ANC’s cul-de-sac; wooing investors while amending the Constitution – IRR - Biznews

Nov 19, 2018
19 November 2018 - So, on the one hand, an appeal for engagement and investment. On the other hand, a policy direction was being confirmed whose outcome – entirely predictably – will be inimical to these intentions.

Terence Corrigan

There are times that are primed for the aphorism ‘you can’t make this stuff up’. Reality so closely mirrors farce, and ironies are so intense that it’s difficult to imagine that what is happening was not deliberately choreographed.

Last week was such a time. President Ramaphosa was in Europe to talk up South Africa’s prospects in hopes of encouraging trade and investment. Trade and Industry minister Rob Davies commented that the engagements would demonstrate that ‘South Africa has turned a corner’.

At home, Parliament’s Constitutional Review Committee aggressively drove the last mile of its push for an amendment to the constitution to enable expropriation without compensation (EWC). This culminated on Thursday in the adoption of a report recommending an amendment.

So, on the one hand, an appeal for engagement and investment. In the president’s eloquent words, this was central to the country’s fate: ‘Without opportunity, without investment, without thriving economies that enable us all to enjoy our place in the sun, we cannot hope to have political and social stability on the African continent.’ On the other hand, a policy direction was being confirmed whose outcome – entirely predictably – will be inimical to these intentions.

President Ramaphosa offered the by-now familiar set of assurances. Eschewing as far as possible a direct reference to EWC, he said that expedited land reform was essential for the country’s stability and prosperity. And in attempting to assuage concerns about the country’s policy direction, he pledged: ‘This problem of land will be resolved through adherence to the rule of law and adherence to the Constitution.’

Fine sentiments – gutted by the president’s colleagues, with his own endorsement. EWC may be undertaken within the scope of the law and constitution, but at the moment, it is an open question as to what that will mean. What is certain – at least in the intentions of the African National Congress and the government that President Ramaphosa leads – is that it will not be undertaken within the framework of the constitution as it currently stands.

In other words, he has promised to embark on this policy within a set of rules, but those rules are yet to be determined. It’s a very vague assurance.

Ironically, much has been made over the past year of the checks and balances provided by South Africa’s strong constitutional framework, the robust legal protections afforded to citizens and the promise of a meaningful process of public participation. President Ramaphosa himself has pointed to them. Diplomats and foreign governments have certainly drawn reassurance from this – as we at the Institute of Race Relations can attest.

Last week was a clear signal that this faith was misplaced. The required public participation process was deficient in the extreme – more spectacle than substance, it declined even to review hundreds of thousands of submissions. Whatever comes from the constitutional amendment will increase the reach of the state into the property rights of private individuals and institutions. It will weaken those protections that have so often been invoked. This is so even if one takes the optimistic view that it will only make ‘explicit that which is implicit’.

Sadly, by the reasoning of the committee, the ANC, President Ramaphosa, and many activists in favour of EWC, this was unnecessary. They have all contended repeatedly that the constitution in its current form allows EWC. So a hazardous threshold has been crossed, and the Bill of Rights is to be meddled with in order to solve a problem that many of its proponents deny exists. The precedent is not encouraging.

(For foreign – and specifically European audiences – this must be seen in conjunction with South Africa’s termination of the bilateral investment treaties, and their replacement with legislation that leans heavily on just that provision that is now in jeopardy.)

And, commendably after a fashion, the ANC has been honest enough to confirm that there will be no clarity on what the amended constitution will look like – let alone revised policy, legislation and its consequent implementation – until after next year’s election. ‘Policy certainty’, something of a fetish and catch-all explanation for what is wrong with the country’s policy environment, is on hold. Probably for a very long time.

If the current course is maintained, when that ‘certainty’ emerges (if it does), it is not likely to present an attractive environment in which businesses, local and foreign, large and small, are likely to be inclined to risk their resources.

The reality of what is unfolding should be of deep concern. The World Bank has warned – as have many others, including (obliquely) the president’s own investment envoys – that EWC is dissuading investment. An analysis of the economic consequences of EWC – by Roelof Botha of the Gordon Institute of Business Science and Ilse Botha of the University of Johannesburg, drawing on the experiences of such policies elsewhere – argued that the mere prospect of the adoption of EWC had led to a decline in investment. With it as a policy, South Africa could expect to enter a long-running recession, with billions lost to the economy and to government revenue. Potential job losses, forecast over a two and a half year period could reach 2.28 million. To which one could add, the rapid dissipation of any hope of ‘political and social stability.

The authors comment: ‘It makes no sense… to attempt the implementation of land reform policies that have proven over and over again to exercise a destructive influence on the economy and threaten the livelihoods of the most vulnerable members of society.’

It does indeed make no sense. But it is not made up; this is no farce and no fantasy. This is the path South Africa is on. There should be no illusions about it.

Terence Corrigan is a project manager at the Institute of Race Relations. The IRR will be challenging in court the process that produced the report recommending a constitutional amendment. Readers are invited to join the IRR  sending an SMS to 32823 (SMSes cost R1, Ts and Cs apply).

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