This is the first of two articles on the stance adopted by the Agricultural Business Chamber of South Africa (Agbiz) in relation to expropriation without compensation.
When a dispute arises, be it political, personal or legal, there is no firmer footing to be found than that of stubborn facts. This is true of the dispute that has recently arisen between the Institute of Race Relations (IRR) and the Agricultural Business Chamber of South Africa (Agbiz) regarding the latter’s position on the expropriation of property without compensation (EWC).
The dispute has its origin in an open letter campaign launched by the IRR in January 2020. In its open letter and an accompanying press release, the IRR notes that Agbiz supports the findings of the Final Report of the Presidential Advisory Panel on Land Reform and Agriculture, which endorses EWC. Having first stated that it would not respond, Agbiz CEO John Purchase replied in a three-page statement dated February 5, 2020, claiming that it is “astonishing that our position is not known” to the IRR. Purchase further claims that the IRR shows “a complete lack of appreciation regarding the process” by which EWC is being forced upon South Africa.
You will judge this yourself when the further content of Agbiz’s statement, and of other similar documents, are considered later in this article, but to fully appreciate the stubbornness of facts it is necessary to take a few steps back and consider a longer timeline of developments that corroborate the IRR’s submission that Agbiz supports, on an ongoing basis, the government’s position on EWC.
The Good
On December 18, 2017, Cyril Ramaphosa is elected leader of the African National Congress (ANC) by a delegation of 5 000 party bosses. (Personal disclosure: at this point I ululate with joy). But in the early hours of December 21, 2018, Ramaphosa concludes the Nasrec convention by making a “unanimous” call from the ANC to alter the South African Bill of Rights’ protection against arbitrary EWC. The crowd’s roar is deafening. Little to no regard is paid to the report from the government’s own High Level Panel on Assessment of Key Legislation and Acceleration of Fundamental Change, published a month earlier. Known as the “Motlanthe Report” – it was chaired by former president Kgalema Motlanthe – this document unambiguously set out the needlessness of just such a change in the pursuit of land reform. But it is tossed under the cavalcade of Ramaphosa’s drive to power.
Or is it? In the same December 21, 2017, speech Ramaphosa also establishes a firm line of defense against EWC. He explained that he and the ANC had “also resolved that in determining the mechanisms of [EWC] implementation, we must ensure that we do not undermine the economy, agricultural food production and food security”.
In immediate response to Ramaphosa’s announcement, Dan Kriek, President of Agri SA, the largest representative of medium-sized farmers in the country, publicly states that EWC would be “economic suicide”. Kriek also points to the Motlanthe Report’s scathing analysis of corruption in the executive administration that is “at the heart” of land reform’s technical retardation, compromising earlier successes, including 1.8 million people directly benefiting from land restitution.
Agbiz also notes its “disappointment and deep concern” at the EWC announcement, while welcoming “the call that no illegal occupation of land will be tolerated”. The justified “deep concern” is soon toned down when Agbiz issues a press statement one month later. “First and foremost,” goes the statement, “the announcement was made by a political party and is not official government policy as of yet”.
Second, even if the Bill of Rights were to be altered, “it cannot allow a free-for-all land grab situation”. Agbiz hopes that “a balanced approach will be followed whereby only selected categories of land are expropriated so as to minimize the effect on the economy”. This is an ominous harbinger of what comes later, remember it.
Third, “it is very important not to underestimate the provisos contained in [Ramaphosa’s EWC] announcement”, namely that “in determining the mechanisms of [EWC] implementation, we must ensure that we do not undermine the economy, agricultural production and food security”.
Agbiz must be credited for this – from the very beginning it identifies Ramaphosa’s provisos as the most promising handbrake to stop EWC, since there is no known way to amend the property clause of the Bill of Rights without undermining the economy.
September 2018 – President Ramaphosa appoints his own land reform panel to assess EWC’s feasibility. To his credit, he appoints two of EWC’s most potent and impressive critics, Kriek of Agri SA, and Agbiz’s chief economist, Wandile Sihlobo. This puts Agbiz in the president’s inner circle with a chance to point at the handbrake and say, pull, now, before it is too late.
