South Africans generally, and the government in particular, should be in no doubt about how expropriation without compensation is viewed across the world.
There is something in the South African psyche that craves global approval. This is partly pragmatic – an emerging market in a globalised world would be expected to take a keen interest in the perspectives of investors and trading partners. Yet it also perhaps reflects a need to validate the country, a distant echo of the idea of South Africa’s exceptionalism, and an enduring lack of self-esteem.
And so, when foreign observers comment favourably on the direction of South Africa’s politics, their views are eagerly seized upon. This is especially the case where the policy direction is contentious. At times, there is a resort to creative interpretation to make such comments fit into the prescribed narrative.
When then British prime minister Theresa May visited South Africa last year, her endorsement of land reform was widely hailed. Since ‘land reform’ in South Africa had come to be defined by the official drive towards expropriation without compensation (EWC) – above all, an ideological programme damaging to property rights and impervious to economic realities – her comments were expounded by many as an agreement with this.
In fact, she expressed a broad agreement with the idea of land reform, but qualified it strongly. It would, for example, need to be ‘legal and transparent’. She remarked pointedly that ‘investment cannot be attracted nor growth achieved in the absence of security and the stability it brings’. There was, in other words, a clear if diplomatic caution to South Africa in her words.
Similarly, when the respected investment research firm Intellidex recently listed a number of government policies as having the potential to damage the South African economy, supporters of the EWC drive might have drawn some comfort from the suggestion that its impact over the long term might be ‘positive’.
This, they might be tempted to believe, shows that sober, hard-nosed business analysts see it as no more than a temporary obstacle. Perhaps they ‘get it’, and see the wonderful potential that the EWC policy is opening up. After all, representatives of the ruling party and the government have repeatedly assured the country that EWC will not only bring about justice, will not only correct the failings of existing land reform programmes, but will be a decisive prompt for economic growth, food security and much more besides.
This is not the case. Intellidex does no more than express a commonly held position that land reform has the potential to contribute positively to the country’s fortunes. That is, if it is done well. This is an uncontroversial position. Indeed, it is probably a consensus position in South Africa.
But Intellidex – again, in common with many other bodies, domestically and internationally – has sharply expressed concerns about the direction that policy has taken. EWC, which has come to dominate the conversation around land reform, poses a dire risk.
Peter Attard Montalto, head of capital markets research at Intellidex, commented last year: ‘Land reform in its totality is a strong, long-term positive for SA if it can be executed through a capable, capacitated and clean state — conditions that do not exist and are unlikely to do so in the foreseeable future.’
He has further noted that a degree of ambivalence exists among top policy makers, including the supposedly reform-inclined ‘Ramaphosa camp’. As he told the Financial Mail last year: ‘In the discussions we’ve had with policymakers in recent months we have been surprised that there is a core group of people even within the Ramaphosa camp who would admonish us for “fetishizing” property rights, or for putting the interests of banks and investors ahead of historic justice… The argument that we put forward that getting historic justice is a lot easier when property rights are respected and the economy and fiscus are well functioning was dismissed.’
In reading the mood of the outside world in relation to their country, South Africans would do well to be mindful that ideas may be understood differently, away from its rancorous debates. While land reform and EWC may have become inseparable for many in the country – EWC having become an ideological fetish of its own – they should be understood as very different things.
As Montalto told the IRR, media reports of Intellidex’s position lacked detail and nuance. On the broader issue, he said: ‘Land reform is so much bigger than EWC and the continual focus on EWC means, I think, people struggle to think of it as a conceptual whole.’
Indeed, we at the IRR have just released our own land reform alternative – in a report entitled Reaching the Promised Land: an alternative to the Report of the Presidential Advisory Panel on Land Reform and Agriculture – which strongly rejects EWC, but proposes workable processes towards effective reform in both rural and urban contexts.
Ultimately, the choice between a productive land reform process and a debilitating bout of seizures, with the consequences that each implies – enhanced value chains on the one hand, or economic calamity on the other – is in South Africa’s hands. Developments in South Africa are indeed closely watched abroad, and will be as things unfold. It is only good sense to factor into domestic decisions the sentiments of international economic movers. And neither South Africa’s people nor its government should be in any doubt about how its EWC plans are viewed across the world.
Terence Corrigan is a project manager at the Institute of Race Relations.
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