Time for banks, private sector to say “No!” to EWC – IRR
9 September 2022
With only days to go before a committee of MPs is scheduled to approve and forward for adoption draft legislation on expropriation without compensation (EWC), now is the time for influential South Africans to speak up about the threat this law will pose if approved.
This call by the Institute of Race Relations (IRR) comes as Parliament’s Portfolio Committee on Public Works and Infrastructure prepares to meet on 14 September to vote on forwarding the Expropriation Bill to the National Assembly.
The governing ANC’s drive to push EWC was given a significant boost a month ago by President Cyril Ramaphosa. He told the party’s policy conference that “(we) must undertake to make a dramatic, as well as a disruptive, lasting change”, adding that “despite the setback of our efforts to amend Section 25 of our [sic] Constitution, we must continue to pursue all available options, including through legislation, like the Expropriation Bill, to implement the resolution of our 54th Conference on land redistribution without compensation”.
The IRR and others have warned that the risks of this policy are daunting.
The Banking Association of South Africa (BASA) warned Parliament last year that if EWC is allowed, or even if compensation be paid at less than market value on encumbered properties, this could “lead to systemic consequences for the economy and the financial system as evidenced by the 2007 global financial crisis”.
BASA, which represents all the banks, submitted that the EWC section be “deleted” in its entirety.
It is theoretically possible, next week, for the Portfolio Committee to delete Section 12(3) of the EWC Bill which allows for “nil” compensation in an open-ended list of circumstances. Included in the cases envisaged for EWC are instances where property has been purchased for the sake of resale at profit, or where land has already been informally grabbed by land invaders, such that the owner has lost “control” of it.
For MPs to take this seriously, however, will require the private sector to speak up loudly, and reinforce the warning delivered last year by BASA.
Since Ramaphosa lent his full weight to the ANC’s drive for EWC, the IRR wrote to the four major banks last month, reminding them of the interests of millions of ordinary South Africans vested in them, and encouraging them to state publicly whether they remain opposed to EWC.
Only one of the banks has responded to our letters by reaffirming its opposition to EWC and expropriation below market value, as reflected in BASA’s earlier submission. The other banks are apparently too busy to articulate themselves on a matter that is, according to their view 19 months ago, an existential threat to the financial stability of South Africa.
Said IRR Campaign Manager Mlondi Mdluli: “The time to speak is now and the thing to say is simple: ‘No below-market compensation. For goodness’s sake, no EWC.’”
The IRR has also sent letters to retailers, property developers and real estate agencies, requesting that they reaffirm their position on the Expropriation Bill and EWC. The retailers forwarded our letters to the Consumer Goods Council of South Africa (CGCSA), which has requested a meeting with us next week. We have agreed to meet with the representatives of CGCSA.
A number of property developers and real estate agencies have confirmed receipt of our letters but have not yet responded.
Said IRR Head of Campaigns Gabriel Crouse: “There is no doubt that if the EWC Bill is passed all the banks would be more than ready to fight costly legal battles to protect their interests. But the battle of words cannot be put off until then. Now is the time to speak out and speak clearly, so that the committee drops EWC and reworks the Bill to match what South Africa needs. Prevention simply is better than cure.”
Issued by Mlondi Mdluli, IRR Campaign Manager, 9 September 2022
