Registered users can save articles to their personal articles list. Login here or sign up here

What happens if SA expropriates land without compensation?

Investments in the agri sector could be scuppered, food prices could rise and job losses would mount.

Three Agriculture Business Chamber (AgriBiz) researchers have warned that government’s populist proposal to expropriate land without compensation might result in a prolonged period of no new investments in SA’s agriculture sector and food insecurity for the poor.

AgriBiz’s Theo Boshoff, Wandile Sihlobo, and Sifiso Ntombela have argued in a research paper that expropriation without compensation has massive economic implications and could impact property rights across key sectors of the economy.

Buckling under pressure to fast-track its land reform targets, the ANC agreed to push for land expropriation without compensation at its elective conference in December 2017. In doing this, the governing ANC requires a two-thirds threshold in Parliament to amend Section 25 of the Bill of Rights, which promotes access to land by citizens, just and equitable compensation in the event of expropriation.

By the government’s admission, SA’s land reform programme is widely considered to have failed over the last two decades, with over 80% of beneficiaries unable to build an agricultural surplus and productive capacity.

The researchers said agriculture makes up 2.5% of SA’s GDP but when including the sector’s entire value-chain (industries including animal feed, plant health, food processing, transport, and storage) the contribution increases to 7%.

Mass expropriation without compensation will result in a protracted period of no new net investments in agriculture, which “means no growth in agricultural output as well as no growth in the agribusiness sector”.

“This is because commercial farmers, regardless of race, who have not yet been expropriated, are hardly likely to start new investments and because the new farmers would not have the necessary means to invest.”

And with declining investments, higher food prices are expected, which will hit the poor the hardest. “It is, of course, possible to import many commodities and process them in SA, but there is a limit to this, and the country would have to give up foreign exchange in order to import the raw materials that go into the production of the food we eat.”

The government has not elaborated on how expropriation without compensation would work, only saying that it will be done in a sustainable manner to ensure the economy and food security are not affected. The uncertainty on the mechanics of expropriation is expected to see investors put their investment decisions on hold.

During the State of the Nation Address debate in Parliament on Monday, President Cyril Ramaphosa said the government will not allow “smash-and-grab interventions”.

“We will handle this matter [expropriation] in the same way we have handled all difficult issues our country has had to handle. We will always seek to do what is in the interests of our people,” Ramaphosa said.

The scuppered new investments in the sector are expected to have an impact on employment. Boshoff, Sihlobo and Ntombela said the push for radical land reform might result in a decline in employment.

According to the adopted National Development Plan, primary agriculture employs (on average) 4.5 additional workers for every R1 million in capital invested, compared with 2.94 for the economy as a whole.

Land reform scenarios

AgriBiz has compiled four scenarios that may happen should the Constitution be amended to allow expropriation of land without compensation. In the first scenario, incidents of illegal land occupation and farm invasions may emerge given the lack of clarity on popular statements often made by politicians such as “take back the land”. The three experts said this scenario would make the agricultural sector non-functional and unproductive.

The second scenario includes land reform taking place within the ambit of the law, disputes being settled in court and no evictions without a due court process. Property rights and agricultural and agro-processing investments would diminish in this scenario.

Plans to amend the Constitution would be abolished in the third scenario. It would be business as usual as the current mechanisms of acquiring land for redistribution would continue. “This scenario could lead to the long-term sustainability of the food sector, but in the short term might not meet the demands of those calling for the rapid redistribution of land.”

The last scenario entails a hybrid approach, where compensation would be paid for expropriation and a public-private partnership embarks on a process to identify farms for sale, the state and private contributes finances for farm purchases. This scenario has been described as moderately good as it increases access to land, respects property rights and might minimise the negative impact on production and investments in the sector.

AUTHOR PROFILE

COMMENTS   37

To comment, you must be registered and logged in.

LOGIN HERE

Don't have an account?
Sign up for FREE

What happens if SA expropriates land without compensation? It will just confirm that which we already know namely that the ANC are thieves. If the regime took your car, house, land whatever why is this any different?

Markets punish thieves, so the ANC will get their comeuppance.

Isn’t that what the Native Land Act of 1913 did so that whites could steal land?

And the market punished the then government for it, markets or rather the lack thereof played a big part in ending Apartheid, and they will also play a big part in making sure the current administration knows that 2 wrongs don’t make a right.

