Letter: Land reform scares investors - Cape Times

13 September 2018 - Whether the process underway leads to any formal sanctions is largely moot: EWC is doing enough damage on its own, and more is likely to come.

President Cyril Ramaphosa showed considerable dexterity in discussing the impact of Expropriation without Compensation (EWC) during question time in the National Council of Provinces on Tuesday. Discussing how the country’s ‘land reform’ policy drive (he skirted around the idea of EWC) was being received abroad, the president declared that there was broad support for it and that there was no risk of any country imposing sanctions.

He is probably quite correct here. Proper, productive land reform is likely to be welcomed both domestically and abroad. EWC – the empowering of a state that has shown little ability to manage economic processes – will not be, and it is this policy specifically that is doing great harm to the country.

President Ramaphosa mentioned the support for land reform that had been evinced by UK Prime Minister Theresa May. But as my colleague at the Institute of Race Relations, Michael Morris, noted during her visit, she was also very clear that ‘investment cannot be attracted nor growth achieved in the absence of security and the stability it brings’.

Support for land reform does not imply an endorsement of everything done in its name.

Sanctions, meanwhile, are something of a red herring. Recession-hit South Africa desperately needs to attract foreign capital if it is to have any hope of reaching the 5%-plus GDP growth rate that will allow it to start setting the country on the path to a prosperous, high-employment future. Not to mention keeping up the tax revenues that underwrite the extensive social protection system. The threat of property seizures works directly against this, and will feature in the investment decisions of businesspeople, irrespective of what their politicians may say. Some of the president’s own investment envoys have reported EWC to be a significant problem in their engagement with investors. Whether the process underway leads to any formal sanctions is largely moot: EWC is doing enough damage on its own, and more is likely to come. 

Terence Corrigan

Project Manager, Institute of Race Relations

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