Cape Town - The government’s plans to expropriate land without compensation have caused widespread anxiety with the rand falling due to concerns over property investments.
The agricultural and property sectors have called for an urgent meeting with President Cyril Ramaphosa to discuss the decision by Parliament to amend the constitution to make way for expropriation without compensation.
The EFF tabled a motion on Tuesday that was supported by the ANC.
Annelize Crosby, head of Agri South Africa’s Land Centre of Excellence, said they also called to meet with Ramaphosa.
“We want to know how it will not affect the economy. We think the motion is based on politics and emotions. It is not rational. Rational arguments regarding the possible implications that such a step may hold for the agricultural sector and the broader economy were absent from the debate.
“Financial institutions are substantially invested in the sector and expropriation without compensation will impact negatively on the banking sector. Such a step could lead to a situation where institutions will no longer make production loans to farmers. Without these, farmers cannot purchase seed, fertiliser, feed or implements and will be unable to produce. This may lead to food shortages, price increases, food related riots and social instability.
“The ANC and the EFF clearly did not take heed of the true facts regarding the failure of land reform. It appears the governing party has ignored the findings of the High-Level Panel on Key Legislation, appointed by Parliament.
“This panel found, after a thorough investigation, that the property clause and the requirement that compensation be paid on expropriation, were not impediments to land reform. Instead, an insufficient budget, lack of political will, poor implementation and corruption were impediments. It is apparently easier to amend the constitution than to address the real problems bedevilling land reform.”
Dan Kriek, AgriSA’s president, said all property owners’ rights were at stake and “amending the clause represents a step backwards into a past where the protection of property rights was not applied across the board. The right to property is a fundamental right that provides protection to black and white, rich and poor against unjust state interference. The denial of this protection is out of step with international practice and is not in the national interest.”
Cape Town Chamber of Commerce said land expropriation without compensation “in a manner that increases agricultural production and improves food security” is impossible. “Farming has become capital intensive and without security of tenure, farmers will not be prepared to make the huge investments in modern irrigation systems and banks will not finance these projects while there is a threat of expropriation without compensation.
“In the past 20 years there had been massive investments in agriculture,” said Janine Myburgh, president of the Chamber.
"In areas like the Western Cape, the exporting of food, fruit and wine had become a major creator of jobs and essential part of the economy. As a result, the whole landscape of the province had changed," said Myburgh.
Deon van Zyl, chairperson of the Western Cape Property Development Forum, said the uncertainty around how the expropriation would be done was of great concern. “The property sector needs certainty and this does sit well with it. The last thing the country and its economy needs is uncertainty. That drives away investors,” he said.
He said property prices and demand for private property ownership could be affected. “What the government needs to understand is that the sector is a major player in the economy.
"Developers don’t build housing developments with their own money, they use bridging finance and bank bonds. The same goes for the agriculture sector in certain cases. Uncertainty around the expropriation of land without compensation will hurt this sector and, ultimately, the economy,” he said.
Economist Dawie Roodt said the very existence of the state was to protect citizens and their private property.
“The protection of property is absolutely crucial. Given the history of our country, I understand property needs to be returned, but to who must it be returned? It cannot just be given to black South Africans. The problem now is that there is uncertainty as to how this matter will be dealt with. The last thing the economy needs is further uncertainty. We cannot afford that."
Roodt predicts that it could take years before land or property is expropriated without compensation.
“There could be opposition parties that approach the court to have the process stopped. Parliament will also have to consider the matter and it would take some time. It’s not something that will happen overnight. At this stage there is very little we can do, because of all the uncertainty,” he said.