Business mute on land move
Since the ANC, bulldozed by supporters of former president Jacob Zuma, first suggested at the elective conference in December 2017 that there was a need to change the constitution to accelerate reform, business has been rather muted in its response. For a while that seemed a reasonable reaction, perhaps in the hope that the subject would disappear of its own accord.
Possibly they were also comforted by reassurances that this would be done without affecting the economy or food security.
The idea that it was all about nothing was probably reinforced by most commentators, including the ANC leadership. President Cyril Ramaphosa, one of the authors of the constitution, lest we forget, agreed the country’s supreme law already made provision for the state to take land without paying for it. It is worth quoting what the document says on this point: “The amount of the compensation and the time and manner of payment must be just and equitable, reflecting an equitable balance between the public interest and the interests of those affected, having regard to all relevant circumstances….”
There is consensus that in some cases “just and equitable” compensation could be set at zero. Even Ramaphosa, who now argues that the stability of the country would be at stake without this new policy, acknowledged this in his late-night speech on July 31. It’s also worth quoting him in full: “The constitution on the property clause enables the state to effect expropriation of land with just and equitable compensation and also expropriation without compensation in the public interest.”
He also stated “there is also a growing body of opinion, by a number of South Africans, that the constitution as it stands does not impede expropriation of land without compensation”. In a dangerous departure, driven more by a desire to outflank the EFF, he also sought to use ongoing public discussions on land reform to justify the ANC’s policy shift. While the process is still very much ongoing, he stated that “our people want the constitution [to] be more explicit about expropriation of land without compensation, as demonstrated in the public hearings” and that the ANC would seek to do this via an amendment.
The question may well be asked: if expropriation without compensation is already catered for, why should citizens care whether the constitution is rewritten to achieve the stated aim of being more explicit?
A similar question could perhaps be asked about the EFF’s proposed bill to nationalise the Reserve Bank. Our central bank is unique among its peers in having private shareholders. As they have no role in setting the Bank’s mandate, does it matter if the EFF gets its way? Yes, it does. The Land Bank’s warnings on the potentially destructive impact of a poorly run land reform programme on its finances should be a wake-up call. Much has been written about the ANC’s failures in redistributing land. So it’s not an unreasonable concern that a populist-driven rush into meddling with the nation’s founding document will at some point lead to destructive policies by a government concerned with its own electoral prospects in the face of populist challengers.
Destroying the Land Bank, one of the few self-sustaining state-owned enterprises, would be tragic given its role in nurturing emerging black farmers, having doubled its credit extension to them since 2015 to R5.4bn. That’s because the bank lends money against collateral, against which it also borrows when it raises money in financial markets. A loss of those assets would mean its own lenders would question its ability to repay them.
Questions would also be raised about land that borrowers have used as collateral to get money from commercial banks, who have more than R100bn of such debt backed by land.
These debates are thus far from academic and those committed to the constitutional order and the long-term prosperity of the country need to win them, even if the ANC seems to have no stomach to take the fight to the EFF.
OUR CENTRAL BANK IS UNIQUE AMONG ITS PEERS IN HAVING PRIVATE SHAREHOLDERS