Agbiz welcomes the invitation, responding in a newsletter dated October 19, 2018 with the headline: “Wandile represents Agbiz on various platforms”. The accompanying article lays out praise and support for Sihlobo’s representation of Agbiz on various influential forums, the foremost being “President Ramaphosa’s advisory panel”.
If Sihlobo is to hold his line he will face a powerful backlash, so Agbiz’s early advertised backing of him as its representative establishes potentially necessary shelter against bullying within the president’s ring. Sihlobo’s position on EWC at this time seems clear; he co-authored an article titled Why Land ‘Expropriation without Compensation’ is a bad idea, which had, since its publication in July 2018, become something of a must-read in anti-EWC circles.
In this article, as elsewhere, Sihlobo unapologetically identifies and explains why EWC is an obstacle to economic growth and genuine land reform. Sihlobo and co-author Dr Tinashe Kapuya write, “There is no such thing as ‘expropriation without compensation’”:
With the benefit of hindsight, what the Zimbabwean experience tells us is that expropriation without compensation is a catastrophically bad idea. The Zimbabweans might have seized the land without compensation 18 years ago, but they collectively paid for it through eight consecutive years of economic decline that led to job losses, de-industrialisation and a loss of agricultural export revenues.
Sihlobo and Kapuya go on to ask:
if compensation is not due to farmers, would there be compensation to banks, which are de facto partial owners of that land through debt? If government exonerates itself from compensating the banks, this would translate to R160 billion wiped off the books of the banks.
The IRR’s 2020 open letter campaign addresses this very problem, echoing the concerns of Agbiz’s chief economist by urging big banks, insurers and Agbiz to stop worrying about potentially toxic debt in silence, or in silos, but rather to rise up together and demand security for the fundamental property rights upon which the financial sector depends. Agbiz now characterizes this campaign as “mischievous”, concluding its response to the IRR with a warning “to treat mischievous statements within the sector with the necessary circumspection as other agendas are clearly at play here”. Indeed the IRR’s agenda is clear – to stop EWC.
Going back to 2018, there is one last, vital piece of good news. The “Terms of Reference” (ToR) of Ramaphosa’s panel open the door for a graceful exit from the EWC fiasco. The panel is mandated to “consider any existing studies”, by implication this includes the Motlanthe report, Sihlobo’s “Why [EWC] is a Bad Idea”, and documented studies of Venezuela’s collapse, opening the way for reason to re-enter the president’s orbit.
The Panel’s ToR also mandate it to develop “policy on compensation for land acquisition by the state for public purposes and in the public interest”. What is “the public interest”? Panelists were surely welcome to interpret this as including, if not being exhausted by, Ramaphosa’s own “provisos” not to undermine food production, food security, or the economy at large, since the report would be addressed to Ramaphosa himself.
The ToR also oblige the Panel to consider “the circumstances in which the policy [of EWC] will be applied”. Read together with the imperative to generate policy on compensation “in the public interest”, a clear path emerges. Panelists can endorse EWC in this, and only this, circumstance: where the property targeted for expropriation has a market value of R0. This would clarify since circumstances for EWC that would not undermine the economy, food production or security, thereby serving those aspects of the public interest.
Had the Panel drawn made this recommendation (it did not) the president could then consider his own Panel Report – replete with alternative non-EWC recommendations on how to drive land reform forward, starting with the mass roll-out of title deeds – and upon its independent authority conclude that while he and the ANC unanimously support EWC in principle, in practice it will only be possible to apply EWC to R0-value property.
This would not automatically halt the process – revanchists in the EFF would go on demanding the nationalization of all land to spite the whites. But it would mean that any ANC member who continues to propose EWC on valuable assets would stand in open opposition to the president, his Panel of independent experts, the Motlanthe Report, the South African economy, and the Constitution itself.
In short, Sihlobo and Kriek’s invitation to participate in Ramaphosa’s Panel offers them the unmatched public opportunity to hold the president to his December 21, 2017 promise, which, if done, would save the country from an existential threat. As representatives of respectively big and medium businesses in the agriculture sector, their personal expertise would also be backed by real clout. This then is the good news.