If it was wrong then, then the same thing is equally wrong now.

Spark. Those neurons need to fire more collectively. The ANC did initiate a land claims process. Whether this addressed everything appropriately and exhaustively is disputable (in the usual ANC ineffective manner). The concept of private land ownership was not prominent in African cultures nor was there an existing legal system to record such titles. In the absence of these structures I would nonetheless, agree (no concession required) that the 1913 Act was specifically designed to steal land.

If I can digress for a moment. The law is the glue that binds society together. The impartial, disinterested, equitable application of this system without prejudice is represented by a blindfolded lady holding nothing but a pair of scales. What Ramaphosa is proposing is populist rabble rousing rhetoric that will involve legislation to be implemented by force or threat of force that will favour one group at the detriment or destruction of another. The concept of group identity and pitting one group against another, in this process, is very important: Hitler had the Jews, Lenin the bourgeois and Idi Amin his Asians. Ramaphosa has his whites and his proposal is a perversion of the law.

Successful societies have one thing in common and that is equitable application of the law to ALL. South Africa is a mess because of the enforcement of laws is non existent and the belief amongst a large sector of the population that one can steal and somehow its okay. Whether it is shoplifting, housebreaking (theft), car hijacking, state capture (Gupta style), grand theft Zuma style or perverting and abusing the state apparatus to do your bidding, its one and the same.

Its time to take a stand. Time to choose between good and evil which is a choice between the law and perversion of it.

What many do not realize, is that once you start going down the road of socialism, there is no turning back. There are always more needy people who have to be bribed for their votes. The state then has to go all the way. The next step is communism en then fascism. The moment people give the state the right to own the means of production, they also hand their liberty and individuality over to the state. There can never be total control over the means of production without full control over the minds of the people. Social justice is the first step on the road to slavery.

Communism – A communist society is stateless, classless and is governed directly by the people. This however has never been practiced. – examples: Marxist Communism, Leninism and Marxism–Leninism, Stalinism, Maoism

Fascism -One charismatic leader has absolute authority. Often the symbol of the state. Advisers to Government are generally picked by merit rather than election. Cronyism common. – examples: National Socialism, Nazism.

‘Fascism is the stage reached after communism has proved an illusion.’ – Friedrich von Hayek

The 1913 Land Act was about keeping the share of ownership as in 1913 constant. Whites could also not buy in black areas. A big difference to taking land.

Are you saying that this us good simply because you think Whites will loose out? Do you think racism will create a bright future for your children. Your children will spit on your grave.

I just wonder sometimes how much of this is done truly under the belief that land expropriation will lead to a better life for most South Africans – which it wont – and how much is an emotive need for revenge/punishment. This probably sits at the heart of a lot of the debate in South Africa at the moment. It is my opinion that there is an unfulfilled need for revenge/punishment from a section of SA’s population. One of the many problems with revenge in this instance is that the main perpetrators of apartheid are either dead or living in comfortable retirement. All white people under the age 47 never voted in an apartheid election, is it fair for you to exact your revenge upon them or their children?

“Holding a grudge is like drinking poison and hoping somebody else will die.”

Well… for one it did not state steal land from blacks who had established farms… but even if you do argue that the land was potentially going to be utilized or needed by blacks who may or may not have been occupying it at the time… then by this current 2018 expropriation bill without compensation you have just vindicated that Land Act of 1913! So now whats your righteous argument and point? Punishment and not really restoration? And if so, now you have opened a huge can of worms involving previously invaded land by various tribes other than whites!

If you want to know the end result of “Appropriation without Compensation”, one just has to look north of Beitbridge… how did that work out?

2 wrongs don’t make a right. The expropriated persons become homeless, financially destroyed, same as forced removals under apartheid. There are vast tracts of unused state owned land that can be used before resorting to expropriation of privately owned properties.

It is not just the expropriated owners that are negatively effect. Most farms have large loans from the bank to finance their harvest/equipment. This money comes from people who place their savings at the bank and the banks loan it to the farms.

So if there is no farm, the farmer can’t pay back the loan, if the number of loans are large enough then the bank can’t pay back the deposits to the savers.

So it is easy to say I don’t own a farm so land expropriation doesn’t affect me but the effect of expropriation will extent far beyond just those who currently own the land.

