The policy push by the ANC to introduce EWC has engendered great confusion and concern amongst many with a stake in the country, at home and abroad.

Understanding any phenomenon demands that we put aside our preconceptions. Things may not be as we assume them to be. They may not react to incentives and stimuli as we might expect. Proper understanding requires, in other words, that we be willing to see things in their own terms, not on terms that are familiar to ourselves.

This is particularly true in trying to determine how complex phenomena will play themselves out. The ongoing policy push by South Africa’s ruling party, the ANC, to introduce a policy of Expropriation without Compensation (EWC) has engendered great confusion and concern amongst many with a stake in the country – both those at home and abroad. As a threat to property rights, it could have enormous negative ramifications for the country’s economic future. 

Again and again, hopes that President Cyril Ramaphosa will shed some light on this have been disappointed. So South Africa, and its global partners, await ‘clarity’ on this.

Clarity certainly remains elusive. As at the Institute of Race Relations have previously argued, the drive towards EWC is just clear enough to raise justified concerns, but not clear enough to enable any meaningful planning. EWC is coming – ‘We are going to take land,’ promised President Cyril Ramaphosa last year, ‘and when we take land we are going to take it without compensation’ – but the form and extent is an open question.

Indeed, perhaps the closest thing to clarity that has been offered came from Mr Masiphula Mbongwa, a director in the Department of Rural Development and Land Reform, at Davos earlier this year. South Africa would, he told delegates, introduce a constitutional amendment along with corresponding legislation that would ‘vest land in the people of SA’ (an apparent reference to a mass custodial taking of land, ending private ownership along the lines of the water and mineral rights), introduce a land tax, and abolish the 1913 cut-off date for restitution claims. The last point, incidentally, seems primed to reduce the restitution process to abject unmanageability both in terms of scale and complexity – which might very well serve as a pretext for the government to demand ever more discretion and latitude in its ability to intrude into private property. 

This makes the position that some have adopted a little difficult to accept. In the face of mounting evidence of the seriousness of the policy trajectory and its implications, a number of commentators, analysts and businesspeople have sought to downplay the dangers at hand.

A vivid example of this provided last month by Dr Amaka Anku, head of the Eurasia group’s Africa practice, was optimistic about this issue. This largely about politics and staving off an electoral challenge from the Economic Freedom Fighters. It would not, she emphatically said, result in the seizure of productive agricultural land or mining properties. ‘It won’t happen.’

Referring to his recent State of the Nation Address – widely seen as a missed opportunity to deliver clarity on EWC – she remarked that President Ramaphosa had stressed the redistribution of state-owned land in urban areas, and argued that it ‘would not be economically productive for him to go and start seizing productive land.’

Her analysis rests, as does that of many of her peers, on assumptions for which the evidence is questionable. There is no logical reason to believe that simply because President Ramaphosa did not specify that productive properties are targeted, that they will not be. EWC has been a public relations disaster, an entirely predictable one, for the government. 

In recent months, language has been recalibrated to downplay the threat to property rights. EWC is now typically rendered as ‘land reform’ – not least before foreign audiences. But make no mistake, intrusions into property rights, or EWC in one form or another, are not only envisaged, but are being put in motion. Towards the end of 2018, regulations under the Property Valuation Act accorded the government hefty discounts off market price when acquiring properties for land reform purposes (possible exceptions being those making large daily incomes). The new Expropriation Bill structures the definition of expropriation in such a manner as to exclude regulatory and custodial takings – and also explicitly states that it is possible to pay no compensation in situations other than the five marginal ones it lists. 

It is, however, correct that seizing productive land would be counterproductive. We at the Institute of Race Relations (IRR) have long argued this. This should not mean that it would not be done. She is no doubt assuming that rational economic calculations govern will this policy. This is to draw on a misreading of the dynamics in operation and to misunderstand what is happening. 

Economic considerations are by no means foremost here. The past year has made it apparent that pushing through EWC as a policy has assumed sufficient importance that economic damage can and will be countenanced. The ‘debate’ around it has already inflicted a great deal of damage on South Africa’s economic reputation.

Nor can this be explained as electoral politics, since land reform has never been a prominent electoral issue – Ronald Lamola, senior ANC member in charge of the party’s land efforts, confirmed as much in an interview with the Financial Mail. ‘If we speak about using land as an election tool, the Pan-Africanist Congress [a small but long-standing party which has always placed land at the centre of its agenda] would have been the government of SA since 1994,’ he said.

The driver in other words, is to be found elsewhere. Dr Anku does not allow for the extent to which politics and ideology are playing a role. 

The ‘land debate’ is merely another iteration (an historically- and ideologically-charged one) of a long series of moves on property rights. In the 1990s, the state nationalised water rights, and shortly thereafter took ‘custodianship’ of mineral resources, both of which amounted to seismic shifts in the holding of assets. Over the past decade, beginning long before the ANC faced a leftist challenge, we at the IRR identified over two dozen distinct legislative and regulatory moves on property rights over the past decade. Not all of these were on land. 

A part of this is to be understood in relation to the ANC’s aspirations to forge a mighty ‘developmental state’. In theory, state direction of key economic assets and decisions, whether by ownership, regulation or the strategic placement of people, will drive accelerated growth and distribute its benefits appropriately. In reality, the state has nothing like the capacity to make this work.

Another part arises from pure ideology. A hankering after a ‘socialist’ society – codified in its National Democratic Revolution – generates an instinctive mistrust of private enterprise and an ambivalence towards private property. That the state requires expanding discretion to intrude into these follows naturally.

Meanwhile, widespread governance pathologies mean that for some in power, the prospect of state power over people’s property is a lucrative one indeed.  

Without accounting for these impulses, the current policy drive can indeed appear illogical, perhaps even symbolic and devoid of substance. It is not. Putting aside assumptions about economic growth and South Africa’s hospitality towards investment reveals a concerning logic in the current policy trajectory. Somewhat malign perhaps, but not illogical. Those who seek to understand it would do worse that to recognise this. 

Terence Corrigan is a project manager at the Institute of Race Relations

Terence Corrigan is the Project Manager at the Institute, where he specialises in work on property rights, as well as land and mining policy. A native of KwaZulu-Natal, he is a graduate of the University of KwaZulu-Natal (Pietermaritzburg). He has held various positions at the IRR, South African Institute of International Affairs, SBP (formerly the Small Business Project) and the Gauteng Legislature – as well as having taught English in Taiwan. He is a regular commentator in the South African media and his interests include African governance, land and agrarian issues, political culture and political thought, corporate governance, enterprise and business policy.