A large number of clients with bonded properties at South African banks have turned to the lenders to answer questions around what will happen if land expropriation without compensation is pushed through by government.
Land expropriation has dominated headlines over the past few weeks, since president Cyril Ramaphosa announced that that ruling ANC would continue to push for section 25 of the Constitution to be amended to make the policy legal.
The announcement unsettled the market as investors squirmed amid the uncertainty, while public reaction raised questions on how, when and where expropriation would take place, and what could happen to their properties.
President Ramaphosa has since come out with a better explanation for what the land expropriation process would entail, however, South African banks have said that the whole ordeal is still opaque, with no real certainty around it.
All of the country’s major banks, including Absa, Standard Bank and FNB have indicated that it’s “business as usual”, but pointed out that the land debate is still ongoing, and that they are taking part in it.
Call for calm
Responding to panicked clients, Nedbank has called for patience while the various political and legal processes play out.
“The land debate itself has already had a negative impact on overall investor sentiment and, therefore, economic activity and job creation. But, so far, it has not yet directly affected Nedbank or the way we assess credit for our clients,” the group said.
“We fully support the democratic process and land reform debate and the need for historical redress, but it is vital that this sensitive and important issue is handled properly to ensure no lasting impact on economic growth and food security.
“Any proposed changes of Section 25 of the Constitution will still need to be fully debated and will have to pass constitutional and legal muster on multiple fronts. The actual wording of any proposed changes will be absolutely vital and would need to be assessed before any economic and credit assessment impacts can be determined.”
Nedbank said that it would be wise to wait for the process to play out, rather than pre-empt it without the detail.
“Nedbank is participating in the current Parliamentary process and debate and has made a submission. We emphasised in our submission that we did not support a change to Section 25 of the Constitution, as this already provides for expropriation without compensation in cases where a court holds this to be just and equitable or it is in the national interest.”