July 11, 2018
July 11, 2018
The great land debate and what’s really at stake.

Boardrooms and dining rooms across South Africa have been abuzz with the news of parliament’s recent passing of the EFF motion to look into amending section 25 of the Constitution (commonly referred to as the “property clause”) to allow for the new phrase de jour: “expropriation without compensation”. The EFF/ANC argument is that this clause of our constitution, which entrenches private property ownership in South Africa and prevents arbitrary deprivation of property, has been the impediment to meaningful land reform in South Africa. Both parties argue that if the state is allowed to expropriate property without compensation it can magically speed up land reform. Perhaps these parties would have been better advised to do some homework before embarking on this leap of logic.

The recently released High Level Panel report, spearheaded by the former president Kgalema Motlanthe no less, is a rather more sober diagnosis of where the real problems and bottlenecks to land reform exist. The report correctly identifies that the Constitution is not the impediment to land reform. It highlights rather that elite capture of the land reform process in South Africa, a chronic underfunding of the land reform process, (accounting for only 0.2% of national expenditure in the 2016/17 financial year) are actually to blame. This is coupled with the absence of an over-arching legislative framework to coordinate and guide the process. The Constitution, it seems, and section 25 in particular, have become the convenient scapegoat for a decade of government corruption, neglect and underfunding of land reform that has completely hobbled the process.

There are far wider implications for our country however if section 25 is amended. Urban dwelling South Africans should not be lulled into a false sense of security under the pretext that this latest initiative will only affect agricultural land and farms. The Constitution is very clear in section 25 (4)(b) where its states: “property is not limited to land”. This means that all private property as we know it is potentially at risk. This would include private residential property, intellectual property, shares on the stock exchange, art collections and could extend further into any right in such property. International experience shows a direct correlation between property rights and the prosperity of nations. Countries with strong property rights have a higher GDP, much lower mortality rate and higher levels of investment and far lower levels of poverty.

In countries that have chosen to erode property rights, the opposite is the case. A good example is Venezuela whose populist government similarly ventured down the path of expropriating properties and weakening property rights. That country now sits with a nation languishing in abject poverty, with an inflation rate hovering at a staggering 5673%. A little closer to home, the new administration of Zimbabwean President Emmerson Mnangagwa has admitted that the reckless land expropriation of the Mugabe regime played a major role in wrecking that country’s economy and driving the nation into a spiral of poverty, disinvestment, inflation and debt.

There is not a person in South Africa who can credibly argue that black South Africans did not suffer from years of legislative dispossession and that the land ownership patterns do not remain skewed. It is absolutely right that we focus on addressing this problem. However, the answer does not lie in amending the Constitution, it lies in ensuring that we pass title deeds into the hands of as many previously disadvantaged individuals as possible. This will help address the ownership patterns as well as provide a tangible asset against which these property owners could leverage finance to either improve the property or provide seed capital for a business venture. But this is certainly not the EFF vision, their manifesto proposes that ALL land, owned by both black and white South Africans be expropriated and ownership will be vested in the state as the custodian of all land. Citizens would then be forced to lease property for renewable 25 year periods. This is not empowerment, it is enslavement, reducing citizens to a state of serfdom. The ANC position is less clear and they have provided scant detail of what they actually envisage achieving with this clause outside of the President Ramaphosa’s oft repeated line that “as we take the land, we must make sure that the economy and food security is not compromised” Given the inefficiencies in a state that struggles to efficiently process anything from a birth certificate to a firearm license, the chaos that would ensue in processing millions of “land leases” is simply unthinkable. Equally so, it’s hard to envisage an expropriation without compensation process that would not compromise the economy or food security.

What we need more than anything now is to attract investment to South Africa and lots of it. It is the only way to grow the economy and provide jobs for the almost 9 million South Africans who are unemployed. The uncertainty around expropriation without compensation does nothing to promote South Africa as a stable investment destination. We should be capitalizing on the “Ramaphoria” that has met the end of the Zuma presidency and the recent international ratings reprieve. We should not be jeopardizing it with populist policies. We can and must have meaningful land reform in South Africa and it should start with ensuring that the legislation envisaged in section 25(8) of the Constitution to achieve orderly and transparent land reform is actually enacted. We can also make a significant start by placing the millions of hectares of state owned land into the hands of citizens. All this can be done without unstitching the Constitution and compounding risk and uncertainty in an already shaky economy. Let’s all hope that good sense prevails as the Constitutional Review Committee does its work.