Agree Borga. According to the most recent statistics issued by the Department of Agriculture, Forestry and Fisheries, our total farming debt stands at more than R133-billion. The Land Bank holds approximately R38-billion of this whilst R80-billion is held by commercial banks and nearly R9.3-billion is held by agricultural co-operatives. SA’s agricultural debt-to-asset ratio is very high and many property loans are secured via mortgage bonds. If land expropriation trumps the “sanctity” of a registered mortgage we are in deeper trouble than we think.

We are using the rugby rule-book at a soccer game. Those ANC and EFF members who advance the policy of expropriation without compensation are from a communal background or are unemployed or low-paid workers who do not own property. They don’t own property themselves, and not even in their larger family structure. They do not understand, or care, about economic facts and figures. They don’t care about food security or employment.

In all formal structures where people don’t own property, they also do not have the right to vote. In the communal areas the chief rules according to traditional methods and has full control and manages all the resources. In a communist system the state owns the land and manages all the resources. In both these instances individuals do not have voting rights.

The problem begins when you have a system where a large part of society does not own property, but their vote gives them the power to determine economic policy. This is like giving the keys to your wine cellar to that group of job-seekers down the road. Will they value your wine? Will they protect it, nurture it and appreciate it?

Something extremely negative happens to the psyche of a generation who grows up in a system where they don’t have property rights. People who don’t have property rights also lose the initiative to improve their situation. They do not accept responsibility for their financial situation. They will blame everybody else and demand more and more support from the state. When you give voting rights to people who don’t own property, you lite the fire of anarchy.

To prevent anarchy you have 2 alternatives. Take away property ownership and voting rights from every citizen (communism), or make every citizen a responsible property owner who is free to take the initiative and responsibility to improve is own position. It will be an enormous injection into the economy if all people in rural areas could get the title-deed of the place where they live.

Agree 100% Sensei.Property ownership is the basis of wealth. Look at how Maggie Thatcher changed Britain for the better by giving the lessees of Council rented homes to the people who occupied them for free. That, and facing up to the Unions changed the game for the better!

Very true Sensei but let’s drill into this a little. Those that support this theft; and there are plenty of them, see opportunity. It is the opportunity to get something tangible for nothing. The same as informal settlement – you come from these areas where the chief can and will boot you off any piece of land you may be on at a whim. Go to an urban area, build a “shack” on some ground, the law now magically protects you against eviction, you can agitate for services and free housing and, with a little luck and few fires, you score a house; free gratis and for nothing. You do not pay for the services or any rates; not a terrible deal considering where you came from. Eventually (??) you may actually get title to this house and realise its value – all for nothing.

So joining the queue for this expropriation has its attractions.

Absolutely sir & you have the heart & mind of a true farmer. Hats off to anyone who come up with practical solutions. ‘n Boer maak ‘n plan.

Very important: if the state can accelerate issuing of Title Deeds for RDP-houses and for emerging farmers, it will give a SENSE OF OWNERSHIP (and an asset that can be borrowed against). Improved economic activity will flow from this.

The WRONG QUESTION is asked i.r.o what happens when land is expropriated.

The appropriate question is: HOW WILL THE GOVT BE ABLE TO PLUG A POTENTIAL 500-BILLION REVENUE GAP (…and we think the current R48bn is big!) in future once there is little economic activity left, as result of all property-ownership in SA that went out of the window.

The poor will lose most in the end, as they’re ultimately dependent on Govt.

The actual gap was not R48 billion, That’s the difference between the expected tax income and tax income realized. The actual gap is R200 billion.The portion that needs to be borrowed to balance the books.

So, If your great grandfather acquired a piece of land 150 years ago, and it was barren land. Today the land is improved and the land is a business. Do you expect to get improved land for mahala? Who will get it? The ministers brother?

Nothing wrong with expropriation without compensation if it is confined to Nkandla, the Saxonwold Shebeen and other fruits of crime.

That could actually turn out rather well.

I would like to hear from EFF how this would work practically in their scenario.

What property? Just farms? Why not Constantia mansions and Clifton apartments or Zimbali Golf Estate lodges? Or plain old suburban homes? Or big industrial parks? Or office blocks, malls?

How far back does one go? If I bought land in 2000 that was stolen in 1900 what now?

To who is the land given? There are rare examples where the actual pre Apartheid owner is known and a big chunk of that is already dealt with.

What happens to debt on the land? My 2000 farm may have a value of R10m and a bond of R5m. Does the bank still come after me for R5m?

