The Expropriation Act has a clause that provides for expropriation without compensation.
Agricultural organisations this week slammed the decision by Parliament after it approved the Expropriation Act warning that it will lead to an exodus of capital and hit the sector due to concern about property rights.
The Expropriation Act has a clause that provides for expropriation without compensation.
This week Parliament approved the Expropriation Act and sent it to the National Council of Provinces for final approval before it is signed into law by President Cyril Ramaphosa.
There was a lot of uncertainty around how expropriation without compensation would work, despite the government having stated that it would be done in a sustainable manner to ensure the economy and food security is not affected, said Daneel Rossouw, Nedbank functional head agriculture, Relationship Channels.
Rossouw said this uncertainty could lead to less investment in the sector, which in turn might in the longer term lead to higher food prices.
Also criticising the decision, Christo van der Rheede, Agri SA executive director, said unfortunately, the National Assembly (NA) did not use the debate to engage with the serious flaws, which remained in the bill and missed this opportunity to mitigate its likely harm to the agricultural sector and wider economy should the Bill in its current form be adopted.
“The Bill that was passed by the NA continues to allow for the possibility of nil compensation for expropriation in terms of clause 12(3) and (4). In its initial submissions to government on the Bill, Agri SA commissioned two studies to inform and support its commentary.
“Our position remains that the inclusion of the nil compensation clause will undermine access to capital and capital formation for the sector and economy. Examples from similar land policies implemented in countries like Zimbabwe and Venezuela illustrate the potentially disastrous impact that these policies can have on agriculture, the broader economy, and society,” Van der Rheede said.
Another significant issue with the Bill was how it defined expropriation itself, which he said Agri SA believed was too narrow. This essentially opened the door to a form of indirect expropriation through the limitation of property rights without compensation being payable.
Agri said these issues would knock on the country’s shared national commitment to building a more inclusive agricultural sector. It would also weaken the protections afforded to private property and this could see an exodus of capital from the agricultural sector and the broader economy.
Agri SA said the anticipated loss of jobs and investment would impact both the emerging and established farmers alike.
“As the Bill now makes its way to the National Council of Provinces (NCOP), we call on legislators in that body to take into account the Bill’s apparent flaws and its likely devastating economic impact. A further assault on the certainty of property rights will only add to a climate that deters investment in, amongst others, the agriculture sector which will undermine the country and region’s food security,” Agri SA said.
“Property rights are the cornerstone of economic development and Agri SA will use every tool at its disposal to ensure their continued protection under the Constitution of South Africa.”
Agri SA said it was appealing to the government to work with the private sector to craft a sustainable, constitutionally valid programme for inclusive economic growth in South Africa that includes private sector partnerships. “Agri SA is well placed and willing to assist government to improve the outcomes of land reform under the current framework,” Van der Rheede said.
On Friday, agricultural organisation TLU SA slammed the decision.
“It is shocking that with the country's economic slump, the unemployment and poverty there are still role players who make decisions that destroy investor confidence and who do everything in their power to not bring our economy to growth. The country's history will judge these people," said Bennie van Zyl, the general manager of TLU SA pointing a finger at the ANC.
“This piece of legislation is extremely short-sighted. Who would invest in a country where the state arrogates such powers to itself? With an unemployment rate that is running away precisely because of the ANC's transformation policy, it is an open question how the government sees the way forward in terms of investment confidence? This is always the starting point of economic growth. By the way, economic growth is the only way to solve the social-welfare reality that worsens every day.”
The principle of private property rights forms the basis of wealth creation and must be protected at all costs. The path the government is taking has only caused poverty and much sadness worldwide.
“We are clearly not on the right path to grow our country economically. The government of the country is stealing every young person's future,” he said.
BUSINESS REPORT