Expropriation Without Compensation: It’s game on!

By IAfrica
In South Africa
Jun 23rd, 2014
0 Comments
112 Views

I.

Want some confirmation that Julius Malema’s EFF has squirrelled its way into the national consciousness and dug in for good? Since the elections, I’ve been receiving emails and Tweets and alarmed phone calls regarding the imminent expropriation sans compensation of the high-walled compounds many South Africans call home. The gist of these messages can roughly be summarised as follows: in order to save itself from the guillotine, the ANC is getting the jump on Malema and his red-overalled homewreckers by instituting a series of bills, amendments of bills, programmes, and legal initiatives that will make it much easier for the government to take away houses, farms, and Sandton City from rich white people, thereby turning South Africa into Zimbabwe.

The issue was synthesised rather neatly on political analyst Nic Borain’s Politics and Investment blog, in which he reposted twelve “legal concerns” regarding the property rights issue, as itemised by the South African Institute of Race Relations and AfriBusiness. (The former is a “classically liberal think tank” with solid Apartheid-busting credentials; the latter is an Afrikaner pro-business lobby group). Borain, who didn’t return a request for comment, warned his readers to “consume with the requisite amount of salt”. But high net-worth individuals tend to stay away from sodium because it’s bad for the blood pressure and have therefore taken The List to represent the beginning of the end of the fall.

By all means, read it for yourself:

  1. The National Development Plan has as its aim the transfer of 20% of the agricultural land in a district to black recipients, at only 50% of the value as determined by the state (in terms of the Property Valuation Bill).
  2. The verdict of the Constitutional Court in April 2013 in the case of AgriSA v the Minister of Minerals and Energy distinguishes between “deprivation” and “expropriation”. After the verdict the state is able to dispossess and redistribute property, as long as the state does not assume ownership of the property and act (sic) only as custodian.
  3. The Green Paper on Land Reform aims a radical redesign of property rights, with inter alia a type of freehold on land which will drastically limit the rights of owners. Within this context a Land Management Commission is proposed, which will have discretionary powers regarding disputes over title deeds.
  4. The policy proposal by the Minister of Land Reform, Gugile Nkwinti, for “Strengthening the rights of workers working the land” aims to transfer 50% of the land to the workers, commensurate with their term of service. No compensation will be paid to the owner.
  5. The Expropriation Bill poses that expropriation may be used for the public interest and public goal. The Bill is not only applicable to land but will cover all types of property. Public interest and public goal are determined in an ad hoc manner and both have restitution as aim.
  6. The Promotion and Protection of Investment Bill allows state intervention in investment processes. The Bill explicitly provides for expropriation at less than market value. All in the name of so-called restitution. Any property used for commercial purposes is targeted by the Bill.
  7. The Infrastructure Development Bill aims to eliminate so-called inequalities in infrastructure. The Presidential Infrastructure Coordinating Commission is granted the authority to expropriate in the public interest and for the public goal.
  8. The Spatial Planning and Management of Land Use Act aims at centralised planning of land ownership. It proposed so-called spatial justice by integrating low and high cost housing in residential developments.
  9. The Extension of the Security of Tenure Amendment Bill expands the rights of occupants and their dependents. Evictions are strictly controlled and the Amendment Bill means a significant loss in control over property.
  10. The Restitution of Land Rights Amendment Bill creates further political and economic uncertainty regarding the future of property rights.

11.The Rental Housing Amendment Bill proposes stricter regulation of the rental property market. Rental Tribunals will be established to hear disputes and will be able to determine increases in rent.

  1. The National Water Amendment Bill and Policy Review prohibits the trading of water rights and proposes a use-it-or-lose-it principle for water rights. Equality (including racial transformation) becomes the criterium (sic) for the allocation and re-allocation of water rights.

Indeed, if you’ve ever used the term “real estate portfolio” un-ironically, this may appear terrifying. But does The List signal the first parries in a government mandated, politically expedient property rights revolution? Or should the landed gentry just shake up another batch of martinis, swallow a couple of Ambien, and sleep off the fuss?

II.

Before we drill down into specifics, it’s worth taking a discursive iPod Shuffle-like stroll through the Expropriation Without Compensation greatest hits collection. The playlist kicks off, of course, with the Freedom Charter, famously adopted by the Congress of the People in Kliptown, 1955. The document, which propelled the ANC and other local liberation movements through the dark years, was fairly explicit on land rights come the end of Apartheid: there wouldn’t be any. In the post-regime commie Shangri-La, “The Land,” insisted the Freedom Charter, “Shall be Shared Among Those Who Work It!” This meant that “restrictions of land ownership on a racial basis shall be ended, and all the land re-divided amongst those who work it,” and “all shall have the right to occupy land wherever they choose.”

