Renewed drive for expropriation without compensation will compromise recovery

10 October 2020

Pursuing expropriation without compensation (EWC) represents another tragic mistake for which South Africa will pay a heavy price.

The Institute of Race Relations (IRR) notes that the Ad Hoc Committee to Initiate and Introduce Legislation Amending Section 25 of the Constitution has adopted its draft programme, and hopes to conduct outstanding public hearings and to have finished its work by 24 November.

This, despite all the evidence that EWC will destroy the prospects for increased and sustained investment without which the growth and job creation so vital now to South Africa’s post-Covid-19 recovery are not going to happen.

The ‘debate’ around EWC has already generated both great uncertainty and concern for businesspeople. Indeed, the EWC drive pushes the country not towards uncertainty, but towards bad policy. We have repeatedly heard that until this is taken off the table, the country remains ‘uninvestable’.

Indeed, economic modelling done in 2018 by Dr Roelof Botha and Prof Ilse Botha determined that the impact of an EWC policy on South Africa – based on cases where such policies haven been implemented elsewhere – would lead to sharp declines in GDP and state revenue. Something in the region of 2.3 million jobs could be lost – roughly around the job loss caused by the Covid-19 pandemic and the lockdown.

The IRR cautions that those who might dismiss this as mere posturing – ‘making explicit that which is implicit’ – should remember that it is no small matter to tamper with the Bill of Rights. To do this is to degrade the protections South Africa’s people have vis-à-vis the state.

This is all the more the case in view of the declared intention of the African National Congress to ensure that the Constitution is changed to place expropriation decisions within the purview of the executive, rather than the courts.

All of this sets a terrible precedent for the future.

Issued by Hermann Pretorius, IRR Deputy Head of Policy Research, 10 October 2020