RYK VAN NIEKERK: Over the past few years Moneyweb and Brenthurst Wealth have presented the ‘SA Quo Vadis?’ series of seminars around the country. These seminars analyse the key challenges facing South Africa and their impact on your money, investments and retirement. This year’s series kicks off on June 18 in Pretoria. The core theme is Land Expropriation Without Compensation – Your Money, Your Business, Your Property.
Political analyst Ralph Mathekga is on the line. He is also one of the keynote speakers at this event. Ralph, welcome to the show. What are your broad views on this new policy and how it affects the perception of our economy in South Africa and abroad?
RALPH MATTHEKGA: Thank you so much for inviting me. I think if you look at the language that is being used to express different positions about this policy of land expropriation without compensation, it is not the language of concession, it is not the language of the consensus. People have already taken a position and I think that what this says is that we seem to be shifting south from consensus as we try to find policy solutions to some of the problems that we have in our society.
What makes things even more difficult is that the ANC has already taken a position on this, and the party is trying to consult after taking a position. That has actually muddied the waters in a manner that people are no longer feeling that whatever contribution they make to this will actually contribute towards the final policy.
So it has not been handled very well, and unfortunately it’s an indication of tensions that we see in our policy environment. My fear is that we seem to be moving in this direction of all-or-nothing, a zero-sum approach to policy, instead of finding concessions and being practical and finding things that can actually work for this country.
RYK VAN NIEKERK: Is it not just purely politics. There seem to be some divergent views within the ANC, and this could have been a concession made by Cyril Ramaphosa during the policy conference in December last year, where he was elected ANC president. That also muddies the water if it is perceived as being mere inter-party politics.
RALPH MATTHEKGA: It is politics, but unfortunately it has substantive implications. When the ANC went to the Nasrec conference they took this position, and what actually escalated things is when the ANC in parliament after the Nasrec conference used their majority to pass this motion, which was an EFF motion. So one could say that it is actually politics, it’s all about talks going into the election.
But I think that would be naïve in the sense that we know that there is one political party that is actually implementing this as you and I are speaking. We know the EFF has been encouraging people to occupy some land. We do have protests that have engulfed the country and quite often they seem to result also in land occupation.
So this has a negative [effect] on investor confidence in the country. What investors usually ask when they come to the country is: “Who is in charge?” – and at this point one cannot say the ANC is in charge here when it comes to this issue. The party has lost the narrative altogether, and I think if there is anyone who is in charge on this, it seems to be the EFF, the party that has less than 10% of the electoral vote, and I think it is holding the ANC with 62% of electoral vote to ransom. This is very, very strange.
RYK VAN NIEKERK: But what do you think the outcome will be? Surely if that scenario is true, it is not sustainable?
RALPH MATTHEKGA: It is not sustainable, and I think what needs to happen is that the ANC needs to try to get the EFF back to the table, and talk to the EFF about various methods that maybe could be used through the formal processes of implementing this. I mean, the resolution that was taken by the ANC also says that this should not be at the expense of food security or the economy. That is a very powerful disclaimer that the ANC needs to make the EFF aware of.
But the problem is that there is a growing mistrust between the ANC and the EFF on this. The EFF does no longer trust that the ANC actually wants to do this. They have stated that the ANC is making an about-turn on this; we have had the EFF MPs speaking about this, the expression they’ve used in parliament about this. We need to retain the nuances and I think it is the responsibility of the ANC to get the EFF back to the table about this so that we can avoid what we are seeing – this land occupation.
RYK VAN NIEKERK: What do you think is the role of the private sector? Do you think they are vocal enough?
RALPH MATTHEKGA: I think that the private sector should have a role to play because this is not just about land as 24 hectares or 2 000 hectares, but it is about private property as a medium of exchange, as collateral to some of the financial transactions that have taken place in the country. And the private sector knows exactly how much land is being held as collateral to some of the finances and instruments they’ve had to issue out.
