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On the nationalisation of land

Paul Hoffman says EWC is a threat not just to Section 25, but the “founding values” of the constitution

Nationalisation of land (aka expropriation without compensation) will be constitutionally difficult and economically disastrous.

The EFF is certainly pertinacious in its pursuit of its policies. In 2017 it found itself somewhat isolated in what it calls its campaign to secure land expropriation without compensation. This year, and following the adoption of a rather tentative ANC resolution on the topic at its December 2017 Nasrec conference, the EFF was able to get the National Assembly to refer the issue and its desired amendment of the provisions of Section 25 of the Bill of Rights, the property clause, to the Constitutional Review Committee for consideration. Roughly two thirds of the members present voted for the motion after it was amended at the instance of the ANC. The DA, Cope, FF+ and the ACDP voted against the motion. The actual votes cast were 241 for and 83 against the motion.

Julius Malema, Commander in Chief of the EFF explained the EFF’s rationale for the move:

“Every land in South Africa should be expropriated without compensation and it will be under the state. The state should be the custodian of the land,”

The EFF’s idea is to transfer all land in SA to the state for the benefit of “our people”, whoever they may be. Private ownership of land would accordingly abruptly end upon the implementation of this form of expropriation. This policy is usually called nationalisation, but in the world of smoke and mirrors that is called “politics”, seizing upon expropriation without compensation as the name of the project is preferred, presumably because expropriation on a just and equitable basis – which notionally may or may not include the payment of compensation – is referred to and regulated Section 25.

The Constitutional Review Committee is enjoined to look into amending Section 25 and any other provisions of the Constitution that may be implicated in the scheme to end private ownership of land and to transfer it all to the state without paying the owners of the land a cent. This new regime would apply to all land not already in the hands of the state, including the vast tracts of KZN which are held by the Ingonyama Trust.

It is prudent to draw the attention of the Committee to a provision of the Constitution that is implicated in the move as it has to prepare a report back and conduct a public participation process before the end of August 2018.

Section 74(1) of the Constitution is not often referred to in the daily lives of South Africans. In essence, it provides that the foundational values of the new order cannot be amended unless the proposed amendment enjoys the support of 75% of the National Assembly and six of the provinces in the National Council of Provinces.

The calculatedly opaque or somewhat vague resolution of the ANC at Nasrec to support expropriation without compensation is going to bring the foundational values of the Constitution into sharp focus in the deliberations around the legality and wisdom of giving legislative effect to the ANC’s resolution. This attention to section 74(1) is because the rule of law is a foundational value.

It is a primary element of the rule of law that the system in place in any given constitutional democracy should include respect for property rights. The SA Constitution regards the rule of law as “supreme”. The National Accord, which preceded the adoption of the Constitution, was premised upon upholding the rule of law, not “rule by law” which is what was in place under apartheid. Respecting the rule of law is the right way in which to aspire to a society in which the inherent human dignity of all is respected, the achievement of equality is promoted and guaranteed human rights are enjoyed by all.

The rule of law is regarded as sacrosanct in our constitutional dispensation. This high status is also compliant with the internationally accepted definition of the rule of law which the World Justice Project has devised and refined as the basis for its most useful “Rule of Law Index”. In the definition of the rule of law the following words appear:

“The laws are clear, publicized, stable, and just; are applied evenly; and protect fundamental rights, including the security of persons and property”

In short, security of property rights is a basic tenet of the rule of law everywhere on the planet where the rule of law holds sway.

One of the really hard fought sections in the Bill of Rights is the “property clause” – Section 25. It is also the second longest section of the Bill of Rights (after the part so beloved of, and well used by, Jacob Zuma – which deals with the rights of arrested, detained and accused persons).

Section 25 is not well understood and has not been put to optimal use in the striving for a better life for all in the new SA. A misconception that it envisages the “willing buyer, willing seller” policy that the ANC formerly put in place has wide currency.

This interpretation is simply not correct.

Resort to the wording of the section, a salutary approach, reveals the real deal that was made at the birth of the new SA and one searches in vain for the words “willing buyer and willing seller”:

1. No one may be deprived of property except in terms of law of general application, and no law may permit arbitrary deprivation of property.

2. Property may be expropriated only in terms of law of general application-

a. for a public purpose or in the public interest; and

b. subject to compensation, the amount of which and the time and manner of payment of which have either been agreed to by those affected or decided or approved by a court.

3. The amount of the compensation and the time and manner of payment must be just and equitable, reflecting an equitable balance between the public interest and the interests of those affected, having regard to all relevant circumstances, including-

a. the current use of the property;

b. the history of the acquisition and use of the property;

c. the market value of the property;

d. the extent of direct state investment and subsidy in the acquisition and beneficial capital improvement of the property; and

e. the purpose of the expropriation.

4. For the purposes of this section-

1. the public interest includes the nation’s commitment to land reform, and to reforms to bring about equitable access to all South Africa’s natural resources; and

2. property is not limited to land.

5. The state must take reasonable legislative and other measures, within its available resources, to foster conditions which enable citizens to gain access to land on an equitable basis.

It can been seen from any fair reading of the text that a delicate balance was devised, one in which the interests of the dispossessed masses and the minority dispossessors are catered for so that “equitable access to all SA’s natural resources,” not just land, can be achieved.

