Expropriation without compensation a disaster


Dr Admore Tshuma

The ANC's EWC plans are discussed in The Netherlands

Alana Bailey

16 July 2018

Alana Bailey writes on the colloquium in The Hague hosted by South African Monitor

South African government’s expropriation plans discussed in The Netherlands

In June 2018 the foundation South African Monitor hosted a colloquium in The Hague, The Netherlands, with the theme “Expropriation without compensation: comparing politics and property rights in Zimbabwe and South Africa”.

The speakers at this event was Dr Admore Tshuma of the University of Kent and Dr Heinrich Matthee of the University of Amsterdam.

Dr Tshuma specialises in research on poverty, social justice, corporate social responsibility, socio-economic inequalities, re-distributive and reparative justice. As part of his study for his master’s degree, completed in 2004 at City University London, he studied Zimbabwean land reform and reached the conclusion that the programme had been a disaster.

His personal experience also contributes to his interest in this topic. In the 1930s his grandfather had been one of the first black commercial farmers in the former Rhodesia. The farm he had, still belongs to Dr Tshuma’s family. Even though it had not been targeted by Zimbabwean landgrabbers, beneficiaries of the Mugabe land reform programme who settled on neighbouring farms also destroyed much on it, including infrastructure and game that had been there for generations.

Dr Tshuma says: “This has made me angry, knowing how hard my grandparents had worked to get what they had. I therefore feel I need to play a part in enlightening Africans about some of the disastrous policies that have kept Africa down.”

In his presentation entitled “Lessons from Zimbabwe: A multidisciplinary analysis of the consequences of land expropriations”, he stated outright that expropriation without compensation is a form of theft. It violates the principle that all are equal in the eyes of the law. It contravenes the fundamental right to private ownership which is recognised and guaranteed by most international conventions.

He outlined the tragic consequences of President Mugabe’s land reform in Zimbabwe. Before the launch of this programme, the country had been an exporter of food to many other countries. Approximately a third of the country’s workforce had been in the employ of farmers. The agricultural industry had been self-sufficient and neither required, nor received state subsidies.

After the Mugabe government had embarked on an accelerated land reform programme, which had happened purely for political reasons, more than 4 000 farmers were expropriated. In total 28 white farmers and 78 black farm managers and workers were murdered. For these victims there has never been justice. In addition, inter alia 25 000 tractors and 300 000 hectares of irrigation had been destroyed.

More than three million head of cattle had been butchered – including valuable stock, not to mention the extermination of the country’s wildlife. In the words of Dr Tshuma, the process had been an incontrollable “free for all”. The main “winners” had been Mugabe and his cronies, who took ownership of more than 40% of the expropriated farms. Meanwhile the unemployment rate had increased to 95%, with Zimbabwe having the fastest shrinking economy of any country not embroiled in a state of war.

It caused Dr Tshuma great concern to note that South Africa seems to be embarking on the same process as that of Zimbabwe. The South African ruling party is under pressure at the polls and does not provide solutions for this challenge by displaying strong, positive leadership. Consequently an accelerated land reform process is announced, based on political, rather than economic or social considerations.

He expressed the hope that the ANC will reconsider this decision in time before, as in the case of Zimbabwe, damage is done that will take decades to be undone.

He concluded by asking all fellow Africans: “What kind of Africa would we like to leave our children?”

The theme of Dr Heinrich Matthee’s contribution was “Weakening property rights in South Africa: Some implications for international business, civil rights and the political economy”.

He started by describing the decline of the South African economy since 1994. Where manufacturing had comprised 23% of the gross domestic product in 1994, it had decreased to a mere 11% by 2017. Unemployment is estimated at between 27% and 36%, depending on the definition used, and the credit rating agencies S&P Global and Fitch have downgraded South Africa to junk status. Only Moody’s is keeping it at one point above this status. Issues such as the constantly increasing cost of the civil service, corruption and the calamitous state of state-owned enterprises such as Eskom and South African Airways (which is the direct result of political interference, cadre deployment and tenderpreneurship) are general knowledge.

Obviously the international response to this state of affairs is negative. The 2016 Business Climate Survey of businesses of the European Union indicates that transformation is regarded to be the most negative factor in this sector.

The 2017-2018 Global Competitiveness Index of the World Economic Forum shows a constant decline in South Africa’s position in categories such as perceived wastefulness of government spending, the presence of organised crime, business costs related to crime and violence, reliability of the police, the burden of government regulation, public trust in politicians and the role of favouritism in decisions of government officials. Within this context of weak investor confidence, the new policy of expropriation of land without compensation, and the insecurity related to property rights in general, can have a highly negative impact.

The business policy of the ANC displays a pattern of ever more state interference and the erosion of private property rights. This can be seen amongst others in the security, mining and energy industries. Land earmarked for reform increasingly remains the property of the one-party dominant state, with only tenancy rights to be re-allocated thereon. Thus the dependence on the ruling party and authorities are reinforced. Pressure from interest groups within the state and the ANC cover other sectors and result in a shift from agricultural to urban land reform.

Dr Matthee also described the events that had taken place in the run-up to the current debate on land reform by means of expropriation without compensation. The ANC comprises of several factions and entrenched patronage networks. It had lost control of several key metropolitan councils in 2016 local elections. It is under increasing pressure from the EFF and progressively more service delivery protests occur, often organised by supporter constituencies. Existing checks and balances are too weak to ensure a healthy balance of forces and the securitization of politics is used to prop up presidential rule. Due to the failing economy, more limited state resources are available to placate the ANC’s networks of patronage and other political needs. The vague promise of “radical economic transformation” is therefore now being used to appease the dissatisfied voters, leading up to the national election of 2019. Meanwhile the party’s internal factional competition intensifies.

Against this background, a deeply divided ANC accepted the expropriation of land without compensation as its official policy during the party’s national congress of December 2017. On 27 February 2018, the ANC, EFF and other parties voted by a majority in Parliament in favour of a process involving the amendment of the Constitution to enable expropriation without compensation. In May 2018, during a national ANC land summit, it was argued that the amendment of the Constitution may not even be necessary, as Section 25 thereof may already create scope for such action.

As a risk analyst familiar with the European and South African business scene, Dr Matthee warned that significant capital accumulation cannot take place without the security that property rights offer. Expropriation without compensation will lead to a stronger ANC grip on the new tenants of land, reinforcing neopatrimonialism and the politics of patronage. Property rights protect the rich but also the poor and the vulnerable middleclass from predatory political elites.

Uncertainty about the process to be followed and the security of assets will hamper investment and create a ripple effect in the economy, which will cause immeasurable damage.

With this warning, the colloquium drew to a close, impressing on the audience the need to oppose a process of expropriation without compensation in all possible legal ways.

Alana Bailey is Deputy CEO of AfriForum responsible for International Relations. This article first appeared in Afrikaans on Maroela Media.