DA to submit formal request for an Economic Impact Assessment on the Constitution 18th Amendment Bill

04 July 2021

Three years since the initiation of the ongoing parliamentary process to introduce the Constitution 18th Amendment Bill, which seeks to amend Section 25 of the Constitution to allow for expropriation of land without compensation, there has been no fully costed socio-economic impact assessment of the legislation’s impact on the economy.

The DA will submit a formal request to the Socio-Economic Impact Assessment Unit (SEIAU) in the Presidency asking that they conduct a risk assessment of the impact that expropriation of land without compensation will have on the economy should the Bill be passed.

The SEIAU falls under the Minister in the Presidency responsible for Monitoring and Evaluation, Khumbudzo Ntshavheni. Formed in 2015, it is tasked with conducting government-wide assessment of the impact of policy initiatives, laws and regulations in South Africa. Its brief is to highlight unintended consequences, unanticipated outcomes and unnecessary costs from policy initiatives, regulations and legislation.

A reply to a DA parliamentary question by the Minister of Finance, Tito Mboweni, revealed that the government “has not conducted research on the impacts of land expropriation without compensation or undertaken a risk assessment of the impact on the economy”. This is despite repeated warnings from a cross-section of independent economic studies that have shown an immeasurable negative knock-on effect on the country’s GDP, investment inflows and jobs.

In a study conducted to show the macro-economic effect of the Bill, researchers Roelof Botha, of the Gordon Institute of Business Science (GIBS), and Ilse Botha, of the University of Johannesburg’s department of accountancy predicted that R270 billion will be wiped off South Africa’s GDP in a least case scenario of capital formation with 2.3 million direct job losses.

Not only this, but South Africa will lose access to important export markets such as America. Section 104 of the Agoa Act, which have given South African products preferential access to American markets, requires that beneficiary countries commit to protecting private property rights. The Section 25 Bill is a direct assault on property rights in South Africa.

President Cyril Ramaphosa’s repeated claim that Section 25 can be amended without affecting the economy and food security, is very misleading. In Venezuela and Zimbabwe, tempering with property rights collapsed their economies, led to widespread hunger and resulted in wholesale capital flight.

Deliberations on the disastrous Section 25 Bill have been done in an evidence free context despite the various warnings on the Bill’s impact on the country’s economic prospects. A fully costed risk assessment of the expropriation without compensation Bill is not only imperative but necessary to show the full implication of this disastrous piece of legislation.

Statement issued by Dr Annelie Lotriet MP - Chairperson of the DA Parliamentary Caucus, 4 July 2021