EXPROPRIATION WITHOUT COMPENSATION
Bankers warn of domino effect of mass land seizure
Vincent Smith. Picture: VATHISWA RUSELO
Expropriation without compensation was likely to trigger a further ratings downgrade, low demand for property in SA and a loss of confidence in the banking sector, the Banking Association of SA warned at the weekend.
In February, in a move that spooked investors, Parliament voted in favour of an EFF motion for land expropriation without compensation. The constitutional review committee was instructed to review section 25 of the Constitution and other property clauses and report back to Parliament in August.
The EFF appears to be pushing for a blanket approach to land expropriation while the ANC seems more in favour of a case-by-case approach as articulated in the Constitution.
On Friday in Parliament the constitutional review committee hosted a colloquium on section 25 of the Constitution.
Many commentators argue that amending the Constitution to allow for land expropriation without compensation is not necessary as it is already provided for under legislation.
In his submission, Pierre Venter of the Banking Association of SA said an expropriation-without-compensation policy would result in high levels of debt impairments and the value of property as security would reduce, with many investors looking to divest from property to avoid future losses.
“It is not just the banking sector that will be affected but the entire country … all this could result in a loss of confidence in the banking sector and trigger a further sovereign ratings downgrade … we believe if there is a decrease in market value of property either due to amended legislation or market uncertainty it could destabilise the [banking] sector and impact on the country’s ratings,” said Venter.
He said the association was of the view that there was no need to amend the Constitution since the tools for successful land reform “are already there, but politics, patronage and government paralysis is to blame for the slow pace of land reform”.
He added: “We believe land reform must happen in an orderly manner. If it doesn’t, it undermines our security for loans, which is property. We have close to R1.6-trillion worth of assets that we have lent money against … about R133bn of that is to the agricultural sector.”
Dan Kriek, president of Agri SA, said talk of expropriation without compensation sent the wrong signal to the market. “We are not alarmist … the president [Cyril Ramaphosa] is calling for investment, we need policy certainty,” said Kriek.
“Changing the Constitution will not fix our problems … our problem is implementation. We have a lot of policies [on land reform] … we support Kgalema Motlanthe’s high-level report.”
Vincent Smith, the co-chairman of the constitutional review committee, said that expropriation without compensation would happen and it was a question of whether the Constitution needed to be amended or not.
In her submission, Ruth Hall of the Institute for Poverty, Land and Agrarian Studies at the University of the Western Cape said there were a lot of deficiencies with the government’s land redistribution programme.
She said the programme had virtually come to a halt, partly because of declining budgets.
“The rhetoric [on land reform] has been ramping up, but we have been slowing down redistribution,” she said.
Key questions that need to be answered included: who should get the land and for what purposes? And what land should be targeted?
In November former president Kgalema Motlanthe tabled a review of key legislation in Parliament. His high-level panel proposed that instead of amending the Constitution, the government should use its expropriation powers more boldly, in ways that test the provisions in section 25 (3), particularly in relation to unutilised or underutilised land.
The panel also found that a lack of leadership and policy direction, corruption and inadequate budget (budget for land reform is less than 0.4% of the national budget, with less than 0.1% set aside for land redistribution) were to blame for SA’s failed land reform.
Source: Business Day