South African President Cyril Ramaphosa told ratings agency Moody’s on Wednesday that a drive to expropriate land without compensation would be done in a way that would not harm the economy or food security, the presidency said on Wednesday.
Land ownership remains a highly emotional subject more than two decades after apartheid’s demise. Now the ruling African National Congress (ANC) is aiming to change the constitution to allow white-owned property to be taken without payment, for redistribution to landless blacks.
Ramaphosa also told Moody’s that failure to create jobs was the biggest threat to the SouthAfrican economy, the presidency said in a statement.
South Africa has a jobless rate of over 25% and remains scarred by glaring income and ownership disparities that run mostly along racial lines, fuelling social unrest.
“President Ramaphosa reaffirmed that accelerated land reform will unfold within a clear legal framework and without negatively affecting economic growth, agricultural production and food security,” the presidency said.
Moody’s will announce its latest outlook on South Africa on March 23; it is now the only major ratings agency that has kept South Africa‘s credit rating at investment grade. S&P and Fitch cut their ratings to sub-investment grade last year, after then-president Jacob Zuma fired Pravin Gordhan as finance minister.
The land issue is now high on investor radar screens, muting some of the euphoria over Ramaphosa’s replacement of the scandal-tinged Zuma, who was forced from office last month by the ANC.
Goldman Sachs’ Africa director Colin Coleman said earlier on Wednesday that South Africa was in a “very good position” but warned that the land drive was unnerving markets.
The policy would mainly target unused land, a senior ANC official said on Tuesday.
Most land is still in white hands in South Africa, but estimates vary. The government says blacks only own 4% of private land; farm groups and analysts say much state and communal land could be transferred.
Ramaphosa, a former trade unionist turned business tycoon, is still enjoying a honeymoon with the markets and corporations.
South Africa‘s future is looking “a lot more positive” since Ramaphosa succeeded Zuma last month, Anglo American’s Chief Executive Mark Cutifani said on Wednesday.
Mining companies and South Africa‘s government have been at loggerheads for years over legislation that the industry warns could deter investment by changing the requirements for black ownership of private firms.
The new mining minister, Gwede Mantashe, last week pledged to finalise the latest version of the charter within three months. Cutifani said companies had a positive meeting with him this week.
“It was a great meeting. A meeting that we’ve been looking for, for probably two to three years,” Cutifani told a conference in Cape Town.
“We’ve continued to invest in South Africa, we believe in the future of South Africa and from our point of view it just got a lot more positive.”
Markets have reacted positively since Ramaphosa became the leader of the ANC in December, before he become head of state last month. The rand has gained 7% against the US dollar since Ramaphosa took over.