Terence Corrigan
South Africa is witnessing today what will be remembered as one of the turning points in its history. These do not come often.
Over the past two weeks, South Africa’s ruling party and government have pushed aggressively ahead with plans to embark on a programme of Expropriation without Compensation (EWC). President Cyril Ramaphosa made a late-night announcement decreeing that his party would be amending the Bill of Rights to provide ‘clarity’ on the constitutional framework governing EWC – although stating in the same breath that the constitution already permitted it. He did this as leader of a political party, dodging whatever responsibilities he carries as the head of a constitutional republic.
The National Executive Committee of the African National Congress (ANC) said that it would instruct its people in the state to begin undertaking compensation-free seizures of property. (For the leadership of a political party to presume to issue such instructions was itself a grave abuse of the constitution.)
It was also reported that the ANC’s leadership was concerned that – having made the decision to amend the constitution – it might lack a mandate for EWC, since a majority of the hundreds of thousands of written submissions that the official ‘consultation’ process had yielded came out clearly against it. The solution put forward was to reopen the process, and mobilise its members to deliver a suitable outcome. This would so obviously rubbish the integrity of the parliamentary process that it was rejected by the head of the committee, who is himself a member of the ANC.
To push EWC forward, an initial list of 139 properties to be targeted for confiscation was compiled. It’s not clear who issued the instructions for this to be done. The list – or at least a version of it, which, despite government disavowals appears to be genuine, and actually contains around 190 entries – was leaked over the past weekend.
It appears that at least some of these are high-value, productive properties. EWC will not, it seems, be confined to dealing with issues at the periphery of South Africa’s economy – the abandoned buildings and vacant plots of land – but is apparently intended to intrude into its productive heart.
Less remarked upon was a noteworthy address by the ANC’s Secretary General which – while paying predictable homage to Cuba and Venezuela and quoting ‘Comrade’ Vladimir Lenin with effusive approval – lauded communism as ‘the highest form of human society’.
Meanwhile, Stats SA released unemployment data that put the official unemployment rate at some 27.2%. In response, President Ramaphosa – as party head, one understands – announced a stimulus package for the economy. Finance minister Nhlanhla Nene estimated this would require some R48 billion.
The Sunday Times reported that the government was committed to bailing out the country’s State-owned Enterprises to the tune of around R59 billion. It’s not clear where the money for this will come from, with GDP growth projected by the South African Reserve Bank at a meagre 1.2% for this year (this figure being a significant reduction of an earlier estimate of 1.7%), and with the JSE showing a worrying outflow of funds this year.
It’s as well to remember that the government was forced to raise VAT earlier this year in order to do something to fill the growing revenue hole.
And it should have come as no surprise that the rand took a serious knock over the past week – reaching R15.41 to the dollar in the early hours of Monday – though recovering some ground thereafter. On Friday, it was at R14.09. On 1 August, it was at R13.22, and six months ago, it was at around R11.71.
Certainly, concerns around other emerging markets – notably Turkey – have played a role. But the decline of the rand tells the story of South Africa’s failure to address its own vulnerabilities, notably its failure to attract the foreign direct investment it so desperately needs.
It is naïve to imagine that EWC will do anything other than compound these problems. For EWC undermines the most basic guarantee that any investor or property holder needs – the security of the investment. We at the Institute of Race Relations have engaged with numerous businesspeople, both South Africans and foreigners, who have marked EWC as their most pressing concern. The sense that South Africa is increasingly ‘uninvestable’ is gaining hold.
Indeed, there is little to suggest that much priority is being given at present to the impact that it will have on the economy (whatever assurances were made in the past). Much of the rhetoric that has accompanied this process leaves the impression of a government determined to undertake a policy animated more by ideology than by a sober calculation of its outcomes.
This is a moment in which the choices made will be crucial to South Africa’s future. At present, the direction is clear: an economic malaise is to be tackled by deepening a political crisis. And the integrity of South Africa’s constitution and institutions will be collateral damage.
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 here or SMS your name to 32823.
