Constitution doesn't guarantee property rights, but neither will changing it - News24

Aug 08, 2018
8 August 2018 - All told, I fear that property rights are unlikely to emerge stronger from when – and if – these events eventually play themselves out.

Terence Corrigan

I have always admired Professor Steven Friedman for his penetrating and often out-of-the-box analyses of politics. For this reason, I was intrigued by the argument he made in his recent piece, "Changes to the Constitution may boost, not weaken, property rights".

President Cyril Ramaphosa and the ANC, he argues, seek clarification of the conditions under which expropriation without compensation can take place. Amending the Constitution to reflect an accordingly clearer understanding would create the certainty around property holdings and in so doing enhance property rights overall. His perspective deserves respectful consideration.

He is correct that Section 25 is not a cast-iron guarantee of property, and informed comment has not made that claim. Indeed, at the time of the Constitution's writing, it was felt in many quarters that it afforded inadequate protection to property rights. The ANC certainly disagreed with this, seeing its provisions as a mandate for reform. Professor Kader Asmal and his co-authors, in a book that garnered considerable attention at the time (Reconciliation through Truth), strongly endorsed the Constitution's position: "Black dispossession and white possessions will require orderly and sensible realignment. These goals are reflected in the property clause (section 25) of the new South African constitution, which provides that property rights may not be expropriated except by a law of general application, without arbitrariness."

They added: "South Africa's property clause thus makes it impossible to consider institutions of property without the guiding light of history – and it does so in the orderly fashion that is at the heart of the new governance."

The late Dr Hans Binswanger-Mhize, a world-renowned agricultural economist, concurred: "This constitutional and policy framework is one of the most favourable in the world for successfully and rapidly implementing land reform."

And for these reasons, Prof Friedman is quite correct that the president's announcement was incoherent. The property clause – according to the dominant narrative – already allows expropriation without compensation, so why change it?

Friedman's contentions about the substantive outcome of a constitutional amendment is more doubtful.

To his credit, he notes that "the wording of the clause will be crucial". This is a truism for any legislation. And if the constitutional amendment that the president has promised merely does indeed "clarify" things, it may have a marginal impact and thus pose a limited threat. (Though an interesting argument could be made that the act of clarification will almost certainly imply an abridgment of property protections, by placing certain acts and principles of expropriation beyond a constitutional challenge.)

Does the certainty that the proposed constitutional amendment will (or may) introduce offer something substantial to entrepreneurs and investors?

Possibly, although one would need to understand the precise certainty it creates. The importance of certainty to businesspeople needs to be understood correctly. It is not a substitute for good policy or for an attractive environment. Indeed, to be certain about the lie of the land (no pun intended) may be a major disincentive.

It is true – up to a point – that business can be conducted in a less than stellar environment, provided that the rules are clear. But when on balance the environment itself is predominantly toxic, understanding it will inevitably be a warning to stay away. The threat to property rights is one of them, and the certainty created here is hardly a salutary one.

Ironically, what President Ramaphosa did last week was to score a paradoxically matched set of own goals. On the one hand, just enough certainty was created about the inevitability of expropriation without compensation in some form (serious enough to lead to meddling with a provision of the Bill of Rights) to concern investors, but not enough to know whether planning around it will be possible or worthwhile. That in making his announcement, the president effectively rode roughshod over the parliamentary process (whatever deficiencies it may have) could hardly do anything other than contribute to the confusion.

Friedman has – again, probably quite correctly – noted the intensely political nature of this matter and argues that President Ramaphosa made his announcement under great pressure. This may well be true. It is true (as Friedman has presciently observed) that expropriation without compensation has become a proxy of sorts for concerns about economic exclusion.

But it is equally true that the president has repeatedly endorsed the idea, at times in hyperbolic terms. He and his party leadership have ramped up expectations around the issue. It will be difficult to turn back – and, having opened the door, also to guarantee any long-term certainty. It may well be that those pressing for more extreme measures, such as a mass custodial taking of all land in the country, would see the president's performance as evidence that he is either amenable to their demands, or susceptible to their pressure.

All told, I fear that property rights are unlikely to emerge stronger from when – and if – these events eventually play themselves out.

- Terence Corrigan is a project manager at the Institute of Race Relations (IRR), a think tank that promotes political and economic freedom. If you agree with what you have just read then click hereor SMS your name to 32823.

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