With talk of land expropriation in South Africa dominating headlines and making investors uncomfortable – not to mention catching the attention of US president Donald Trump – president Cyril Ramaphosa has penned an op-ed to try and bring calm to concerns around the state’s plans.
As with government’s National Health Insurance scheme, one of the biggest criticisms with the state’s handling of land expropriation without compensation has been the lack of clarity around how it will be implemented.
This has led to a degree of panic among farmers – who have had to deal with so-called “leaked lists” of targeted farms amid EFF-led land grabs – and lingering uncertainty among investors and economists.
Contrary to Ramaphosa’s stated goal of not letting land redistribution affect the economy, government’s dragging of the subject with no clarity forthcoming has actually been an underlying factor in the continued volatility in local markets.
This was pushed to another level this week, when Donald Trump waded into the land debate on his favoured soapbox, Twitter, saying that the US government would study “land seizures” and farm murders in South Africa – sending markets into yet another spin.
Whether prompted by Trump’s utterances or by the growing need for clarity, president Ramaphosa took to the Financial Times to try point out where everyone is getting the state’s land expropriation plans wrong.
A planned amendment to the constitution is still work in progress, with public hearings on the matter concluding this month.
Here are the seven main points highlighted by the president.
There are no land grabs
First and foremost, Ramaphosa stressed that there are, and will be no state-sanctioned land grabs. While the Economic Freedom Fighters (EFF) actively encourages the illegal occupancy of private land, government’s plans are not to take part in or encourage illegal activity.
“The ANC has been clear that its land reform programme should not undermine future investment in the economy or damage agricultural production and food security,” Ramaphosa said.
The government has also explicitly stated that it would take action against anyone who breaks the country’s laws.
It’s about strengthening all rights
“The proposals will not erode property rights, but will instead ensure that the rights of all South Africans, and not just those who currently own land, are strengthened,” the president said.
The goal is to make land accessible to those who work the land – and that those rights are also protected. The EFF’s policy of nationalising all land to be state-owned is not the goal.
This is not Zimbabwe 2.0
Alluding to assessments that South Africa was doing what Zimbabwe did before its land grab crisis (and subsequent economic crash), Ramaphosa said that South Africa has learnt from the experiences of other countries, and will not make the same mistakes that “other countries” have made.
Changing the Constitution is for clarity
On the ANC’s plan to change the Constitution to make land expropriation without compensation an explicit rule, the president said that the Constitution, as it is currently written, already makes provision for that. Instead, what the ANC wants is certainty and clarity, he said.
“The proposed amendment would need to reinforce the fundamental principles of the property clause, which, among other things, prohibits the arbitrary deprivation of property and holds that expropriation is possible in the public interest subject to just and equitable compensation.
“It also says that no provision can impede the process of land reform to redress the results of past racial discrimination.”
Private land is not the target
Ramaphosa also echoed statements made by deputy president David Mabuza in explaining the state’s intentions with land expropriation, saying that privately owned land that is being used (especially for commercial agricultural purposes) is not the target.
“There have been several suggestions on when expropriation without compensation may be justified. These include, for instance, unused land, derelict buildings, purely speculative land holdings, or circumstances where occupiers have strong historical rights and title holders do not occupy or use their land, such as labour tenancy, informal settlements and abandoned inner-city buildings,” Ramaphosa said.
Mabuza said that state-owned land – including that which is owned by SOEs – are first in line for redistribution.
The plans are long-term
The government won’t dish out land to farmers and that’s the end of it. According to Ramaphosa, the land expropriation plans are long term, with government assisting and supporting those who are beneficiaries of the move.
“It is essential that support is given to beneficiaries of land redistribution through financing, training, market access, irrigation and the provision of seeds, fertiliser and equipment, all of which contribute to the sustainability of emerging agricultural enterprises,” he said.
This is a moral and social imperative
Because of South Africa’s past, where the majority were forced onto only 10% of the land under apartheid – and the incredibly delayed process of reparations over the last 25 years – the question of land reform is a moral, social and economic imperative, Ramaphosa said.
By equipping the majority, who were robbed of the opportunity to be productive, with the tools and support structures to become productive, the state is trying to develop more meaningful and inclusive growth in the country.
“For the South African economy to reach its full potential, it is necessary to significantly narrow gaps in income, skills, assets and opportunities,” the president said.
It’s unfortunate that South Africa’s land policy is being prejudged while the process is still underway, Francois Groepe, a deputy governor of the Reserve Bank, said in a Bloomberg TV interview at Jackson Hole on Thursday, regarding Trump’s tweet.
“Our country is a constitutional democracy, so whatever policy outcome is decided upon, it will comply with the requirements of our constitution and I think we should allow the process to follow,” he said.
“I do believe that this particular issue will also be dealt with in a manner that is conducive to social harmony and that enhances the economic prospects of our country.”
Trump’s comment raised concern that the US could punish South Africa economically, having already sanctioned Turkey, and the rand weakened as much as 2% against the dollar on Thursday. South Africa is the biggest beneficiary of the African Growth & Opportunity Act, which grants many of its products duty-free access to US markets.
“With any particular news flow, it is sometimes the case where the markets overreact and then the markets settle,” Groepe said.
“We’ve seen a lot of volatility throughout the year, not only in terms of South Africa, but emerging markets, even if you look at how the US dollar has moved, so I think volatility is just part of our lives.”