Land expropriation will lead to SA’s expiration
Ramaphosa needs a mandate to get SA working again, but using the land issue to get it will choke out the country
I wonder what goes through the mind of President Cyril Ramaphosa each morning. I imagine him sipping coffee, planning how he’s going to get the country back to work.
He must shake his head, marvelling in revulsion at the scale of the plundering that his predecessor wreaked on us. The level of their depravity, the stuff of myth and legend.
The president knows that all indicators show the country is facing an uphill path to recovery. In the continent’s most developed country, unemployment is at 27.2%, the highest in the world.The average family, across racial lines, is feeling the hurt of the currency falling 20% against the US dollar in the past five months. Filling the family car or taking public transport is painful. The increases in VAT and luxury goods duties strip the joy from family time.
State-owned entities such as Eskom, drained by state capture and maladministration, reach further into the family purse. The poorest families (55% of the population) are being punished by a decrease in government spending of about R86bn over the next three years – which is also a result of state capture.
Parents with children in state schools worry that it might be their child who makes up the three in four who are considered illiterate.Ramaphosa set himself a target of raising $100bn in foreign and local direct investment to help rebuild the nation. In a short time he has already secured $30bn worth of commitment from investors.
These investments give confidence that SA is still in business and is looking to grow. This is not unwarranted confidence.
Yet, while Ramaphosa is busy with this, he is watching his back.
He had to cut deals and make peace with those who abandoned Jacob Zuma and supported his run for the presidency. These people are compromised, but wield the political influence he needs to be in leadership.
Politics, as they say, makes strange bedfellows.Land expropriation without compensation (EWC) is the issue that restrains his ambitions. It’s an issue that, no matter how it is spun, Ramaphosa had to take away from the red-clad populists. They were scoring political points from EWC. In late February, he took ownership. If he hadn’t the ANC would have been further weakened come the next elections.
Nothing balms the pained poor like populist promises.
The causal link between the timing of the new decline in the rand and when he took ownership of EWC cannot escape him. Has EWC stained the allure of “Ramaphoria” or is this just a mild sign of displeasure on the part of investors? Each time he doesn’t rebuke EWC, investors panic, despite his assurances that EWC can be implemented without damage.
His investment envoy, Trevor Manuel, confesses that these assurances don’t always win: “Communicating this [EWC], I think, is a bigger challenge than we thought.”It’s challenging because there are no models, in the 21st century, that show taking one group’s property away and giving it to another without compensation has not ended in populist armageddons – look to Zimbabwe and Venezuela.
Furthermore, there are no guidelines for the EWC implementation. I think this is deliberate. There are principles aplenty in the constitution and in legacy ANC documents, but no how-to guides. Without this, there are only the past attempts of other countries to be studied and the utterances of those close to him to translate.
The powerful ANC chairperson this past week had this to say about how much land people would be allowed to retain: “You shouldn’t own more than 12,000 hectares of land and therefore if you own more, it should be taken without compensation.”Why should the world trust SA when it can’t guarantee the protection of its own citizens’ property rights, whether they be private landowners or traditional leaders? Once you start with land, what next will you expropriate?
It’s easy, but lazy, to draw parallels with Zimbabwe.
The 28 million black people living in poverty won’t get wealthier through EWC. The capital and training they need will have taken flight. Banks might end up holding billions in debt on land that has been expropriated, and they won’t be forthcoming with business development or home loans. And the state still has a way to go to fix its weak institutions and root out corruption.
All EWC will do is choke out the country. It’ll shatter the trust the world has in SA’s aspirations to be a modernising state.
The president needs a strong mandate from the 2019 election to use the investment commitments he has secured to get South Africans back to work.
Promising EWC, and then dragging out its implementation, is, unfortunately, the low-hanging fruit for him to get this mandate, and it will cost all South Africans.
• Garsen is managing director at Rhanga Corporate, a business finance, consulting and advisory firm that provides services to companies operating and wanting to operate in Africa using SA as a base. He writes in his personal capacity.