This approach is unexceptionable; properly implemented it would preserve the fealty of the country to the rule of law and would also address the longing for ownership land that some of the poor majority still have, despite the rapid urbanisation of the country and the willingness of an increasing number of citizens to make do with life in the cities, where land, lots of land, is not the issue as much as adequate access to housing is. The EFF certainly does not envisage ownership of the land being transferred to the dispossessed, as can be seen from the words of its leader quoted above.

It is conceivable, under the existing approach, that no compensation need be paid in circumstances in which it is not just and equitable to do so. For instance: a flourishing model farm (not called Estina) was stolen by colonialists and reduced to rubble and dirt by vandalism, mismanagement and over-grazing. Upon expropriation of the thieves and receipt of evidence proving the radical diminution in value of the farm and the destruction of its infrastructure, any reasonable court would be hard pressed to award compensation.

Why, at its Nasrec conference, did the ANC completely change its stance and why has it now plumped for EWC? The change of heart is obviously attributable to the fear that as an election issue EWC, a populist call if ever there was one, would secure increased support for the EFF and perhaps even bring about a post 2019 election hung parliament in which the red berets would hold the balance of power and become the king-makers.

The difficulties are many and varied. From a technical perspective any normal amendment to the Bill of Rights requires a two thirds majority, while an amendment to the core values of the Constitution requires a 75% majority. This majority would involve increasing the 241 votes in favour of the EFF’s amended motion to 300 votes. Conversely, if the opposition can muster 101 votes EWC will not succeed as a legislated option.

The rule of law is one of our constitutional core values and respect for and security of property rights is an essential element of the rule of law. It is certainly arguable that changing the existing and long-standing system of private ownership of land into a system of “state custodianship” of land would undermine the rule of law in the sense that respect for the existing property rights would end.

These considerations imply that unless the new post-Zuma ANC/EFF alliance finds a way to get the camel through the eye of the needle, it may find itself on the receiving end of constitutional challenges that impugn any but the most carefully worded amendment of section 25 of the Bill of Rights. BUSA, Afriforum, Agri-SA and several of the opposition parties in parliament are already sharpening their knives for the challenges ahead.

From an economic perspective EWC is sheer leftist lunacy. Ask any Zimbabwean, even the new President. Especially the new President. Under Mugabe’s not dissimilar land policy Zimbabwe declined from being the bread-basket of Africa to being one of its worst basket cases. The economy tanked, the value of the currency became so ludicrously weak that it was abandoned. The middle class fled and the poor lost their jobs in droves. Today a subsistence economy prevails in Zimbabwe and its new leaders yearn to open it for business.

Will the ANC learn from or copy the mistakes made by ZANU-PF and other liberation movements in Africa whose popularity at the polls wanes? Zambia went through the doldrums as a one party state and has matured into a multi-party constitutional democracy under the rule of law.

SA is already in the shape and form of governance that is able to attract foreign investment and to encourage local investment. Tinkering with Section 25 could upset this felicitous state of affairs, to the detriment of the poor more so than to those whose property is expropriated or nationalised. Already there is an “investment strike” in SA, one which sees about R1,5 trillion washing around on local balance sheets in cash or near cash form.

The necessary trust in government that builds the confidence to invest these huge amounts cannot be built on the rocky foundation of EWC, indeed, as the ANC has acknowledged, food security, sustainable farming and the health of the economy will all have to be taken into account if the EWC amendment is not going to bring about a Zimbabwean type of outcome. And, in a sense, as a largely agricultural economy, Zimbabwe is more resilient than SA in times of economic hardship because the poor are not urban dwellers and are able to subsist on maize, eggs and the odd chicken in the lean years. In contradistinction, a flight of capital induced by EWC will leave the urban poor in SA up the creek without a paddle, a job and even food. Subsistence farming is not an option for them; revolution of a kind not covered by the NDR is a likely outcome.

When the NEC of the ANC has done its homework, has listened to the submissions made in the public participation process and has been given proper legal advice, it is likely to come to the conclusion that the best interests of the country are served by the retention of the status quo and that expropriation with compensation is more likely to render the economic development of SA sustainable than EWC ever will.

The introduction of EWC would hole the Land Bank below its waterline. Farmers who offer their farms as collateral security to lenders will be unable to do so and will have to seek greener pastures elsewhere. Many, in anticipation of EWC and for other reasons, have already done so.

If the ANC ends up putting its own interests above those of the country, then EWC will be used to win votes in 2019. Whether this stratagem will be sufficient to save the ANC from electoral defeat remains to be seen. What can be predicted is that SA, with EWC, will descend into failed statehood, another African kleptocracy in which those dreams deferred in the constitutional settlement of 1994 become the nightmares of uhuru in the all too near future.

SA without EWC has every prospect of cleaning up its act, clearing out the corrupt in high places, boosting the confidence of investors both local and foreign, and putting the flop that the Zuma years have been behind it.

Everyone who cares for the future of the country is encouraged to lobby the Constitutional Review Committee not to follow through with the idea of EWC or the nationalisation of land and state custodianship. These notions undermine the rule of law, they are contrary to the spirit of the Constitution and will cause an economic disaster of the kind we have already experienced indirectly through the presence of many in the Zimbabwean diaspora who have left the land they love to settle in SA.

Clear and dispassionate thought applied to the notion of EWC leads to its rejection as a viable policy option.

Paul Hoffman SC is a director of Accountability Now

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