And so the regime sent tanks into townships to shoot children in order to ensure this didn’t happen.

If you’re keeping up with your history you’re aware that Apartheid eventually did fall, along with several contemporary regimes. In the wake of the collapse of the Soviet Union, Nelson Mandela’s nascent ANC alliance picked through the Freedom Charter in order to spiff up its ethos, leaving only the sunny “South Africa belongs to all who live in it” stuff, while ditching the socialism. On his first round-the-world tour, it wasn’t neo-libs or neo-cons who told Madiba that he’d have to be nuts to nationalise banks and mines and farms and shopping malls. According to long-serving finance minister Trevor Manuel, it was the Chinese—at the time re-inventing capitalism by transforming the Communist Party into the biggest organised crime network in human history—who counselled him against adopting anything in the Freedom Charter even vaguely related to economics. Indeed, from the perspective of the throne room, it suddenly seemed ludicrously destabilising to strip wealthy (whites) of their $$$, and a deal of sorts was struck. As Sisonke Msimang noted in these pages, “black forgiveness would be exchanged for white loyalty to the country. Black people would ‘let’ whites live with them in peace because [whites] were needed to run the economy—forgiveness as a quid pro quo for technical skills”. More specifically in this case, forgiveness as quid pro quo for maintaining an economic system based on property rights.

Which is perhaps why Andile Mngxitama, the EFF’s Ideologue in Chief, recently told me, “My friend, in 1994, I did not celebrate, I did not cheer. I knew it was a sellout. I have gone through about 20 years of depression”. Mngxitama was surely not cheered by Section 25 of the new Constitution, which seemed designed to drive revolutionaries to the bottle:

No one may be deprived of property except in terms of law of general application, and no law may permit arbitrary deprivation of property. Property may be expropriated only in terms of law of general application for a public purpose or in the public interest; and 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.

Which was followed by the clause that kicked the nationalisation debate firmly in the balls:

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.

That, we all figured, was that. Those with walls electrified them; those without waited for houses to sprout from the thin soil of the Redistribution and Development Programme (RDP). To some, this was a burst of economic sanity that would stabilise the country and power it forward. For others, it was an abrogation of everything Apartheid’s opponents had fought for, a dismissal of ancient ubuntu communal land-sharing philosophies, and flat-out un-African. Section 25 took pride of place above the mantel, while the Freedom Charter was hung in liberated South Africa’s second bathroom, right above the toilet.

III.

Were there other options available to South Africa’s constitutional framers? There most certainly were. As it happened, in the early 1990s South Africa wasn’t the only country on the continent grappling with property rights issues. In an Ethiopia newly liberated from the grips of Mengistu Haile Mariam’s murderous stupidity, Meles Zenawi’s Ethiopian People’s Revolutionary Democratic Party (EPRDF) was tasked with cobbling together a constitution. Meles was not Madiba: while our president-in-waiting took his ex-enemies to his breast, Meles mumbled Marxist-Leninist shibboleths in his sleep. Despite the fact that Mengistu’s nationalisation-crazy Derg regime had repeatedly raped the countryside, slaughtered landlords, and used land as a weapon, Article 40 of the 1994 Constitution didn’t change much:

The right to ownership of rural and urban land, as well as of all natural resources, is exclusively vested in the State and in the peoples of Ethiopia. Land is a common property of the Nations, Nationalities and Peoples of Ethiopia and shall not be subject to sale or to other means of exchange.

This made Ethiopia’s international backers enormously queasy, but there’s no evidence to suggest that Meles gave much of a rat’s ass. After all, he could feed the starving with the billions of dollars in Western aid he was awarded for so diligently killing the Horn of Africa’s Islamists.

How has this worked out for Ethiopians? Well, nationalisation has never turned out particularly well for Africans. Even relatively well-intentioned leaders, like Julius Nyerere in Tanzania and Kenneth Kaunda in Zambia, sank their countries when ill-conceived economic policies collided with diving commodities prices in the 1970s. But Meles was practicing a postmodern form of nationalisation. Just as his critics suspected, land would become a form of control. In 2005, under cover of an election that went spectacularly pear-shaped, he instituted the “Federal Rural Land proclamation”, which stated:

Private investors that engage in agricultural development activities shall have the right to use rural land in accordance with the investment policies and laws at federal and regional levels.

