Will banks stand up to ANC’s land agenda?

It’s the burning question, writes Terence Corrigan, project manager, Institute of Race Relations.

In the wake of the budget, it is worth recalling that when the “debate” on expropriation without compensation (EWC) was refreshed in 2017 by the ANC’s Nasrec conference, then director of the Banking Association of South Africa, Cas Coovadia warned that a move on property rights would have a direct bearing on the willingness of the financial sector to extend further credit.

This is no small matter. Farming is a business that depends on secure lines of credit. Farming debt at the end of 2019 stood at about R187.5 billion. Of this, close to two thirds was owed to commercial banks.

The Expropriation Bill and the overall push by government to expand its powers to seize property – call it the EWC agenda – calls the future of this into question.

The Bill is likely to be profoundly unsettling to the property market (something the National Development Plan warns against), and in so doing would hit agricultural financing hard.

Bear in mind that there is simply no way that government could step in to provide anything like the sort of resources that would be required to keep the farming economy going.

Indeed, Coovadia commented: “I can’t understand how you’re going to expropriate land without compensation and still get investors in with confidence.”

Or how to keep banks engaged with agriculture.

Perhaps the overriding question is whether the banks are going to be willing to stand up against the EWC agenda, in all its manifestations.