Letter: BMI understates dangers - Business Day

16 July 2018 - In our various engagements with businesspeople and market analysts — both local and foreign — we have found that expropriation without compensation is an absolutely central concern.

It was surprising to read that BMI Research appears to regard the government’s commitment to introduce expropriation without compensation as mere politicking. (Land debate a tactic to offset EFF and ANC radicals, says BMI Research, July 11.)

To see these developments as an exercise in placation of troublesome allies by President Cyril Ramaphosa, and to believe he will not allow them to threaten the economy, is to severely misinterpret them and to understate the dangers.

The current drive represents the latest iteration of a long-standing campaign to abridge property rights. We have counted more than two dozen distinct moves in this direction, not confined to land, over the past decade.

President Ramaphosa is at best ambivalent on this question.

He has repeatedly expressed his commitment to expropriation without compensation, and it is unclear whether the various caveats – that policy must not disrupt the economy or imperil food production – offer more than vague, nonenforceable assurance.

Certainly, remarks by ANC KwaZulu-Natal task team co-ordinator Sihle Zikalala that commercial land is to be the focus of expropriation without compensation would seem to contradict this.

And it is precisely the fear of such an outcome – perhaps supported by President Ramaphosa, perhaps by passing him by as the policy process develops a momentum of its own – that is deeply damaging to investors, actual and potential.

This is not theoretical. In our various engagements with businesspeople and market analysts — both local and foreign — we have found that expropriation without compensation is an absolutely central concern.

It has largely displaced the hopefulness that accompanied President Ramaphosa’s "new dawn".

The most optimistic scenario is that they are adopting a "wait-and-see" posture, and will reconsider their position when some clarity about government plans emerges. They may, however, be inclined to give SA a wide berth for the foreseeable future.

We believe that expropriation without compensation is already having an adverse effect on SA’s economy. In the end, it may prove to have been a very expensive policy indeed.

Terence Corrigan
Project Manager, Institute of Race Relations

https://www.businesslive.co.za/bd/opinion/letters/2018-07-16-letter-bmi-understates-dangers/

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