The Bad
In May 2018, NAMPO takes place, billed as the largest agricultural fair in the Southern Hemisphere. There, Purchase shares a stage with Kriek and three others in a panel discussion hosted by Roelf Meyer. Kriek courageously defends property rights and dignity, and scorns farm murders. He emphasizes that victims are both black and white, and submits that this country will never come right until we learn to stop “just burying our own dead”.
Purchase, by contrast, is silent on the thorny issue of crime which might niggle big business but kills small farmers and labourers. Purchase is silent on property rights, too … until the very end of the hour-plus debate, when he offers the vague line, “I fully support the issue of property rights – so there’s a good future. We must look at the positives…we often get stuck in our own negative thinking”.
Earlier in the debate, however, Purchase does volunteer his “negative thinking” about the “biggest problem” regarding government policy. “My opinion is our biggest problem in SA now is what we call demand-side management in terms of agricultural products.” To solve the “biggest problem”, “what you then need is to work with government to make sure that we can access the markets in Europe, the Middle East, the Far East and Africa, now our biggest export destination”.
A farmer outside tells me, “Those big guys at Agbiz have really big problems, hey, bigger than me or you.” His friend replies: “Leave it, they come from another planet.”
August, 2018 – a list of farms earmarked for EWC is leaked. Agbiz’s “chief of legal intelligence” Theo Boshoff appears on Kyknet, where he is asked: What would happen in a future EWC regime “if an official list is published of farms that will undergo EWC, what can farmers do if their farm is actually on that list?”
Boshoff answers: “I don’t think it should come as a shock to any farmer in the event of their name appearing on such a list. As I said, this is a legislative process, so there are many processes that must be followed before you reach the point where the state can expropriate.”
During the interview, Boshoff’s attention is drawn to the “contentious” Ramaphosa late-night television endorsement of EWC, recently made. Ramaphosa said a “proper reading of the Constitution on the property clause enables the state” to effect “EWC in the public interest” and that “our people” want this to be made “explicit”.
Agbiz’s representative replies that the president was speaking as the “head of the party” and “not the head of government”, so people should not worry. “In other words, it is not the government, it is dead simple the ANC” so “it shouldn’t make a significant difference.”
Asked hypothetically if he knew “what the implications would be if such an amendment” goes through, Boshoff answers: “The short answer is no, because we haven’t yet seen any amendment.”
Curiously, Agbiz’s chief of legal intelligence knows enough to assure farmers they should not be “shocked” to find themselves on an official EWC list, but not enough to know what general effect an amendment to the Constitution would have.
Asked about the economy more broadly, Boshoff says there “ought not to be too much of a risk” for farms or banks, as the law is not yet changed. “The risk is, if someone makes an investment decision…not to plant it could impair the owner” since the “amount of compensation can be pushed down because it can be considered unused land”.
Agbiz’s CEO is also interviewed in Afrikaans at this time, having recently met with the president. He is asked the extent to which EWC was part of the discussion and what Ramaphosa’s reaction was.
His answer disappoints: “EWC did arise, but I have to emphasize that this discussion was more about the economy and about employment and so on.”
Separating the issues, EWC from the economy, is a walk-back from holding Ramaphosa to his “provisos” binding EWC to the economy more broadly, as Agbiz had previously promised to do. This walk-back comes at the most crucial juncture to date.
But a promise comes along with it: “The guarantee we were given was that we will look for a solution to the land issue, together.”
September 21, 2018 – Agbiz’s chief economist is appointed to Ramaphosa’s Land Panel.
November 15, 2018 – The Constitutional Review Committee endorses an amendment to Section 25 of the Constitution, the property clause, a major blow to opponents of EWC. Agbiz notes this “with disappointment”, adding that “(it) would however have been a positive step if the conditions under which land expropriation without compensation could take place” were labelled.
While Agbiz’s reiteration of concern and disappointment is one thing, its representatives repeatedly fail to note that even if the conditions for EWC are limited only to “unused” or “underutilized” land in words this this would not “minimize” the impact as hoped for in reality. What even is “underutilized” land and who would determine that? EWC against such targets would be “economic suicide”, to borrow Kriek’s phrase, as it was before. In Chavez’s Venezuela, “latifundios” (or “large idle estates”) were targeted for EWC by constitutional amendment circa 1999, a profound step towards the living nightmare those incapable of fleeing still endure.
