Expropriation Bill and Economic Reconstruction and Recovery Plan not aligned!
Since the introduction of the Expropriation Bill in Parliament on 15 October 2020 by Minister Patricia de Lille (Minister of Public Works and Infrastructure), the parliamentary process developed quite significantly at the back end of 2022. On 28 September 2022, the Bill was passed by the National Assembly and transmitted to the National Council of Provinces for concurrence.
Agri SA has at the highest level continuously been involved in the development of the Bill through the submission of comments and input concerning its legal and economic impact and highlighting the potential adverse consequences for the economy and the agricultural sector.
Should the Bill in its current form be enacted, it might have implications for the South African economy and would lead to less investment, less growth, and fewer jobs. It is fanciful to imagine that current or aspiring farmers will continue to invest in agriculture with no guarantee that they will continue to hold their land or that they will be compensated fairly if that land is expropriated. The continued inclusion of the zero-compensation clause also has the added problem of being at odds with the Constitution of South Africa – a fatal flaw. Moreover, the failure to properly define central terms like expropriation will only contribute to a climate of policy uncertainty that is not serving the country well. This Bill is placed under scrutiny since the failed attempt to amend section 25 of the Constitution at Parliament on the 7th of December 2021.
At a time when we should be talking about economic reforms that will encourage investment and job creation, we simply cannot afford the policy uncertainty this Bill will add to an already investor-unfriendly environment. South Africa needs a sustained economic recovery plan after the dire impacts of Covid-19 and the derailing of government entities. Thecurrent Bill will only create further investment uncertainty and further deteriorating our Gini coefficient ranking.
Property rights have been the cornerstone of modern economies for centuries. To implement this policy after we have recently seen the devastating effects in countries like Zimbabwe and Venezuela would be an unconscionable act of economic self-sabotage.
More importantly, the Bill will undermine a fundamental government objective – economic transformation. Land is a crucial asset against which both established and new farmers can obtain capital to start new businesses and operate existing ones. In a cyclical sector like agriculture, access to working capital at the bottom of the cycle is a matter of survival. Without a secure asset like land, farmers simply cannot access this capital. This is the foundational asset class the Bill undermines by the uncertainty it introduces. The perverse consequence of this situation is that emerging farmers – even the beneficiaries of the contemplated expropriation – cannot successfully establish agricultural operations in this environment.
Against all reasons, then, the National Assembly will pass a bill that will only make it harder for new entrants in the sector to thrive. Should the National Council of Provinces also approve this bill, it will be left to the President to show a degree of pragmatism to save the South African agricultural sector and safeguard our ability to continue to sustainably produce food locally as we make the sector more inclusive.
We know that the President has both the authority and the will to act when both constitutionality and practicality demand it. The President has in the past declined to assent to bills including the Copyright Amendment Bill, the Protection of State Information Bill, and the Liquor Products Amendment Bill. The Constitution requires the President to return bills to Parliament when he has reservations about their constitutionality. This is precisely what he did with respect to these bills, and what he can do again in the case of this unconstitutional Bill if it is passed by the National Council of Provinces.
All signs point to the passing of the Bill by the National Council of Provinces. For the sake of the national economy, we trust the President will be prepared to save the country from an unforced error with potentially catastrophic consequences for South Africa’s food security. Another side of the coin for consideration is also when the Bill is enacted is to await a set of facts that can be judicially challenged. This will be a crucial step in law-making as the application of the Act will create a precedent for expropriation circumstances. Agri SA will consider all avenues to ensure the protection and expansion of private property in the interest of the agricultural sector and food security of South Africa.
Unless South Africa’s governing ANC (African National Congress) quickly realises the fundamental error to accept the current Expropriation Bill, our government too may be forced to later make a sheepish U-turn. Unfortunately, untold damage may well already have been wrought on the economy and the agricultural sector, undermining our precious ability to produce food locally.
In terms of the Economic Reconstruction and Recovery Plan, strengthening food security is a key priority. A key enabler to achieve this priority and many others, is a supportive policy environment and enabling conditions for ease of doing business. One can therefore rightly ask if the Expropriation Bill in its current format is aligned with these ideals.
Take note: Members of the public have until 6 March 2023 to submit written commentary on the Expropriation Bill.
Written inputs can be submitted via the online submission form available at the following link: https://forms.gle/PTNQaCjRyEzVcvVa8
By Andrea Campher
