Land plan may cause banking crisis, says CEO
Nedbank chief executive Mike Brown says amending section 25 of the constitution or the property clause is not necessary and talk of expropriation without compensation has created uncertainty within the investor community.
This had negatively affected economic activity and job creation, he told MPs at the weekend.
In his submission on the final day of parliament’s public hearings on the possibility of amending section 25 of the constitution, the property clause, to make it clear how land could be expropriated without compensation, Brown warned that a blanket approach would trigger a “classical banking crisis”.
Brown said a speedy landreform process was essential to tackle past injustices, however, Nedbank was of the view that an amendment to the constitution was not necessary.
“The constitution already strikes a careful and well-considered balance between the need to protect property ownership with the need to ensure land reform while tackling the inequalities caused by our histor,” Brown said.
“In our opinion, the constitution has not been an impediment to land reform.”
Section 25 of the constitution, Nedbank added, already provided for expropriation without compensation in cases where a court held this just and equitable or it was in the national interest.
In a recent opinion piece in the Financial Times, President Cyril Ramaphosa said the proposal to amend the constitution will “not erode property rights, but will instead ensure that the rights of all South Africans, and not just those who own land, are strengthened”.
He said though the constitution provided for expropriation without compensation in certain circumstances, the ANC wanted “certainty and clarity” on the matter.
Brown said wholesale expropriation without compensation would destabilise the banking sector and SA’s broader financial system.
For Nedbank, an assumed expropriation of 10% of its R153bn residential mortgage book would see an impairment charge of at least R15bn.
Some MPs described Brown’s submission as “scare-mongering” and insisted expropriation without compensation was vital to speed up land reform.
Joint constitutional review committee co-chair Lewis Nzimande said the committee would meet on Wednesday to adopt a way forward with its programme.