Business Report – 21 November 2018
JOHANNESBURG – The headlines following President Cyril Ramaphosa’s meeting yesterday with State visitor German President Frank-Walter Steinmeier speak volumes for the emphasis they place on what is most worrying for investors, world leaders and ordinary South Africans.
That undisguised concern is the looming prospect of expropriation without compensation (EWC) in a new phase of ‘land reform’ conducted by a state legally empowered to take private property without paying for it.
Not for the first time, the emphasis of those headlines – ‘no land grabs’, investors ‘reassured’ – reflect the president’s strenuous efforts to play down the risks and insist that whatever comes to pass will be lawful and orderly and thus hold no danger to investors.
The question that must arise is, simply, when is an assurance an assurance you can bank on?
To say that EWC will be introduced in a lawful way is not reassuring; South Africa can look back at a century of devastating dispossession enacted by law. Lawfulness does not convert bad policy into good policy.
Embarking on ‘orderly’ land expropriations without compensating owners is not reassuring either. Whether a mob or a department of state does the taking, the effect is indistinguishable – except for the fact that if the state does it, and does it legally, the scope for any appeal to justice is that much narrower.
Finally, to say that investors can and do feel assured as the economy is open for business and is a safe bet stands in flat contradiction to the data; less than 1% growth nearly a year after the promise of a ‘new dawn’, and mounting unemployment (9.7 million by the expanded version), with some 300 000 more South Africans finding themselves without a formal job since this time last year.
Whatever investors or foreign leaders say in public, the numbers express an inescapable truth.
And nobody is in any doubt that the gathering enthusiasm for expropriation without compensation sponsored by the ANC and led from the front by Cyril Ramaphosa is chiefly responsible for switching on the hazard lights. Property rights anchor investment and if you threaten them, you chase investment away. EWC cannot be championed as anything but an investment killer, for the simple reason that a threatened dilution of property rights places all investment at risk.
The danger of EWC goes well beyond farmers losing maize fields and cattle ranches. Property rights are indivisible, and if the precedent is set on land (as it was in the case of mining and water rights) then it can be expanded to wherever there is wealth to be extracted.
No investor is blind to this risk – or misled into thinking that taking property without paying for it really is the historical imperative on which land redress or the success of emerging black farmers depends .
If President Ramaphosa cannot by any measure be held solely to blame for the complex economic and policy deficiencies that lie at the root of South Africa’s plight, the same is not true of the low credibility of his reassurances to his country, world leaders and the foreign investors on whom the country depends.
Many may wonder if Germany’s President Steinmeier could really have come away from his meeting with Mr Ramaphosa feeling reassured given that their encounter followed only days after the ANC had put its stamp on a recommendation to tamper with the property protections in the Bill of Rights.
Are we to speculate that Mr Ramaphosa confided that he himself wasn’t in favour? Or that, as some of his supporters argue, EWC has been foisted on him by his rivals?
If either was true, it would mean the president had limited influence on the party he led, and that any assurances he chose to give could not carry sufficient weight to be credible.
What is distressingly credible is that South Africa’s intensifying efforts to assure everyone that everything will be all right is only confirming the very real danger we are facing.
Being honest about just how bad eroding property rights will turn out to be for all South Africans has to be the first essential step towards averting the disaster that threatens us.