Significant foreign investment hangs on land reform process – IRR
CAPE TOWN – The decision of the Constitutional Review Committee to recommend that Section 25 of the constitution be amended to provide for the expropriation of land without compensation has been met with some scepticism by market analysts.
The Constitutional Review Committee on Thursday adopted a report that recommends – explicitly – for Section 25 of the Constitution to be amended to allow for expropriation of land without compensation.
Ian Cruickshanks, chief economist at the Institute of Race Relations (IRR), said a great deal of foreign investment hanged on this process, because no international corporation would risk uncertainty about the security of its assets.
“It will simply prohibit them from investing. This means South Africa runs the risk of foreign investment coming to a halt, and enduring zero growth for the foreseeable future,” said Cruickshanks responding to questions from Business Report.
The adoption comes after a public consultation process that saw a number of organisations making submissions on the Bill and public hearings being held countrywide.
IRR’s head of media Michael Morris said the decision on expropriation without compensation was cause for grave concern, given the immense economic challenges South Africa faced in catching up with competing emerging markets on one hand, and, on the other, delivering jobs and better services.
“The growth rate is pitifully low, and unemployment is rising. We cannot match these challenges without foreign investment, but the prospect of expropriation without compensation will undermine investor confidence by removing certainty about whether assets will be safe.
“Our worry is that, far from assuring ‘equitable access’ to land or empowering South Africans to be ‘productive participants’ in the economy, as the Constitutional Review Committee promises, this new step towards expropriation without compensation will worsen economic conditions at a cost chiefly to the poorest South Africans the government has led to believe will be the beneficiaries of its misguided land plan,” said Morris.
The Banking Association South Africa (Basa) said banks had invested about R1.6 trillion of South Africans savings, salaries and investments into property loans.
“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.”
Basa said over the past year, along with other stakeholders it had put forward proposals to finance and support sustainable land reform and food production. Basa said it would continue to work towards faster, sustainable land reform.