So from that point of view it’s not just a question about 10 hectares, it’s not about 20 hectares, it is about the importance of how this is going to affect property as a medium of exchange, and I think the private sector should have a say when it comes to this. And indeed no doubt I’m quite critical of the private sector where I think criticism is due – that they may have not taken a strong position under Mr Zuma’s past administration. But I think this is the issue – that they to take a moral position. They cannot just say yes or no. We don’t need a referent among this, but we need actual nuances. The private sector should actually be part of this debate and tell us the implications of this policy on the economy and on the importance of property as collateral, as a medium of exchange in a market economy.
And we also need innovation. I believe that there should be a space for innovation regarding how to go about this without necessarily hurting the economy. We have achieved a lot as a nation. We defeated apartheid. I think we can get a sober conversation on this and allow innovation and tackle this thing as a nation.
RYK VAN NIEKERK: I agree with you, you know. Innovation is key and land reform is key. We are 20 years into democracy and land reform is still not implemented, or is still in the early stages of implementation. And land expropriation without compensation is not an innovative solution. To the contrary. It’s actually a very blunt policy to hide the bureaucratic and administrative failures.
RALPH MATTHEKGA: Exactly, exactly. It’s not innovative at all. I mean, there is one part of this discussion that you are not talking about. We have centred our discussion of this on the historical aspect of retribution. It’s a question of historical injustice. Fine, we should not confuse things. If we are talking about historical injustice, we should also attend to the question of the economy in the manner in which we have handled this land expropriation … so far, how strong is the economic element? Are we allowing this process – if we are going to undertake this process – to make sure that we ensure inclusion of the majority of people in the economy? This is where innovation is required. But the manner in which this has been cast, as either you are for it or you are against it, without any nuances, without an opportunity for innovation, is not going to actually help us deal with the economic impasse of high unemployment that we have. We should try by all means to use any social policy that we have in our country to try to get economic benefit from it.
RYK VAN NIEKERK: Well if you look at the investment industry, everyone who contributes towards a pension fund or any retirement annuity is being affected by this policy uncertainty. It has a negative impact on investor confidence as well as investment performance. Do you think there’s an appreciation within the ruling party and the EFF that there is a big opportunity cost to this policy?
RALPH MATTHEKGA: I think that the ANC had a plan to manage the EFF. The manner in which I look at this thing, when they hastily adopted that motion in parliament, their plan probably was to say we will manage the EFF. If you listen to the ANC carefully, it appears to me that now the reality is catching up with them. They are being aware that this thing really reverberates beyond just land.
It’s not just about soil, but our economy. We live in a very complex market society where, if you do something wrong in what you might consider to be a very remote aspect of life, it ends up affecting other lives. It’s going to affect the savings that are out there, it’s going to affect the value of South Africa’s bonds and so forth, because it’s all about property.
Again, it is also about contractual obligation. Suppose, for example, that someone put their land as collateral five years ago and they have been able to attain funding and their payment term is 20 or 30 years. That is a specific contractual obligation. How then do you deal with that? Are you saying in South Africa that we are … frustrated with our social problem, we are going to renege on some of our contractual obligations? So I think we need to appreciate that. But the ANC I think are realising how much in a fix they find themselves on this and I think that either they are going to completely have to distance themselves from this or come up with a way in which they bring the nuances and allow for innovation, and make sure that indeed this is not detrimental to the economy and food security.
RYK VAN NIEKERK: Thank you Ralph.
Ralph Mathekga is founder of research and consulting firm Clear Content.
Brought to you by Brenthurst Wealth.
The Quo Vadis Series kicks off on June 18 in Pretoria at the CSIR Conference Centre, and then on June 19 we are in Johannesburg and on June 21 in Cape Town. Ticket prices range from R350 to R450, and tickets are available at Quicket.co.za. For more information just search for “Brenthurst”.