Agbiz’s representatives also repeatedly fail to note that determining which land counts as “underutilized” will most likely fall to the Department of Rural Development and Land Reform, whose corruption and ineptitude are widely documented, including in the Motlanthe Report. Instead, Agbiz repeatedly soft-pedals alarming developments and underplays their significance, effectively flattering the president and his party while obfuscating opposition to EWC.
March 18, 2019 – the Presidential Panel has missed its first deadline to report, raising concerns (later validated) that the Panel was internally crushing dissent. Agbiz, however, continues to project a sunny outlook. Agbiz engages in an Afrikaans interview to say that relations between big agri-business and government “improved considerably” in the last year or so.
Think of the period under discussion – 2018 leading to March 2019. Aside from endorsing EWC, Ramaphosa tells US journalists that there is “no killing of farmers” in South Africa, while failing to address the “boiling frogs” comments he is alleged to have during the Constitutional transition. In the last quarter of this period, agricultural production falls by a record 13.2% amidst heavy job shedding. With this year of horrors for the agricultural sector of South Africa, why does Agbiz describe this period as positive for agri-government relations?
“The access that we now have to ministers and to the presidency and to the president himself, I testify to that, considerable improvement,” Purchase explains. He also assures the public that “at the high level”, the government has “a very good understanding of how important the agricultural value-chain is, and what an asset it is”.
April 19, 2019 – Dan Kriek of Agri SA, and the famously philanthropic mega-farmer Nic Serfontein, say that they and others on the panel have not been able to reach a consensus on recommendations about targets for EWC and so will issue an alternative report to the president.
Agbiz responds by republishing in its newsletter a statement by Panel Chair Dr Vuyo Mahlati that denounces Agri SA for getting involved, on the supposition that Kriek and Serfontein were acting “in their personal capacities” and not as representatives of the country’s largest union of farmers. Mahlati also says that “there is no document to sign, and thus no reason to refuse” signing on. Although this is not true – the draft at the time was not substantively different in its recommendations on EWC – Agbiz leaves Agri SA, Kriek and Serfontein out to dry.
May 4, 2019 – Ramaphosa’s Report is completed, but unpublished. An Agbiz representative has recently co-authored a Business Day piece which says that “(from) our reading of the governing party’s policy documents, this situation [wholescale land expropriation] is unlikely to materialise.”
June 2019 – Ramaphosa’s Panel’s report is before cabinet but not yet public. Agbiz publishes a list of “quick-wins” to boost the agricultural economy. It does not mention as a “quick-win” possibility that Ramaphosa or any others “at the high level” who supposedly have such a “very good understanding” of the problem might abandon EWC (except for R0 properties) on the basis that EWC will otherwise break his own proviso not to “undermine” the economy. This would have been a golden opportunity for Agbiz to set out the biggest win for the South African agricultural sector, a win that would also be “quick” if it believed its own nominal estimation of the president and his inner circle.
This month, Stats SA releases data indicating that the first quarter of 2019 saw the sharpest GDP drop in a decade, with agriculture hardest hit. In the six quarters since Ramaphosa’s call for EWC, three have been negative. This then is the bad news.
The Ugly
July 2019 – Ramaphosa’s Report is made public. 8 of the Panel’s 10 members endorse its call for EWC. One of them is Wandile Sihlobo, Agbiz’s chief economist.
Kriek and Serfontein bravely resist but are isolated. Since Agbiz represents the biggest businesses in the sector, the takeaway is brutal: its “chief economist” endorses EWC, therefore Agbiz endorses EWC, therefore the corporate giants most directly involved in the sector endorse EWC.
EWC champions can flatter themselves that, in this way, Tigerbrands endorses EWC, ABSA, Santam, Standard Bank, Old Mutual, Nedbank, PWC, the Land Bank, the Potato and Vegetables Forum, major feedlots and egg producers, major fruit and nuts consortiums, Total (whose annual revenue is more than half SA’s GDP) and John Deere (the second largest tractor maker in the world) all greenlight EWC through Agbiz’s chief economist. Members might not like it, but that is the gift EWC proponents have been given.
