Expropriation without compensation censured
AGRICULTURE industry body AgriSA yesterday warned against the expropriation of land without compensation, saying a study supported its contention that it would result in a decline in economic growth.
AgriSA’s head of land and legal affairs, Annelize Crosby, in her executive summary presented during a virtual media conference yesterday, said that primary agriculture represented 2.5 percent and secondary agriculture roughly 15 percent of the country’s gross domestic product (GDP).
“These two constitute the food system, which makes up approximately between 17 and 18 percent of GDP. The whole system is hedged against the market value of land,” said Crosby.
AgriSA said an independent study into the possible economic impact of a policy of no compensation, by the Gopa Group of Southern Africa, had looked at how expropriation without compensation would affect economic capital formation, which augmented a society’s stock of productive assets.
The study suggested the inevitability of a sharp decline in the economic growth rate and a further erosion of taxation revenue growth.
In his presentation, economist Dr Roelof Botha said the purpose of the study was to quantify the likely macroeconomic impact of expropriation without compensation, based on a calculation of declines in capital formation and GDP ratios that have occurred in countries that have implemented expropriation without compensation and applying a proxy of these declines to an econometric model of the South African economy, aimed at forecasting the effect of expropriation without compensation on the country’s GDP and fiscal revenues.
AgriSA said it was against expropriation without compensation, and firmly believed in the free market and the basic economic principles that drive developed and developing countries.
“Property rights are also believed to lower transaction costs by providing an efficient resolution for conflicts over scarce resources. Those countries that provide secure property rights and equality of opportunity have found that this has led to economic prosperity. The procedures followed with expropriation should be fair towards the landowner, and the principles of administrative justice should always apply,” said Crosby.
The organisation said the purpose of expropriation should be clear.
A landowner whose land was expropriated should always have recourse to the courts, as AgriSA stood firm on the principle of full access to the courts to adjudicate on the merits of expropriation, as well as the amount of compensation, if it was disputed.
AgriSA said that under no circumstances should the payment of compensation to a landowner be dependent on the state’s ability to pay. It was of utmost importance that a transparent process be followed in valuing land, and landowners should have access to valuation reports.
It said payment should be immediate and in cash.
AgriSA said transformation and land reform would not be possible if food system did not reflect market-related prices. It said this was a principle that had been established in several countries that have tried similar interventions.
AgriSA said it submitted its comments on the Expropriation Bill to Parliament’s portfolio committee on public works and infrastructure last month.
“AgriSA believes that past inequities must be dealt with through positive, future- and solution-driven conversation. The organisation wants to make a positive contribution to finding solutions,” said Crosby.