Yes, friends, you guessed right: agri-business and men with money became rural Ethiopia’s real citizens, while the peasantry—roughly 90 percent of the population—could wait in line for their rights. This has meant forced land removals, villagisation campaigns that Stalin would be proud of, and the odd rape n’ shoot campaign led by the Ethiopian security forces, designed to keep Anauk peasants in line.

But South Africans, parochial by nature, do not have to look so far north for a land reform lodestar. Let’s hear from the EFFs Andile Mngxitama again. “Zimbabwe,” he has said, “is the only truly liberated country in black Africa.” He believes that this is the case because, “While black South Africans are landless, unemployed squatters crammed in townships with no hope, despite having the best Constitution on earth,” Zimbabweans, on the other hand, “have been able to redistribute land from 4,000 white settlers who owned 80% of Zimbabwe […] now, more than 380,000 black households own the land.” Even the international media, Mngxitama stated, was starting to report on booming farms and successful new black farmers.

Mngxitama was willing to concede that “Zanu-PF didn’t handle the whole land redistribution business effectively”—not because white farmers got beaten and dispossessed in the process, or because their black farmhands were in for much of the same, or because inflation hit a trillion or so percent in 2007. Mngxitama was bummed out because the ruling party “neglected to immediately invest in land to support new land holders to at least keep production at acceptable levels.”

The idea was sound. The execution, however, needed a bit of work.

Most white South Africans, many black South Africans, and every last Zimbabwean scraping out a living in economic exile can recite the Zimbabwean land reform/farm invasion story by rote. But there’s a slight problem with the accepted history: it’s wrong on one important detail. According to grizzled lefties Joseph Hanlon, Jeanette Manjengwa and Teresa Smart, among other revisionists, it was never Zanu-PF’s intention to institute a land reform programme, at least not one anywhere near as radical as the one that unfolded in 1999—even the most craven Zanu dumbbell knew what ad hoc land reform would do to the economy. In fact, when ‘war veterans’ first started squatting on farms, Zanu was in a deep political crisis. With little room to maneuver on account of a suddenly viable political opposition, Mugabe had no choice. Placed in its proper historical context, land reform in Zimbabwe can never be considered a government-driven programme. It was a revolution as much against government as it was against socio-economic conditions. Uncle Bob, the ultimate survivor, simply hopped on the train. The dude had nothing to do with it, until he had something to do with it. Zimbabwe was liberated by accident, if living under the Zanu-PF security state can be considered liberation.

So what lessons can Ethiopia or Zimbabwe or anywhere else teach shakily neo-liberal South Africa about land reform? Those on the right would scream, “Absolutely fucking nothing!” Those on the left would insist, “We must rise up, take what’s ours, and the government shall follow.” Within this jumble of competing contexts, non-conversations and false histories, the current ANC administration has decided to do what it always does: a little bit of this, a little bit of that, and a whole lot of nothing. Which brings us back, in a roundabout way, to The List.

IV.

By virtue of being compiled by seasoned economists and think tankers, The List puffs out its chest and presents itself as something coherent and considered—property rights rollbacks are now ANC policy, it insists. However, we must at all times remember that the current ANC administration specialises in incoherence. And while I’m willing to concede that the ANC has finally woken up to the threat from the radical left and wants to get its Mugabe on, how can we be sure that The List signals unified, laser-focused intention? Deputy President Cyril Ramaphosa, currently running the country while President Zuma convalesces with what is either the sniffles or full-body cancer, depending on whom you believe, is one of the more red-blooded capitalists on the planet. And it suits the ANC to maintain Apartheid-era property ownership paradigms, because the party exists to service a narrow elite—one that doesn’t benefit from a zero-sum economy if everyone gets a piece.

Nonetheless, according to AfriBusiness, the fourteen itemised bills, policies, and court verdicts were designed “to undermine property rights in a systematic way. The state first limits property rights by means of carefully crafted legislation and then assumes de facto control over property when it is too late to oppose the move.” The question, of course, is whether the ANC is suddenly smart enough to engineer—across several portfolios, under the watchful eyes of an independent judiciary, all shivering beneath the shadow of Section 25—a creeping cross-platform property heist. Take The List’s ominous-seeming Item 1. I reached out to Pierre de Vos, South Africa’s in-house constitutional law boffin, and he was pretty clear on the issue: although the National Development Plan (NDP), the ANC’s current policy omnibus, hopes to “transfer of 20% of the agricultural land in a district to black recipients, at only 50% of the value as determined by the state (in terms of the Property Valuation Bill)”, it can’t do that, because Section 25 makes it unconstitutional.

