Land expropriation without compensation

Utter the words ‘land expropriation without compensation’ and the reactions you get will be mixed. But it’s a topic that’s guaranteed to be brought up around the dinner table thanks to the impending local elections.

So why is the Expropriation Bill needed? And is it something to be worried about when it comes to property ownership?

The good

The land redistribution programme is meant to redress historical injustices of land dispossession and displacement and, according to the Department for Public Works, ‘avail more land for the cultivation towards food security, rural development and poverty reduction’. It’s also meant to replace an old apartheid act – the Expropriation Act of 1975, which currently goes against the Constitution.

While the new Bill does talk about expropriation without compensation, Public Works and Infrastructure Minister Patricia de Lille wrote in March that ‘it does not prescribe that nil compensation will be paid in all circumstances. The bill provides that the amount of compensation will, in the absence of agreement, be determined by the courts.’

She adds: ‘It makes no sense that a democratic government will revert to apartheid-style practices of taking homes or business premises away from people. Surely, no court would agree to this either.’

The bad

But not all take De Lille’s words to heart. Back in February, the Democratic Alliance (DA) submitted comments to Parliament opposing the Expropriation Bill. The DA believes that some points of the Bill are ill defined and ‘leave room for government to take advantage of citizens, and unfairly expropriate their property’ under the guise of ‘public interest’.

It also warns that ‘intangible property’ mentioned in the Bill could extend to more than just land or property to things like copyright, patents and intellectual property.

Samantha Graham, DA Shadow Minister of Public Works and Infrastructure, says: ‘We are fully in support of land reform, and we know it’s a requirement in this country as we have a land crisis. But government has a lot of land that’s not being used, so there’s no necessity to rush out now and expropriate land. The purpose of the Bill is to give government the power to expropriate for public purpose or public interest, but it’s being packaged as a land reform Bill – and that’s not its purpose.’

The ugly

The South African Institute of Race Relations (IRR) takes the worst-case scenario even further. In its #KillTheBill campaign, it labelled the Bill a ‘draconian measure’ that will strip millions of South Africans of their homes ‘without court orders, fair procedures or equitable compensation’.

Terence Corrigan, project manager at the IRR, maintains that, through this scheme, farmers of the redistributed land will not gain ownership, but will instead have to lease the land from the government as the state will remain custodian of the land.

He warns: ‘What we think is possibly the end game is that the government is looking at setting up a legal and constitutional backstop and a land act where all land with water and mineral rights will be owned by the state. You don’t get to own land privately – you can get a lease.’

The rational

While there are fears that South Africa could venture down the same path as Zimbabwe, there are some fundamental reasons why this is unlikely, the most persuasive being that LWC is the more expensive option.

The Agricultural Business Chamber of South Africa (Agbiz), which tracks the development of draft legislation affecting the agribusiness sector, points out that Zimbabwe’s land grabs 18 years ago resulted in eight years of economic decline, with job losses, de-industrialisation, and the loss of agricultural export revenues.

Back in 2009, economist Eddie Cross estimated that Zimbabwe lost $20 billion as a result of its land reforms – a cost that would certainly be billions more in today’s terms. It is a cost that South Africa – as it emerges out of the COVID-19 pandemic – can ill afford.

When it comes to the issue of expropriation of land without compensation, there are two sets of voices. One set believes that there is a real danger of mass land invasions, a collapse in the property lending system and millions turfed out of their homes.

The other voice is rational and argues the impracticalities of mass expropriation. Agbiz points out that farm loans account for over R160 billion. It means that, if government offers no compensation to farmers and/or the banks, then at least R160 billion will be wiped off the bank books in an instant. If you look at the collective debt (residential home loans included), this figure jumps to R1.6 trillion (as of 2020). Such a shock to the economy could ill be afforded.

Wandile Sihlobo, chief economist at Agbiz, highlights that it’s vital to look at the way in which the Bill is written. He says: ‘The [expropriation] option wording does not actually say [the government] “will” or “must”, but that it “may”. We feel the government could use this as a last resort.’

Sihlobo adds: ‘I broadly support the need for legislation to regulate expropriation, but oppose the provisions relating to “nil” compensation. Expropriation should always be used as a last resort, and cannot substitute for well-formulated and well-implemented programmes to effect transformation in the sector.’