Banking association accepts Constitution amendment with warning. File Photo: IOL

CAPE TOWN – The Banking Association South Africa (Basa) on Thursday cautioned that care needed to be taken to ensure that any amendment to the Constitution did not weaken or reduce property rights in South Africa. 

Basa said in a statement that it acknowledged the decision of the Constitutional Review Committee to recommend that Section 25 of the constitution – the property rights clause – be amended to explicitly provide for the expropriation of land without compensation.

“Basa supports land reform. South Africa has not adequately dealt with the consequences of land deprivation … which has led to widespread frustration that threatens our social and economic stability” it said.

The association said an amendment that left all property or specific classes of property – homes, assets, intellectual property, productive agricultural property, among others – vulnerable to expropriation without compensation, would be a real risk to banks and the country’s ability to attract both local and international investment, grow an inclusive economy and create jobs.

“We urge the Constitutional Review Committee, Parliament and the relevant government departments to expedite crisp, clear policy and legislative frameworks in respect of expropriation without compensation, as soon as possible,” said Basa in its statement.

Property loans

Basa said earlier that banks had invested about R1.6 trillion of South Africans’ savings, salaries and investments into property loans, adding that data showed that South Africa’s big four banks loans to commercial farmers had increased to R148 billion at the end of June 2018, from R133bn at December 2017. 

Pierre Venter, Basa’s general manager for the human settlements cluster, said there was a need for crisp and clear legislation to give investors confidence. “If you do not create that confidence in the public it has the potential to undermine property rights.” 

Institute of Race Relations chief economist, Ian Cruickshanks, said a great deal of foreign investment hanged on this process, because no international corporation would risk uncertainty about the security of its assets.

Peregrine Treasury Solutions corporate treasury manager, Bianca Botes, said considering the number of investment pledges recently obtained during the Investment Summit, the market seems to be relatively at ease with the approach that the government was taking to economic reform, and investors were still confident that we would not see a Zimbabwe-style dynamic play out.

Basa said over the past year it had, along with other stakeholders – including land activists and commercial and emerging farmers – put forward proposals to finance and support sustainable land reform and food production.