Who’s land is taken? If I am black but bought land in 2000 that was stolen does it get taken from me and given to a different black and if not how is it fair to my piece of land’s original owner?

Exactly! Expropriation without compensation is a nice catch phrase but there is no details to it whatsoever. No one knows who will be targeted. Who will benefit. What happens to asset linked debts. All it creates is more uncertainty, and less interest in any investment in the country.

We just have to ensure that the ANC don’t win a two thirds majority so as to change the land act to allow expropriation without compensation. Might be a bit difficult with an ANC and EFF coalition which looks like will happen! I always though the EFF were part of the ANC and just pretended not to be! Turns out I might be right!

Who knows, there might be some members in the ANC that surprise us and believe in individual property rights, but I wouldn’t be the farm on it (pun intended)

ANC + EFF + IFP + NFP + UDM + Agang voted in favour of the motion so no need for ANC to get 2/3 combined this is 75%

Perhaps there is another solution. Pay for the impovements, I.E. all buildings, equipment, business value etc… Just not the land. That would mean that investments made will still be secure.

Simple answer to a simple question: You get Zimbabwe ( perhaps even worse, the masses will their FREE FOR ALL mentality does not give one flying duck about job security, food security, productivity and ethical management to name a few) Can someone tell when when the word ” steal ” was changed to ” expropriate ” ? Guess the fancy nancy word stucks in the rockheads of the masses, just like the ” white monopoly capital ” bs. Anyways when i see these crowds with t-shirts reading ” FREE EDUCATION FOR ALL ” – i cant stop wondering how it is going to be possible if the taxpayers are gone?

This is just one prong of a plan to defuse the ticking timebomb that is the party of Julius Malema, and is a feint. It cannot happen, otherwise there will be no way for anyone to make any money – and in my opinion the people behind CR are ALL about making money. If you actually listened to the SONA, Cyril clearly hinted that the big banks have a plan to turn a profit off land development.

Just stay calm, and keep investing for the long term future.

note who the author is and wonder why my original comment was censored.
Going one way

I have one question on land. As its a historical fact that most of SA was first inhabit by the Koi and San. Also is it strange that this is the only people not recognise as a indigoes identity/nation as Koi and San, but classed as “Kleurling”. This was timelessly bargained at Codesa, by no other than the current CR.

The point is, if the Koi and San do get their place in SA history, as the first “tribe” in southern Africa, as the first actual land “owner”, and the recognition, as a indigos SA “nation”, just as the Zulu, Xhosa, or Sotho, than most land claims by the so called “our people”, is nil, and are they again stealing from a even smaller minority.

For everything you pay; either in sweat or money or blood. Getting land without compensation is a fairytale.

If this happens then there will be nothing of value in SA. Your factory, house money will be worth nothing.

land distribution ended in 1998, but these pricks find a way to keep extending.
they are simply useless and reducing the country to a starving Stalinist model

Mine is really not to give a lash on what the ANC or the government parastatals is or not doing nor it is about insinuating any colloquialism on rascim, rather to look at the best practise at which this concept of Land Reform can be adopted. Call me Provincial but for me it might not be a far fetched reality of stepping into that tangible feeling of equality on ownership.

Now lets look at what the article is saying. It clearly points out 4 critical indicators which by accepted standards/ practise could very well be that tangible feeling of ownership.

1. Failure of the land reform over the last 2 decades with the beneficiaries unable to build agricultural supplus and productive capacity.

2. Impact on Property Legislature or Rights.

3. No further investment be it domestically or internationally.

4. No clear guideline as to how this is going to be implemented.

Looking at possible answers or suggestions on point 1 and 4 which in my mind if addressed correctly could have a positive chain reaction on points 2 and 3 respectively.

At that time period which is the past 2 decades when ownership was given to the beneficiaries – wouldnt it have yielded better results if the following was provided.

1. Clear vision and expectations of the Land or Farms in this scenario.
2. Time Frames with respect to production.
3. Training and Development

Much to the defense of the beneficiaries – with no direction given – it is only natural for one to do what they think is right and unfortunately this has come at the detriment of failed land reforms.

Load All 37 Comments
End of comments.

LATEST CURRENCIES  

ZAR / USD
ZAR / GBP
ZAR / Euro

Podcasts

GO TO SHOP CART

Follow us:

Search Articles:Advanced Search
Click a Company:
server: 172.17.0.2