Amid the flurry of attention paid to the suspension of Ace Magashule and the supposed consolidation of President Cyril Ramaphosa’s power over the ANC, an important detail was largely overlooked. This was that the party will be appointing a land reform committee to push more aggressively on this issue.
Ferial Haffajee was a rare observer to notice this – and kudos to her for doing so – writing it up in the Daily Maverick as a trade-off needed to swing the party behind the president.
‘In return for the blow struck for reform, Ramaphosa has had to concede that the country’s land reform programme is taking too long,’ she writes. The committee could come up with more ‘robust’ suggestions for land reform, since the current processes are not viewed favourably by the party. The draft expropriation bill, she notes, is seen as ‘anaemic’.
This is at once profoundly important and absolutely predictable.
The push for expropriation without compensation (EWC) – with the broader overall drive to expand the latitude for state intrusion into property rights – has too often been seen as a series of self-contained, individuated moves (the constitutional amendment, the Expropriation Bill, the Valuer General’s regulations), each of which has attracted some expression of concern, though ‘balanced’ by analyses that emphasise just how limited the impact is likely to be.
Hence, the constitutional change will not change anything, merely solidify definitions. The Expropriation Bill allows – in certain limited circumstances – the government to take land without compensation, something it ‘may’ do, not something it ‘must’ do. All of this is to argue that the concerns expressed by critics of the moves are overblown. Indeed, the director of the Centre for Development and Enterprise, while noting a number of risks associated with the Expropriation Bill, commented that ‘the hysteria is (mostly) unwarranted’.
Others have taken it further, arguing – as Steven Friedman has done – that this would ‘strengthen property rights’, by making it clear under what circumstances the government could take property, and by implication, what could be done to retain it. This is the ‘certainty’ response; once the rules are clear, everyone will be able to navigate them.
Predictable and damaging
This is not necessarily true – rules can be both predictable and damaging, depending on how they are designed and implemented – but establishing ‘certainty’ has been a central argument in the government’s defence of the Bill.
Certainty would, of course, be welcome. As we have argued before, South Africa has managed the not inconsiderable feat of establishing just enough certainty that bad policy is on the way, but not enough to allow any planning around it. This has been a toxic concoction for investors and entrepreneurs, and helps to explain, even before Covid-19 struck, the depressing growth rates South Africa has experienced under President Ramaphosa – and the corresponding disappointments of his incumbency.
The intention to form this committee and to pursue a more ‘robust’ advance on property rights signals that no such certainty is coming any time soon.
This was inevitable. The ANC has pushed both the constitutional amendment and the Expropriation Bill into Parliament, and will soon confront the problem of what to do next. It has expanded the state’s powers, and staked an enormous amount of political capital on ‘resolving’ South Africa’s land issues – essentially a side issue to most South Africans, albeit one that, mishandled, could inflict great damage on the country, as indeed it already has. Now it will need to deliver something, or find something else onto which to deflect attention.
Broader expropriation powers will probably not deliver anything of value; even the seizure of productive farmland is likely to be a hollow victory, since such an act would risk chasing away the skills and capital that give it its economic value. True, this may represent a political or ideological victory of sorts, and that may be sufficiently satisfying for many in the ANC, regardless of the cost.
But more likely is that many in the ANC are well aware that implementing this legislation would be ruinous. Empowering the country’s dysfunctional local governments with expropriation powers and the cover of the aggressive ideological posturing that has been going on for years, would be a recipe for disaster. Those in the party’s leadership who realise this would want something more systematic and (potentially) controllable.
What we are seeing is not a series of individual interventions, but the construction of a system of expropriation, with the government holding an indisputable dominance over its subjects. Whatever their several impacts, the constitutional amendment and the Expropriation Bill will create a solid backstop for more ‘robust’ measures in due course.
Hence this group and its mandate.
State interests
How should the agenda at hand (nominally land reform, but in reality more about rearranging ‘property relations’ in toto) be carried out so as to inflict as little damage on state interests as possible?
The most likely scenario is that some sort of legislation will be proposed to push the EWC agenda along, probably in the form of an overarching land act. This has been proposed repeatedly in official documents. One element to watch out for here is custodianship, a mass taking of all land along the lines of water and mineral rights, with private ownership being made essentially impossible.
This would entail massive costs, of course, but would probably allow party insiders to benefit from the opportunities for patronage, and even to extract rents through BEE deals with larger commercial farmers whose operations might be seen as valuable enough to be retained (appropriate licensing being obtained, of course).
The impact of this would be – in a best-case scenario – more uncertainty, with all the lost opportunities and forgone investments. More likely, it would destroy a considerable amount of value.
The supreme irony, at least if Haffajee is correct in her assessment, is that this path is being followed in pursuit of ‘reform’. For it seems that to achieve action on dealing with corruption, the trade-off is investability. As she acknowledges, ‘Land expropriation is like a red flag to the business community’. More than this, expropriation will likely not be limited to land, not with the state in the fiscal state it is in, and with such resources as the national pension pot beckoning.
Optimism is misplaced. Reform within the ANC (such as it is), comes at the cost of the reforms that the country desperately needs.
If you like what you have just read, support the Daily Friend
[Photo: REUTERS/Siphiwe Sibeko]