JOHN ENDRES: The slippery Expropriation Act - Business Day

John Endres

Picture this: you’re an expert SA investment adviser. You have a wealthy Texan on the line who wants to invest $5m of his strong dollars in SA. He needs your advice, and he pays well. He’s heard that last week President Cyril Ramaphosa signed something called the Expropriation Act. He wants to know what it means.

I hear agriculture is big in SA, he says. Thinking of buying a farm. What’s the risk? Well, you say. The Expropriation Act will let the government take the farm if they need it for a public purpose or in the public interest. 

OK, he says. It’s not that different from other places. If they do, how much are they going to pay me? 

No idea, you say. Could be market value. Could be less. Could be zero. 

Hold on, he says, you’re kidding, right? Less than market value? Zero? On what basis? You’ve got to be able to give me a number? 

No, you say, quoting prominent advocate Tembeka Ngcukaitobi. You read out what the learned man wrote: “The 2025 Act introduces a novel concept of compensation for the owner of property, not based on ‘willing seller, willing buyer’ but on ‘justice and equity’, terms which are slippery and have never been capable of precise legal or economic definition, despite many attempts at attaining precision” (litnet.co.za, 27 January).

“Slippery” and not capable “of precise legal or economic definition?” repeats the Texan. You can hear the disbelief. 

Yes, you say, but there’s more. When government expropriates it can use those slippery terms to come up with a number. But it can also use others. It can use the market value, the current use of the property, the historical use of the property and how it was acquired, the reason it is being expropriated, and how much government has previously invested into improving and acquiring it. It can also bring to bear any other relevant circumstances it chooses.

There’s silence on the other end of the line. Just the hiss of the overseas connection. 

Are you still there, you ask? 

After a while, a grunt. You force yourself to continue. You need to know, you say, that the value can be zero. 

What, you mean outright seizure? Taking without paying? asks the Texan. 

Yup, you say. Land specifically can be expropriated without compensation for land reform purposes, you inform him. In the coy language used by the act, it can be expropriated and “nil compensation” paid to the owner. When the act mentions “land” this may or may not include improvements to the land, such as buildings, boreholes or farm dams on the land. It’s not clear. 

You continue: in theory, the scope for nil-compensation expropriation is circumscribed by four circumstances listed in the act. But the list is open-ended. There is nothing stopping a judge reviewing an expropriation without compensation case to consider other circumstances — not listed in the act — in justifying why no compensation is due.

OK, I guess I’m not investing in land then, says the Texan. I’m keeping a safe distance from anything that falls under this Expropriation Act of yours. What else you got? 

You feel awkward, but you’ve got to push through. The act allows all forms of property to be expropriated, you tell him. There is no exception. Property means anything that can be owned, tangible or intangible.

Anything? he asks. 

Anything, you say. A business, a factory, a patent, a vehicle, industrial equipment, trademarks, company shares, pension savings, a personal home — the act empowers government to expropriate anything you can think of. Anything that can be owned. And if it happens, there is no way of knowing how much compensation you’re going to get. 

But you have courts, right? says the Texan. 

Well yes, you say, but there’s a slight problem. 

Go on, he says. 

The act says after being notified that government wants to expropriate, you have 30 days to tell the government that you object. You first try to solve the dispute through mediation. After that you can go to court to fight it out. But you can only go to court after you’ve received a notice of expropriation, which you can’t have received because it can only be issued after you’ve been to court. 

What the hell, says the Texan, that makes no sense. 

Right, you say, but that’s what the law says. Plus, if you go to court to dispute the amount, what are you going to tell the judge? How are you going to convince them that the amount you were offered was wrong, given that the government is relying on slippery terms? 

This is some slippery garbage, says the Texan. Tell your president I’m not interested. I’m taking my money elsewhere. 

The line goes dead.

John Endres is CEO of the Institute of Race Relations

https://www.businesslive.co.za/bd/opinion/2025-02-07-john-endres-the-slippery-expropriation-act/