MP says the uncertainty surrounding land expropriation without compensation had already impacted investment and growth in the agriculture sector David Ritchie African News Agency (ANA Archives)

CAPE TOWN – Nedbank proposed in Parliament on Friday that no changes be made to Section 25 of the Constitution with regard to land expropriation without compensation.

Nedbank Group chief executive Mike Brown told the Constitutional Review Committee (CRC), which is investigating proposed changes to Section 25 of the Constitution, that an orderly, pragmatic, effective and transparent approach was needed to make sustainable and economically-beneficial land reform implementable.

“The Constitution already strikes a careful and well-considered balance between the need to protect property ownership with the need to ensure land reform while tackling the inequalities caused by our history,” said Brown. 

“There is no deficit in the legal powers provided to the State by the Constitution and in existing legislation to expropriate property for land reform purposes. However, they have not been adequately promoted and enforced. To date, Section 25 has not been the cause of the lack of progress on land reform and it should not be used as a scapegoat.”


The Institute of Race Relations (IRR) said on Tuesday that the government’s push for expropriation without compensation was making South Africans poorer. 

The IRR said in a statement that the economic growth numbers released by Statistics SA reflected a number of factors including investor fears that the government wished to persist with plans to seize property and not pay for it.

Gross domestic product data released this week showed the South African economy had fallen into a recession as the economy contracted by 0.7 percent in the second quarter of the year after contracting by 2.6 percent in the first quarter.

DA shadow minister of rural development and land reform MP Thandeka Mbabama said the uncertainty surrounding land expropriation without compensation had already impacted investment and growth in the agriculture sector with the sector contracting by nearly 30 percent.

“The news of the country’s economy being in a recession does not bode well for stability and job creation in a country with almost 10 million people who remain unemployed,” Mbabama said in a statement on Friday.

AgriSA echoed this sentiment in their presentation that expropriation without compensation had already caused a significant lag in capital investment in the agriculture sector. AgriSA, the Banking Association of SA and Business Unity SA (Busa) agreed that an amendment of the property clause would undermine investment and result in capital flight and a weaker rand.

Mbabama said: “Even the ANC’s alliance partner, Cosatu, agreed that Section 25 is adequate to empower the government to implement land reform.”

Implementing land reform

Busa, in a statement on Friday, said it was concerned by the focus on constitutional reform rather than addressing the endemic structural and administrative challenges in implementing land reform, which has been riddled by inefficacies.

“Section 25 of the Constitution already allows for expropriation to take place within the provision for the payment of just and equitable compensation. However, the state has never invoked the opportunity to test this in our courts and adjudicate upon just and equitable compensation within the context of land reform. 

“We believe that the bounds of just and equitable must first be tested before a decision can be made on possible amendments. 

“It is, thus, the position of a business, along with many others, that Section 25 is sufficient to achieve sustainable land reform to enable transformation and growth, while still maintaining confidence in South Africa’s commitment to property rights, as well as fostering a growth-friendly policy environment. 

“Further, caution should be applied so as not to elevate the risk of undermining property as an asset to invest in or to use as collateral to access finance, as this will hamper growth and investment efforts,” said Busa.

Nedbank’s Brown said the banking sector was a valuable national asset, which contributes to the assessment of the country’s investment ranking, lowers borrowing costs and ensures funding availability for government, companies and individuals alike. 

“As a commercial bank, we are a key role player in funding the economy and any material impact to property prices would adversely affect confidence in the banking system and could trigger a classic banking crisis with significant negative knock-on effects on the economy,” Brown said.