In fact, one could scroll through The List performing some dilettantish constitutional lawyering, and knock down about half of every proposed bill or amendment, using Section 15 as a cricket bat. Rural Development and Land Reform Minister Gugile Nkwinti has made much noise lately of his garbled policy proposals that would require commercial farmers to hand over half their farms to commercial farm workers (Item 4), thereby “deracialising” South Africa’s rural economy, and “democratising” the “allocation and use of land”. But he can’t do this, because Section 25 makes it impossible. Item 7 is standard in even the most secure social democracies; a version of Item 8 is extant in almost 200 American cities. Regarding Item 11, which reminds us of a Rental Housing Amendment Bill that “proposes stricter regulation of the rental market”, De Vos states, “There are already Rental Housing Tribunals empowered to resolve disputes between landlord and tenants but these have been somewhat dysfunctional. If they do their job properly, they will actually prevent exploitation and discrimination so I am not sure its such a sinister move.”

What is certain is that any pro-business group worth their weight in Audi A8s would find The List awfully statist and hostile to business. Considered in bulk, The List certainly hints at Zuma’s promised “radical socio-economic transformation”, the latest term spat out by the ANC’s buzzword-generating software. Considered unemotionally, The List presents a bunch of non-viable Constitutional amendments, along with a continuing right/left debate about whether South Africa should have more regulation or less, greater state involvement or none whatsoever. Commies vs. the folks with Ronald Reagan posters on their bedroom walls, or more simply and more crudely: rich whites vs. poor blacks, with an ineffectual, kleptocratic government (working in service of white minority capital) trapped between them.

V.

There’s good reason why the current status quo makes no one happy: it doesn’t give property owners, investors and lenders the confidence and security they need to build businesses and invest in the future. And it doesn’t give economically marginalised South Africans a leg up. Nothing has been settled, and nothing has been redressed. For many it seems like Apartheid never ended, which is why 25 EFF members decamped to Cape Town in late May, having run on an expropriation without compensation platform. “Give us back our land,” demanded the EFF. Poll numbers be damned, they are now the dominant voice in South African politics.

I do think those who are worried about The List are on to something: the status quo cannot, and will not, remain in place. Which means big changes are coming to the economic framework of this country. How, then, to stave off the economic implosion that inevitably accompanies radical land reform policies? Should the government crack open the Constitution and scrap Section 25, then the guesswork is over and South Africa is officially the continent’s latest nationalisation experiment. Should they not, or should they dally in doing so, then more creative solutions will need to be sought.

Here’s one: why not give everyone in South Africa a title deed to the land they live on? As AfriBusiness notes, “the best way to expand property rights is to transfer full ownership of land to the residents of informal settlements and RDP houses. The Free Market Foundation has already launched a successful programme in this regard, and AfriBusiness has encouraged business leaders to participate in this programme. It is crucial to protect the existing rights of owners of land and other assets.” This would reconcile Section 25 with Section 26, which enshrines the right to housing. Some measure of this was adopted by the DA’s campaign for the Gauteng premiership, which made them seem like a real political party with real policy ideas.

The rest of AfriBusiness’s ideas are the usual corporate strong-arm tactics, which suggests that the lobby group, along with so many of the country’s elites, don’t quite understand the urgency of restitution. The EFF, on the other hand, does. Their election manifesto was clear: land will be taken into custody of the state. Unfortunately, this has never worked before in Africa. It isn’t working in Ethiopia currently (at least not for the peasantry), and it’s unlikely to work in South Africa. In the first quarter of the 21st century, has Julius Malema finally figured out Marx, decoded nationalisation, firewalled it from rampant state abuse, and reengineered it to benefit the majority?

I’m not so sure.

South Africa desperately seeks political innovation, and in this case it needs it more than ever. This is an issue that demands cooperation between business, government, and the polity, and we don’t have much of a history of that. The List isn’t the Game Over declaration some may believe it to be. But it is a sign: change is coming. If the country doesn’t wrest the debate from the ideologues on the left and the right we will end up with radical solutions. We will end up not like Zimbabwe or Ethiopia, but like some new, much larger monster: the most sophisticated economy in Africa will tumble over the brink, into a hell of its own making. DM

Photo: A farm in the Ashton valley in the Western Cape of South Africa, 10 January 2013. EPA/NIC BOTHMA


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