Is the endorsement unambiguous? The Report concedes to dissent regarding its legal opinions on whether EWC (for non-R0 property) would require a 50%, a 67% or a 75% majority to pass through parliament. But no dissent is noted in its “Recommendations for Immediate Action” section, 5.1 “Regarding the circumstances in which the EWC policy will be applied” which reads inter alia as follows:
That EWC…may commence immediately under specified conditions identified for “nil” compensation, including but not limited to:
(a) abandoned land;
(b) hopelessly indebted land;
(c) land held purely for speculative purposes;
… (f) land already occupied and used by labour tenants and former labour tenants;
… (j) farm equity schemes.
Devastating. This goes beyond the Venezuelan model of targeting latifundio, since it targets “farm equity schemes” which typically means that workers own shares in a farming business collateralized by title deeds so that profits are divided between the (usually white) former business owners and the (usually black) formerly capital-less labourers.
The “not limited to” preliminary means that the list is not closed – the Panel called for EWC under limitless conditions, entailing going concerns, endorsed by Agbiz’s chief economist. How exactly does Agbiz respond to the momentous occasion?
Agbiz’s next newsletter has three headlines about EWC, as follows: “Report takes the debate on sustainable land reform forward”, “Presidential advisory panel’s report on land reform: why context is important” and “Land panel report looks post-apartheid failures square in the eye”. No one could accuse Agbiz of ringing the alarm bell too loudly at this time.
The third headline is the most bizarre, linking to a piece by the card-carrying Communist, Jeremy Cronin. In the piece, Cronin says “bribery” is frankly assessed by the Panel. But “bribery” only appears once in the Ramaphosa Report, given as an example of “pure market opportunism”. What does that mean?
On the one hand there are corrupt officials who extort money from desperate emerging farmers. (I have spoken to several desperate land reform “beneficiaries” who had to give goats or whisky to Department of Rural Development and Land Reform officials in exchange for access to mandated seed or tractors or access to state land). On the other hand, there is “pure market” exchange, like buying shoes from Pep. Conflating the two is anything but looking “post-apartheid failures square in the eye”, especially when considering how brazenly Ramaphosa’s Report asserts that “willing buyer willing seller”, which is a genuinely market-based approach, has proved a “failure”. By conflating “bribery” with free “market” activity the heart of land reform is obscured: pure government corruption.
Even more concerningly, Cronin congratulates the majority of Ramaphosa’s Panel (including Sihlobo) for opposing title deeds and long-term leases as a means to achieving genuine reform, saying “that turning communal land ownership into alienable [bankable] private property would further deepen poverty”.
It is hard to know why Agbiz posted this patronizing, Soviet-style article to its newsletter at this critical juncture. Cronin does namecheck Agbiz in it, saying that “what is especially encouraging is the diversity of the panel” since it includes academics and lawyers and “an agricultural economist with the Agricultural Business Chamber”. Abgiz posted this right after Sihlobo endorsed the Panel Report, embracing the connection between the Report and Agbiz at the first possible opportunity.
In the first piece linked on their post-Report newsletter, Agbiz more soberly “reiterates its mandated position that it does not support an amendment to the Constitution” regarding EWC.
In the second, Agbiz downplays the significance of the Ramaphosa Report, saying “government gets bombarded by policy recommendations on a daily basis through a variety of platforms”, so no big deal.
Agbiz further downplays the Panel’s recommendations regarding EWC by noting that “ironically” EWC was a parliamentary question, not one for the president to decide, and so not the real point of the exercise. It claims there was “never the intention to outsource policy-making functions” like fact-finding on the feasibility of EWC within the “proviso” constraints codified into the ToR of Ramaphosa’s own Panel.
In response to the Institute of Race Relations’ criticism, Agbiz reiterates this line in 2020, writing:
It must be clearly stated that the National Assembly (Parliament) had already resolved to amend the Constitution to make provision for nil compensation under certain circumstances before the Panel had even been constituted.
First the circumstances for EWC are not “certain” in Parliament’s resolution, and second, Agbiz’s newfound selectivism about where to challenge EWC is flatly contradicted by the August 2018 interview in which its CEO said “our message to the president” was “come, let us wait until we have clarity from the Constitutional Review Committee, then we can debate in the parliament, behind the scenes, wherever we get the opportunity [emphasis added].”
