value to leverage for loans, which is why pushing forward with this particular remedy in the name of transformation is both misleading and self-defeating.
In considering the big-picture implications of the Bill, it’s also important to understand where the agricultural sector fits into the broader economy. While the industry contributes about 1.5% to the country’s GDP, it accounts for more than 5.4% of employment – supporting millions of livelihoods. In terms of sustaining livelihoods, the sector punches far above its weight. Moreover, whereas many industries are concentrated in cities and urban centres, the sector’s many commodities support livelihoods in the country’s rural economies, where opportunities are most needed. Any policy that has an oversized impact on the agricultural sector will, therefore, also have an equally disproportionate and devastating impact on rural workers and the local economies built around the industry.
That this fundamental principle, the importance of protecting property rights, is essential to a modern, free market economy is evidenced by its being upheld in most, if not all, constitutional democracies around the world. And if South Africa aspires to be a growing, competitive player in the global economy, eschewing this vital building block will take us further from that goal. That much is evident in the examples provided by Zimbabwe and Venezuela.
It is important to cite these two well-worn cases to underline a feature that is not frequently mentioned. The land policies that upended the protection of property rights in Venezuela and Zimbabwe and sank their economies had ostensibly good intentions. These countries sought to achieve similar objectives to South Africa: to address poverty, inequality, and racial disparity in land ownership. And in both cases, expropriation without compensation failed to achieve the desired result. Quite the opposite; in both cases, the citizens were plunged into poverty, leading to mass emigration. Neither country has recovered from these disasters.
There is no practical reason for this policy change. Through managed and resourced land redistribution and restitution programmes, the state can facilitate the entry of new landowners. Resorting to the approach of nil compensation is a blatant attempt to distract from its manifest failings in this regard.
This Bill arises for South Africa at a time of deep crisis. From infrastructure to loadshedding, there are pressing challenges this country must address to put the South African economy on a solid footing for future growth. To pursue this initiative at this time stands at odds with our stated objective of attracting investment into the country to grow the economy and create the jobs we need to lift South Africans out of poverty.
The enactment of this legislation will undoubtedly lead to many years of litigation. But this will be a tragic and unnecessary diversion of resources from what we truly need to do. We know everything we need to – with real-life examples – about the likely impact of the Bill on our economy and food security. What we need to do, and what we need lawmakers to do on this most critical matter, is to put practical considerations above ideological ones. Thanks to our bicameral legislature, Parliament has a second chance to do the right thing by revising this Bill.
ANDREA CAMPHER AND WILLEM DE CHAVONNES-VRUGT
