Government carries the weighty responsibility of managing the environment and promoting positive investment and employment decisions, says the writer. File picture: Rogan Ward/Reuters
“As long as many of our people still live in utter poverty, as long as children still live under plastic covers, as long as many of our people are still without jobs, no South African should rest and wallow in the joy of freedom.” 

These celebrated words were spoken by Nelson Mandela at the time of Archbishop Desmond Tutu’s retirement in 1996. 

What they denoted was that the expectations of South Africa’s democracy were not just normative, but socio-economic, too. Much of its success – indeed, its legitimacy – would depend on whether the life experience of the millions of poor and economically excluded could be improved. 

This has been a durable idea. Delivering the International Desmond Tutu Peace Lecture earlier this month, President Cyril Ramaphosa presented peace as a function of development. South Africa, he said – rightly enough – comes from a history of dispossession and continues to endure the ‘trauma and the dark shadow of hunger, of homelessness of illness, illiteracy and unemployment.’ 

In an echo of Mandela’s sentiments, he said the country could not speak of true freedom until South Africa’s people enjoyed high-quality health care , education, housing, and a clean environment.

There is a particular symmetry in these sentiments being expressed so soon after the Jobs Summit. Jobs are, after all, the most important means of inclusion in an economy. It is imperative, as Ramaphosa noted, that South Africa should draw people on an unprecedented scale ‘into the productive economy through work’. 

Any hope of this – which, again, as Ramaphosa noted, the Jobs Summit took as a given along with every economic strategy South Africa has (nominally) adopted since 1994 – would depend on substantially increasing the hard fixed investment that underwrites employment creation.

These are fine, rational sentiments. Economists advise that the outcomes of policy substantively embody the incentives and disincentives within the overall economic landscape – in other words, the circumstances, existing and expected, that investors and entrepreneurs confront. Government carries the weighty responsibility of managing the environment and prompting positive investment and employment decisions.

The reality is that government action in South Africa frequently accentuates the disincentives. Styling South Africa’s administrative apparatus as a ‘developmental state’, the government has accorded itself a great deal of discretion, even responsibility, for intervening in economic decisions. But with confused and volatile policy, with weak and compromised bureaucracies, and with ideological preoccupations, this is less a formula for bold progress than for stagnation.

The mining sector, South Africa’s signature industry, has taken a particularly hard knock on this, being the target of repeated condemnation, and subject to a complex regulatory environment which is poorly understood by many of the officials tasked with implementing them. Minerals minister Gwede Mantashe was famously reported to have said that the government was working towards policy certainty – a revealing turn of phrase. Meanwhile, employment numbers are down, and scant exploration has taken place in recent years. 

And on property rights, government refuses to offer anything beyond vague, non-enforceable (and contradictory) assurances on the impending introduction of expropriation without compensation. Willing only to declare that it will become policy, complete with a constitutional amendment to fortify it – this evidently irrespective of what the public consultation process may reveal – the ruling party has created probably the ultimate disincentive to investment. President Ramaphosa’s own international investment envoys have pointed to the difficulties that this policy drive is creating for them.

We at the Institute of Race Relations have repeatedly heard the same concerns from businesspeople, both in the country and abroad. The past decade has rightly heightened concerns about how power is exercised – this, at least, is no bad thing.

This is not to say that there is no case for land reform, on either moral or economic grounds. Land expropriation without compensation (EWC) is, however, a policy pathology, not a solution. It offers no remedy for the real problems that beset South Africa’s land reform efforts – poor project design, meagre budgets, bureaucratic failings, corruption and so on. 

Indeed, the expanded discretion that EWC would accord the state makes successful land reform less likely.

Rhetoric around ‘confidence’ and ‘consensus’, dishonest representation of data on land ownership, or attempts to spin general statements of agreement with the need for land reform into an endorsement of EWC are a poor substitute for tackling the problems as they exist.

The stakes are high. A misshapen land reform policy, which undermines property protections in the economy, will not only hit the farming sector, but would reverberate throughout the economy. In so doing, it would choke activity. Indeed, it is a near certainty that once applied to land and farms, it will be used elsewhere. And it would be felt most acutely by the millions of people currently excluded from the economy, whose prospects of ever finding inclusion would recede ever further. 

And in so doing, EWC might prove responsible for more than the seizure of property; it might deliver a fatal blow to the freedom that South Africa’s transition was meant to usher in.

* Terence Corrigan is a project manager at the Institute of Race Relations. To join the Institute of Race Relations send an SMS to 32823 (SMSes cost R1, Ts and Cs apply).

** The views expressed here are not necessarily those of Independent Media.