Terence Corrigan
If ever South Africans wanted an indication of the seriousness with which the government's moves towards expropriation without compensation are viewed internationally, the visit by United States deputy secretary of state John Sullivan last week provides it.
It is telling that while the focus of Sullivan's mission was strengthening bilateral relations with South Africa, he was forthright in the terms with which he addressed the question of land reform, couching it as a plea to the ANC government. Paramount – as we at the Institute of Race Relations (IRR) and others have stressed – was "confidence in the South African economy".
Sullivan is reported to have said: "My approach here, given my goal of promoting deeper and stronger commercial bonds in order to encourage foreign direct investment by US companies in South Africa, is to plead with the government that processes that are underway remain transparent and that it promotes confidence in the South African economy."
If Sullivan's formulation was diplomatic, there was no doubt about the scale of anxiety in the US in the deputy secretary of state's revelation that "I'm in listening mode, as the president directed the secretary (of state, Mike Pompeo) to enquire about the matter".
This level of interest comes as no surprise. As the News24 report, "Lots of 'misinformation' in US about 'complex land issue' in SA – US deputy secretary of state", notes, "more than 600 US businesses are registered in South Africa and the country is the third largest foreign direct investor in the local economy".
On the ground in South Africa, moves towards expropriation without compensation are gathering pace, and will likely achieve the very reverse of matching Sullivan's plea that it "promote confidence" in the economy. As the game plan around expropriation without compensation becomes clearer – notably in the publication of the Expropriation Bill – the reality may be altogether more insidious.
It is forgotten that, in February 2018, Parliament's resolution on expropriation without compensation consisted of two related elements: first, whether or not the Constitution should be amended, and, second, to examine a "future land tenure regime". While the first part became the focus of politics, the second was largely ignored.
It should not have been. Empowering the state to seize property piece by piece is a danger, but a wholesale "reform" of land tenure could represent a calamity. A land tenure regime refers to the overall legal and regulatory system under which land may be held, and through which people may gain access to it. The ability to own land depends on this being permitted by the overall system.
For some years, a theme of South Africa's land politics has been whether land would indeed be available to be held as a private asset. Perhaps the most prominent example of this was the 2014 Preservation and Development of Agricultural Land Framework Bill, which would have effectively ended private ownership of agricultural land.
It declared: "Agricultural land is the common heritage of all the people of South Africa and the Department [of Agriculture, Forestry and Fisheries] is the custodian thereof for the benefit of all … As the custodian of the nation's agricultural land, the Department, acting through the Minister, Intergovernmental Committee or MECs concerned … may approve, reject, control, administer and manage any rezoning or subdivision of agricultural land."
This idea – taking resources into the "custodianship" of the state – was not only expressed by politicians, but drew on precedent. The effective nationalisation of resource rights had already been pushed through in respect of water and minerals through legislation passed in 1998 and 2002 respectively. Through them, the state became the "trustee" of water resources and "custodian" on minerals.
This position was given a boost by a Constitutional Court ruling in 2013 (Agri SA vs Minister for Minerals and Energy), which held that while the former owners of mineral resources had been deprived of their property, the state had not acquired ownership, but had merely assumed custodianship. This did not amount to an act of expropriation and therefore no compensation need be paid.
The Agricultural Land Framework Bill was clearly intended to extend these principles to agricultural land. Land would have become a state monopoly, with farming conducted on the basis state-issued licences, under conditions set by officials. (Given the problems evident in state control of water and minerals, it's fair to say South Africa can consider itself fortunate that land was not subjected to such a regime.)
Government's land audit report, released in early 2018, revived this line of thinking, recommending legislation that would "vest land as the common property to the people of South Africa as a whole".
When the Economic Freedom Fighters (EFF) submitted its motion in Parliament to kickstart the process of introducing expropriation without compensation, it was clear that a mass nationalisation of land was envisaged. Amendments by the African National Congress (ANC) removed this emphatic commitment, and pledged to look at the issue of "future land tenure" in a broader, more amorphous manner. In the intervening period, conflicting views have emerged from within the party.
Many commentators have seized upon the expressed commitment of some within the ANC (though by no means all) to retain individual, private ownership of land, in contrast to the position of the EFF. It would be a mistake to assume that a mass seizure has been taken off the table.
In an underreported aspect of South Africa's appearance at Davos earlier this year, Masiphula Mbongwa, a director general in the Department of Rural Development and Land Reform, indicated that the intention was indeed to introduce legislation that would mirror the water and minerals regime, and that land would be vested "in the people of SA".
We have warned that in light of the existing precedents, doing so is possible, and, what's more, the manner in which the definition of expropriation the current Expropriation Bill is structured is clearly intended mirror the 2013 judgment, defining expropriation as "the compulsory acquisition of property by an expropriating authority or an organ of state upon request to an expropriating authority". This makes the acquisition of an asset a condition for expropriation, and not merely the act of taking it from the former owner.
In turn, it enables a distinction to be drawn between direct expropriation and indirect expropriation. In the former case, the state would take ownership for itself, and therefore, a claim for compensation would probably exist. In the latter, it would merely extend custodial or regulatory authority over assets, removing them from the owner, but not technically taking ownership for itself. In such instances, it is unlikely that anything would be payable.
This, then, would empower the state to seize entire asset classes – probably starting with land, but not necessarily limited to it – at little expense to itself.
The looming danger of this should not be underestimated – for South Africans as much as for healthy bilateral relations with major trading partners such as the US.
- Terence Corrigan is a project manager at the Institute of Race Relations. Readers are invited to join the IRR, and to mandate it to speak on this issue, by sending an SMS to 32823 (SMSes cost R1, Ts and Cs apply).
