Basa comments come as the ANC embraces calls to change the constitution to allow for the expropriation of land without compensation. File Photo: IOL

JOHANNESBURG – Banks are worried that South Africa is taking a wrong turn with laws being considered by the nation’s parliament that could leave the economy worse off.

“They do not seem to be the legislative underpinning of a comprehensive, implementable national economic recovery plan,” the Banking Association of SA (Basa) said on Thursday. “Rather they seem ideologically motivated and do little to address the real needs of an economy desperately in need of jobs, effective transformation and empowerment programs, and inclusive growth.”

The comments come as the ANC embraces calls to change the constitution to allow for the expropriation of land without compensation. While the ANC says the change is needed to improve equality, the opposition say the party is trying to deflect attention from the government’s failure to properly manage earlier land-reform efforts before elections.

“Banks recognise that the present patterns of land ownership in South Africa, which have their origin in apartheid and colonial dispossession, are neither just nor sustainable,” Basa said. 

Lenders are willing to partner the government and farmers on land reform, which must secure property rights, safeguard financial stability and put in place proper infrastructure to address a shortage of housing that has left 1.2 million families living in informal settlements, it said.

Lenders have invested about 1.6 trillion rand of customer savings, salaries and investments into mortgages, and rely on the properties as security for the loans, according to BASA. Should these property values decrease, banks and the economy won’t be able to absorb the shock, it said. Ramaphosa and his deputy, David Mabuza, have both said that the government is opposed to any land grabs.

– BLOOMBERG