As South Africa continues to debate amendments to the property clause of the Constitution and the Expropriation Bill, government should not lose sight of the fact that people don\u2019t invest in assets they aren\u2019t confident that they will have the rights to own.<\/p>\n
If people don\u2019t invest, economic growth doesn\u2019t happen, says Business Leadership South Africa (BLSA) chief executive Busi Mavuso.<\/p>\n
Mavuso said that the Expropriation Bill is perhaps the most consequential of the legislation and amendments being considered in South Africa right now.<\/p>\n
“It goes far beyond the main driver of the reform: land reform. Indeed, my biggest issue with the Expropriation Bill is that it explicitly defines property as \u201cnot limited to land\u201d.<\/p>\n
“This means everything is up for grabs: from moveable and financial assets to intellectual property,” she said.<\/p>\n
While the bill puts in place several principles underpinning justice and equity in its application, for an investor considering a jurisdiction for investment, it creates uncertainties that add to the risks, Mavuso said.<\/p>\n
“We cannot know how organs of state will interpret the law or how courts will rule. The bill imposes no penalties for inappropriate or corrupt attempts to expropriate property that would provide some balance against the risks.”<\/p>\n
Losing out on investors<\/strong><\/p>\n Mavuso said she cannot see what the upside is to the all-encompassing definition of property in the bill. It does nothing to advance land reform and merely creates unacceptable risks for investors, she said.<\/p>\n “Reading the bill makes clear that its creators have land reform in mind. The overly wide broadening of the definition of property appears arbitrary.<\/p>\n “There is no example of the conditions under which it might be appropriate to expropriate intellectual property or financial assets like shares. So why create uncertainty for investors?”<\/p>\n Mavuso added said there is global battle on to attract investment into start-ups – a battle that South Africa has been losing.<\/p>\n Despite the relative sophistication of our economy, several studies have shown we are losing the battle to raise funding for venture capital investment, she said.<\/p>\n