Expropriation Bill poses an existential threat to this country’s food security

Nearly two-and-a-half years after the expropriation bill was introduced in the National Assembly, it now sits with the National Council of Provinces. The ostensible motivation behind the bill is laudable; no-one can deny the indelible mark left on our society by our history of racial oppression and exclusion from land ownership.

However, the bill in its current form will only worsen the problem and weaken the property rights of existing property owners, especially new entrants into land ownership. Instead of creating more inclusive land ownership in SA, it will worsen the situation.

It seeks to undermine the property rights that are protected in the constitution. In particular, the goal of normalising nil compensation for expropriation — as the current version of the bill does in sections 12(3) and 12(4), together with an inappropriately narrow definition of expropriation — will fundamentally alter the property rights foundation on which our economy is built.

Even the constitution — crafted to right the wrongs of history — only allows for nil compensation in limited cases subject to court jurisdiction. This framing recognises the norm of compensation while allowing for expropriation without compensation in exceptional cases that merit this radical intervention as a method of last resort.

The consequences of nil compensation will not just materially and negatively affect farmers and owners of land, there will also be cascading fallout to the detriment of the broader economy and ultimately society.

Perhaps the most destructive consequence of the bill will be to undermine food security.

Agriculture is a cyclical sector. At the bottom of the cycle, which can last several years, farmers rely on secured loans to access the operating capital that pays staff wages and input costs. Loans are also needed to finance capital expenditure.

The most valuable asset against which farmers can borrow is their land. But when land is liable to be expropriated without compensation, banks will be reluctant to accept the title deed as a reliable form of security for loans, affecting farmers’ ability to manage farms productively and cultivate the food we so rely on.

However, the greatest implications of this shift will be for aspiring entrants to the sector, who are least likely to have other personal assets of value to leverage for loans. This is why pushing forward with this “remedy” in the name of transformation is both misleading and self-defeating.

In considering the big-picture implications of the bill, it is important to understand where the agricultural industry fits into the broader economy. While the sector contributes about 1.5% of the country’s GDP, it accounts for more than 5.4% of employment — supporting millions of livelihoods. In terms of sustaining livelihoods, the sector punches far above its weight.

Moreover, whereas many industries are concentrated in cities and urban centres, the sector’s many commodities support livelihoods in rural economies, where opportunities are most needed. Any policy that has an oversized impact on the agricultural sector will also have an equally disproportionate and devastating effect on rural workers and the local economies built around the sector.

That this fundamental principle — the importance of protecting property rights — is essential to a modern, free market economy is shown by it being upheld in most constitutional democracies. If SA aspires to be a growing, competitive player in the global economy, eschewing this vital building block will take us further from that goal. That much is clear in the examples provided by Zimbabwe and Venezuela. It is important in citing these two well-worn cases to underline a feature not frequently mentioned. The land policies that upended the protection of property rights in both Venezuela and Zimbabwe, and sank their economies, had ostensibly good intentions.

These countries sought to achieve similar objectives to SA: to tackle poverty, inequality and racial disparity in land ownership. In both cases expropriation without compensation failed to achieve the desired result. Quite the opposite; in both cases citizens were plunged into poverty, leading to mass emigration. Neither country has recovered from these disasters.

There is no practical reason for this policy change. The state can, through managed and resourced land redistribution and restitution programmes, facilitate the entry of new landowners. Resorting to the approach of nil compensation is an obvious attempt to distract from its manifest failings in this regard.

This bill arises for SA at a time of deep crisis. From infrastructure to load-shedding, there are pressing challenges this country must tackle without delay to put the SA economy on a solid footing for future growth. To pursue expropriation without compensation at this time stands at odds with our stated objective of attracting investment to the country so that we can grow the economy and create the jobs we need to lift South Africans out of poverty.

The enactment of this legislation will undoubtedly lead to many years of litigation, which will be a tragic and unnecessary diversion of resources from the things we need to be doing.

The fact is that we know everything we need to — with real-life examples — about the likely effect of the bill on our economy and food security. What we need to do, what we need our legislators to do about this most critical matter, is put practical considerations above ideological ones.

Thanks to our bicameral legislature, parliament has a second chance to do the right thing by revising this bill.

WHEN LAND IS LIABLE TO BE EXPROPRIATED WITHOUT COMPENSATION BANKS WILL BE RELUCTANT TO ACCEPT THE TITLE AS A RELIABLE FORM OF SECURITY FOR LOANS, SIGNIFICANTLY AFFECTING FARMERS’ ABILITY TO MANAGE FARMS PRODUCTIVELY

TO PURSUE EXPROPRIATION WITHOUT COMPENSATION AT THIS TIME STANDS AT ODDS WITH OUR STATED OBJECTIVE OF ATTRACTING INVESTMENT TO THE COUNTRY SO THAT WE CAN GROW THE ECONOMY AND CREATE THE JOBS WE NEED