Expropriation Act damages all South Africans — a reply to Tembeka Ngcukaitobi - Daily Maverick

Anthea Jeffery 
That the ANC has been willing to enact a patently unconstitutional expropriation law increases the risk that the Act, like expropriation legislation in various other African states, will be used not for redress, but for elite enrichment.

Advocate Tembeka Ngcukaitobi SC describes the Expropriation Act of 2024 as a necessary antidote to colonial and apartheid land injustices.

He denies that it “allows the state to seize property without compensation” and reassures readers that “expropriation laws are regarded as a good thing overall”.

Like the African National Congress (ANC), he implies that the Act will apply solely to land even though, as he acknowledges in passing, the property it covers is clearly “not limited to land”. In fact, the Act extends to property of every kind: from homes, shops, factories and mines to individual savings and accumulated pension rights.

He criticises US President Donald Trump for claiming that the Act is aimed at “seizing ethnic minority Afrikaners’ agricultural property without compensation”. Given the wide application of the Act, Trump was inaccurate in singling out Afrikaners in this way.

On the other hand, both the ANC and President Cyril Ramaphosa have repeatedly suggested that the uncompensated confiscation of commercial farms – many of them owned by people of Afrikaner heritage – is precisely what the statute is intended to help achieve.

Property rights certainty eroded
Ngcukaitobi further claims that “nothing will change simply because a new law is in place”. This is untrue. The certainty of property rights in South Africa was fundamentally eroded the moment that Ramaphosa signed the measure into law.

Already, this has made it more difficult for the country to attract fresh fixed investment, both local and foreign. This in turn has already made it harder to stimulate faster economic growth or generate the jobs so urgently needed by more than eight million unemployed South Africans.

Ngcukaitobi’s analysis also ignores a deeper truth. Under the Act, all South Africans, irrespective of their race, are at increased risk of expropriation for zero or inadequate compensation.

“Nil” compensation will expressly apply to land in four listed circumstances – but the list in the Act is an open one which in practice may be extended to land in other instances too. For property of all other kinds, compensation is likely to be limited and could often be set by expropriating authorities at, say, 50% of market value.

Ngcukaitobi implies that critics of the Act are trying to cling to an outdated “willing buyer, willing seller” principle for determining compensation. But all expropriated owners need compensation to be based primarily on the market value of the property the state has taken.

This measure of compensation is necessary to avoid turning expropriation into a punishment for property owners guilty of no crime. It is also the best antidote to the state’s potential abuse of the power to expropriate.

In addition, it is what most potential investors will require before risking their capital in an economy as fragile as South Africa’s has become.  

In many instances, expropriated owners will also merit “amounts to make good any actual financial loss caused by the expropriation”, as the now repealed Expropriation Act of 1975 earlier provided. Actual financial losses of this kind would commonly include the costs of moving to new homes or of re-establishing businesses in new premises.

Ngcukaitobi criticises this provision in the 1975 Act as “entitl[ing] the expropriated owner to double payment: a market-related price and money to make up for the loss”. This assessment shows a limited understanding of both basic legal principles and economic fundamentals.

Re-establishment costs
Say a cash-strapped municipality decides to take advantage of the Act by expropriating a local shopping centre for, say, half its market value and transferring it directly to a BEE consortium to which some of its councillors have links. This would impose a severe financial penalty on an owner who has committed no crime.

Here, the expropriated owner merits compensation primarily at market value for the municipality’s taking of their asset. But they also merit an amount to make good the financial costs of re-establishing the expropriated income stream, using a newly purchased asset paid for with the compensation money. This is not double dipping – but rather an essential part of the “just and equitable compensation” required by the Constitution.

Sometimes the re-establishment costs in issue may be considerable. Assume, for example, that a building used by its owner to run a bakery is expropriated by a municipality planning to use the land for low-cost social housing. The erstwhile owner of the bakery must now re-establish their business elsewhere. The market-based compensation they ought to receive would enable them to buy a replacement building, but the set-up costs required would also be substantial.

Among other things, they would have to prepare their new premises to meet hygiene standards; pay a moving company to move their equipment and engineers to reinstall it; and inform their customers that they are moving. During their move, they will clearly not be selling at all – and after the move, they might sell at 50% of their previous sales’ levels for a period, until they have rebuilt their customer base.

Ngcukaitobi seems to regard compensation for financial losses resulting from expropriation as illegitimate. But, in circumstances such as these, this is clearly not so. The new Act nevertheless makes no provision for compensation of this kind – which Ngcukaitobi sees as a significant advance on the 1975 statute.

Constitutional compliance
One of the main problems with Ngcukaitobi’s analysis is that it brushes aside the unconstitutionality of many of the new Act’s provisions. To ensure compliance with the Constitution, a municipality or other expropriating authority must either agree with the owner on the amount, time, and manner of payment of compensation or obtain a court order deciding these matters before the expropriation proceeds.

To ensure full compliance with the Bill of Rights, this prior court order must also confirm that the proposed expropriation is truly for “a public purpose” or “in the public interest”; that it does not infringe the guaranteed rights to equality, human dignity, and/or administrative justice; and that any eviction of people from their homes as a result of an expropriation has been authorised under section 26(3) of the Constitution.

Though the Act makes some attempt to meet these requirements, the wording it uses is inadequate. The upshot is that many of its key clauses remain unconstitutional. An expropriation statute which infringes the Bill of Rights cannot qualify as “a good thing overall”.

That the ANC has been willing to enact a patently unconstitutional expropriation law increases the risk that the Act, like expropriation legislation in various other African states, will be used not for redress, but for elite enrichment.

In these African countries, as Ngcukaitobi warns, expropriation laws have set off “fresh episodes of dispossession and concentration of wealth for new elites”.

The Act poses precisely the same risk for South Africa – yet Ngcukaitobi declines to acknowledge this. 

Dr Anthea Jeffery holds law degrees from Wits, Cambridge, and London universities. Since 1990, she has worked for the South African Institute of Race Relations, where she is Head of Policy Research. She is the author of ten books, including Business and Affirmative Action; The Truth about the Truth Commission; Peoples War: New Light on the Struggle for South Africa; and Chasing the Rainbow: South Africas Move from Mandela to Zuma.

https://www.dailymaverick.co.za/opinionista/2025-02-19-expropriation-act-damages-all-south-africans-a-reply-to-tembeka-ngcukaitobi/