OPINION: Nothing soothing in what the Expropriation Bill offers
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By John Endres
JOHANNEBSURG - In responding to concerns regarding the latest draft of the contentious Expropriation Bill, gazetted on 9 October, South Africa’s land minister is reported as assuring investors that the process of enabling the government to seize property without compensation would not be allowed to “degenerate into a free-for-all”.
These assurances should be taken with a pinch of salt.
A “free-for-fall” is an apt description of the way in which officials of the ANC government and their accomplices have skilfully manipulated tender processes, cadre deployment and state procurement guidelines to impoverish the people of South Africa to the tune of between R1.5 trillion and R4 trillion over the past decade, according to estimates by Wits economist Lumkile Mondi.
Looking at local government specifically – municipalities being the organ of state likely to be most involved in expropriations – a July 2020 report by the Auditor-General alerted South Africans to “increasing indicators of a collapse in local government finances” while noting that 91% of municipalities “did not comply with legislation”.
So the argument being put forth by the land minister is this: that a state that has been unable to prevent the wholescale looting of the public fiscus, that is unable to supply reliable electricity or clean water or prevent its railways from being dismantled wholesale and carried away, that is unable to keep its citizens safe from private-sector criminals and that allowed its municipalities to descend into financial collapse; that such a state will use the power to expropriate without compensation responsibly.
This is, to put it mildly, fanciful.
One may easily envisage a scenario where cash-strapped municipalities leverage a convenient expropriation law to give their collapsed finances a boost, or where local government officials deftly wield the threat of expropriation without compensation to improve their own fortunes, using small donations from targeted property owners relieved to discover a way of making the threat go away, as if by magic.
Investors should not find the prospect soothing.
They are also well advised to play close attention to the wording of the bill itself rather than the wording of commentary on the bill.
Opinion writers have widely been following the government’s line that the bill is really about land reform, and that effective land reform is not possible without it. Both claims are false.
The bill follows the Constitution’s definition of property, which specifies that “property is not limited to land”.
In other words, organs of state would be empowered by the new law to expropriate any other forms of property in addition to land, for potentially scant compensation and by following procedural requirements that favour the state and disadvantage the citizen. Other forms of property that could conceivably be expropriated for little compensation include buildings, factories, businesses, shares and licences.
The government’s claim that land reform is a burning issue somehow being stymied by a lack of expropriation without compensation equally holds no water. According to the ANC’s own internal research, land reform is not even one of the top 10 priorities of those surveyed.
A group of eminent persons tasked by Parliament to investigate (among other things) why land reform had done so persistently poorly over the past two decades, the High Level Panel, found that land reform failures had little to do with the cost of buying land. To quote from the group’s 2017 report: “Experts advise that the need to pay compensation has not been the most serious constraint on land reform in South Africa to date – other constraints, including increasing evidence of corruption by officials, the diversion of the land reform budget to elites, lack of political will, and lack of training and capacity, have proved more serious stumbling blocks to land reform.”
The Expropriation Bill is legislation which the ANC is introducing under false pretences to vastly extend the powers of a kleptocratic and untrustworthy state. And even if the ANC were clean and credible, consider that waiting in the wings are the Economic Freedom Fighters, to whom a law like this would be like manna from heaven. Taking all this into account suggests that nonchalance is misplaced when it comes to this bill.
John Endres is Chief of Staff at the Institute of Race Relations, a liberal think tank that promotes political and economic freedom.
*This opinion piece is a response to the article published on Business Report by Bloomberg - SA moves to soothe investor fears over land grabs.