South Africans Face Loss of Property Rights

Land Bill Has Wide Implications

An article published by Realestateweb has drawn attention to the government’s proposed Land Bill and the possibility that it could be about more than just real estate, potentially allowing the government to take everything you own, including your intellectual property.

This message about the proposed land expropriation bill soon to come before parliament came from a group of well-respected economic and constitutional thinkers at a conference on the implications of the Land Bill held in Cape Town on Monday.

The conference delegates discussed how the Bill has ominous implications for the country’s economy, as well as South African society. The Bill’s main problem when it comes to property ownership is that it gives the state the right to take your house and land without paying a market-related price for it. In other words, it becomes a “take now, fight about the details later” approach.

South African farmers raised the alarm about the Bill initially, as much of the focus is on agricultural land in a bid to speed up the land redistribution program. Those in the know predict that food security and a loss of investor confidence, similar to what has happened in nearby Zimbabwe, can be expected if the new law is enacted.

Dave Steward, executive director of the FW de Klerk Foundation that played host to the conference, highlighted a “particularly nasty clause”, which gives the Minister the right to appropriate any property. This obviously has much wider implications than those specifically related to land reform.

“It could be shares. It could be on behalf of any juristic person…this could be a company where they have tried to negotiate and failed,” said Steward, indicating that this “looks like a massive expansion of BEE (Black Economic Empowerment)”. Steward goes on to say that, “It is horrifying in its implications,” and that there could be a BEE company, which could simply ask the Minister to expropriate shares.

Dr Leon Louw of the Free Market Foundation said that the Bill “is about all forms of property, including intellectual property,” and cited examples of software copyright, school text book copyright, pharmaceutical company rights over medicines and shares, as being among the types of property that might be expropriated in terms of the proposed law.

Former head of the Afrikaanse Handelsinstituut and chief economist at Transnet, Ulrich Joubert warned that the South African economy is particularly vulnerable to the loss of capital and skills. The economic growth in the 1990s and 2000s was spurred on to a large extent by consumer spending. Foreign investment is largely based on portfolios and this means easy withdrawal from South Africa.

Joubert asserted that South Africa needs to avoid adding to the risk perceptions already making investors nervous by threatening property rights entrenched in the constitution. “We need to create an environment where investors can be confident of getting a return on investment – without being expropriated,” he urged.

Schlemmer, a constitutional expert, believes that it takes a long time for events surrounding legislature to “penetrate through to the population”. At the moment, only a small number of South Africans are actually aware of the looming threat and its implications. Considering the already growing negative sentiment, he suggests that now would be a “very bad time to start messing with land ownership and property”.

He went on to say that the government appears to be disguising the lack of capacity of government departments and the lack of delivery around the land question with this new legislation. Compared to the government’s housing challenge, the land issue is a relatively “small problem”, Schlemmer said in reference to a provision in the Bill for the expropriation of real estate in towns and cities.

A number of political leaders also attended the conference, including Democratic Alliance leader Helen Zille. She referred to the legislation as a “wedge issue”, which the ANC “uses before elections to mobilize people on the basis of race to vote for the ANC”. Zille went on to say that, “There are people in the ANC who are as appalled. What we are seeing around expropriation is symptomatic of what we will be seeing in the years ahead. What we are seeing is a government claiming to represent the will of the majority – it is not in the interests of the majority…it isn’t the will of the majority. We have a venal minority posing as a righteous majority – using the race card”.

The ANC did not attend the conference and when asked for an explanation, Steward said, “We invited people from their portfolio committee and relevant government departments. I guess they are all busy on a Monday afternoon.”

The Bill was meant to go in front of the National Assembly this week, but the “fact they decided to postpone it might be a positive indication,” said Steward.

The information in this article is courtesy of Jackie Cameron (“Mind losing your house, business, shares and book royalties?”, Realestateweb, 4 August 2008).

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