President Cyril Ramaphosa has indicated that his administration is still considering whether constitutional amendments are necessary to make it easier to expropriate property without compensation.
Speaking in an interview with Bloomberg TV in New York on Wednesday (26 September), Ramaphosa said that he believed the process of redistribution would be a peaceful one.
“We are seeking to put right what was done wrong many years ago. There won’t be any mayhem, there won’t be any land grab,” the president said.
He added that he had met with US president Donald Trump on Tuesday, who had previously tweeted that he would investigate the issue of land grabs in the country.
However, Ramaphosa noted that the two heads of state never discussed the issue of land – and further described the US leader’s views on the issue as clearly misinformed.
The expropriation debate has threatened to detract from Ramaphosa’s efforts to secure $100 billion in new investment and revive an economy that’s stagnated for almost a decade, and dipped into recession in the second quarter.
His success will be key if the ANC is to rebuild a reputation that has been badly scarred during its former leader Jacob Zuma’s scandal-marred tenure and revive its support before next year’s elections.
“I would say what we are seeking to do on the land question is to manage risk, to minimize risk,” Ramaphosa said earlier at a Global Business Forum hosted by Bloomberg.
“We all agree if we address this, we will see the investment community looking at South Africa in a different way. We are open for business, we are open for investment.”
He also said the rand has weakened too steeply against the dollar and the currency needs to be ‘well-balanced’ to support the economy.
“The rand is undervalued at the moment,” Ramaphosa said.
“We want the rand to be well-balanced as to be able to support the economic trajectory of the country.”
Last week, Ramaphosa unveiled a stimulus and recovery plan to spur growth. It envisions R50 billion ($3.5 billion) being redirected to projects that can help create jobs for the 27% of the workforce that’s unemployed, a new multibillion-dollar infrastructure fund and new rules for the mining and energy industries to spur investment.
A review of power, rail and port tariffs, and less stringent visa rules are also on the cards.
“We are going to reprioritize our budget,” Ramaphosa said in the interview.
“We are currently looking at where we can reprioritize spending and where we can get this R50 billion. We are going to put quite a lot of it in small and medium enterprises, agriculture, promote businesses in the townships and rural areas.”
While the local currency has remained relatively flat since the announcement of the details surrounding Ramaphosa’s stimulus package, Bianca Botes, corporate treasury manager at Peregrine Treasury Solutions, noted that the rand displayed peculiar behaviour by gaining 1.58% leading up to the Federal Reserve interest rate announcement on Wednesday evening.
The Fed declared a rate hike of 25 bps shortly after 20h00 local time, raising rates to 2.25%. The rand surprised by gaining momentum to trade at R14.11/dollar shortly after the announcement was made.
“The monetary policy of the Federal Reserve remains largely unchanged amidst strong job growth and a stable economic outlook,” Botes said.
“The Fed indicated a potential rise in rates in December with a likelihood of three hikes in 2019. The rand rallied throughout Wednesday along with other emerging currencies as investors sought riskier assets.
“The rand is trading at its strongest levels since August, holding its ground at R14.14 on Thursday morning. We expect a range-bound day of R14.10 to R14.30 on the cards,” she said.
In morning trade on Thursday, the local unit traded at the following levels against the major currencies:
- Dollar/Rand: R14.16 (0.20%)
- Pound/Rand: R18.61 (-0.01%)
- Euro/Rand: R16.63 (0.10%)