In another about-turn, Agbiz now avers that the ToR barred the Panel from opposing EWC despite the fact, as earlier indicated, that all panelists were free to say that the “circumstances” under which EWC may take place are: when expropriating properties worth R0, to serve “the public interest”.
The next line of defence Agbiz takes up in response to the IRR puts in quotation marks (without clear attribution) the claim that “panel members had divergent viewpoints about the principle of [EWC]” and that these “divergent viewpoints are presented in the numerous recommendations contained in the report”.
And yet no “divergent viewpoints are presented” in the “Recommendations for Immediate Action” quoted above, and as can be confirmed here. That is why Agri SA broke off to submit an alternative Report.
Finally, breathtakingly, Agbiz takes a leaf out of Mahlati and Ramaphosa’s book, now claiming that Sihlobo did not represent Agbiz in any way, but acted merely in his “personal capacity” on the president’s Land Panel, and thus, to borrow its earlier phrase “it shouldn’t make a significant difference”.
This “personal capacity” shrug-off is flatly contradicted by Agbiz’s earlier statement describing him as their representative. But that is not all. Why would Sihlobo “personally” endorse EWC to the president when he had so strongly opposed it in the past? Why would Sihlobo “personally” endorse EWC when he was, at the time, contributing to the Kriek-Serfontein “minority report” that opposes it? Moreover, Agbiz does not explain how, if its position differs from that of Sihlobo’s “personal” conviction, it can go on representing a community whose interests are so fundamentally undermined by what its chief economist has joined in recommending?
Agbiz refuses to address these points, employing deflection tactics instead. Perhaps now is the time to remember its earlier hope that EWC be doled to “minimize the effect” on the economy rather than insist the economy not be “undermined” whatsoever. The latter would require securing property rights for all; the former could play out by succouring presidential favoritism while throwing smaller players under the cavalcade that rides forth to arbitrary power.
The upshot is that Agbiz finds itself on both sides of the issue. It is officially mandated to oppose EWC (which it has done to parliament) while it maintains an association with a limitless endorsement of EWC to the president. But it gets worse.
Agbiz’s submission to parliament on EWC in 2020 openly attacks the notion that property owners should receive compensation based on fair-market valuation. Agbiz states that Tembeka Ngcukaitobi “captured the essence” of Agbiz’s own key argument when he wrote that “the slavish adherence to market-driven compensation models” has been “particularly” responsible for “slowed down transformation”. Agbiz itself warns Parliament to avoid “a slavish adherence to Common Law principles”.
Agbiz further submits that “(it) is well understood that a 2/3 majority is required to amend the Bill of Rights”, referring in particular to “the proposed amendment”. But it is not “well understood” at all.
As Dr Anthea Jeffery of the IRR notes, “various legal experts have put forward pertinent arguments as to why a 75% majority is in fact required for the Bill”, including Adv Paul Hoffman SC, lawyer Gary Moore, and Professor Björn Hoops.
Jeffery goes on: “Behind the committee’s assumption that two-thirds will do lies a clear political calculation. The ANC and the EFF hold some 68% of the seats in the National Assembly and can marshal a 66.6% majority. A 75% majority, however, lies well beyond their grasp.”
Agbiz’s parliamentary submission would put it back in their grasp by a combination of fiat and ignorance rather than argument. Agbiz says “it is astonishing that our position is not known to the [IRR]” but its position is known only too well. The question is: are its members, from global oil companies and tractor producers to Africa’s biggest food manufacturer to fruit, nut, meat, egg and feedlot consortiums, to all the major banks, aware of what Abgiz is up to?
A criminal syndicate captured the ANC and, from there it captured government for all South Africans to see. Led by a winning smile and some socialist ideologues, the kleptocratic elite is now zombie-walking our country into the economic abyss via EWC and who is there to hold its hand, to whisper flattery and half-truths while stifling key opposing points? Agbiz.
This is not an “insinuation” as Agbiz claims, it is a demonstration. Pointing to Agbiz’s track record is not mischief, however inconvenient the stubborn facts are to those who would appease EWC. My agenda is to do the following duty: to report on EWC’s transformation from a “catastrophically bad idea” into wretched reality. No fear, no favour. In no uncertain terms.