Reviewing Expropriation without Compensation

Category Articles of Interest

Tim Johnson Principal of Seeff North Coast discusses the topic of "expropriation without compensation" which many clients have expressed concern over.

As Musi Maimane recently put it, ‘the Ramaphosa honeymoon is over’. What he means is that in as much as business, investor and political sentiment had received a much needed boost with his ANC victory, together with some Cabinet re-shuffle compromises, the even more concerning rhetoric about land expropriation without compensation has left people trying to work out how to put the champagne cork back into the bottle.

Clients right now are asking whether they are at any risk if investing in property, especially agriculture. The honest answer is that I don’t think anyone can unequivocally provide clarity because it seems even the politicians don’t know what their words mean or how they will practically be implemented.

This week I read a very insightful article by Ruth Hall who is a professor at the Institute for Poverty, Land and Agrarian Studies at the University of the Western Cape. I thought she provided some degree of clarity in an otherwise muddied landscape.

According to Hall, the EFF interprets “expropriation without compensation”’ as not just one option for the state, but that it is to be applied across the board. The EFF wants the state to be the “custodian of all South African land”, which is ironic given its own experience of how state power has been used and abused. State custodianship is an entirely different matter from expropriation with or without compensation in specific cases. It is doubtful that the two parties will be able to find common ground on this.

So the question is which land will be affected? The EFF has now said that expropriation without compensation should apply only to rural land, and presumably commercial farmland, rather than to communal areas. Supposedly, nobody will lose their houses or flats. Incidentally, more than half of commercial farmland has changed hands since 1994 – so, should those who bought property last year be treated the same way as those who inherited land from across the generations? Who should be prioritised for land access? How are the rights and interests of owners, tenants and occupiers to be weighed up? How can the state be held to account? These are the many questions that should animate the debates in Parliament and on the streets in the coming months.

Yet as Hall clarifies, at present, the “property clause” in the Constitution applies to all forms of property – commercial farmland, residential homes, informal land rights and property other than land, including stocks and bonds, pensions, intellectual property and other assets.

This will have to be one of the issues addressed by an ad hoc Constitutional Review Committee, comprised of different political parties, to “review and amend section 25 of the Constitution to make it possible for the state to expropriate land in the public interest without compensation”. The big question is also whether it would it be permissible for the Constitution to allow different standards to apply between those who own farms versus those who own houses?

Confusingly for some, the Constitution already makes it possible to expropriate without compensation and the amendment is therefore not needed. If it is “just and equitable” that compensation be set at zero, that is allowed under the existing “property clause”. The litmus test is what is “just and equitable” in a given case. Hall further points out that this is a reality that has been glossed over in the populist push towards blaming the Constitution for political failure.

So it is safe to say that the next few months will be filled with robust debate about land rights and economic justice. The Constitutional Review Committee has a critically important role to play and it is important for all stakeholders in civil society and business to actively engage in the process to ensure a ‘just and equitable’ solution for all South Africans.

Author: Tim Johnson

Submitted 09 Mar 18 / Views 1294