Page 53 - IRMSA Risk Report 2020

EXPERT OPINION

SYDNEY SOUNDY
EXECUTIVE MANAGER: STRATEGY AND COMMUNICATIONS, LAND BANK

According to the Report of the High Level Panel on the Assessment of Key Legislation and Acceleration of Fundamental Change, chaired by former
president Kgalema Motlanthe, “Experts advise that the need to pay compensation has not been the most serious constraint on land reform in SA to date
– other constraints, including increasing evidence of corruption by officials, the diversion of the land reform budget to elites, lack of political will, and lack
of training and capacity have proved more serious stumbling blocks to land reform.”

A detailed examination of what expropriation without compensation would mean was produced by Dr Roelof Botha and Prof Ilse Botha and submitted to
the Constitutional Review Committee in 2018. Looking at comparator countries, it set out two likely scenarios for SA over a period of 10 quarters (for the
purposes of the study, it assumed a start in the 2nd quarter of 2018 and continuance to the 3rd quarter of 2020). The study states that “empirical evidence
confirms the stifling effect on initiative, entrepreneurship, and productivity inherent in the plethora of regulations and restrictions that accompany an
institutionalised system where private property ownership is not guaranteed and protected by law.” Studies by the CRA shows that annualised GDP
would be between R270.4bn and R454.8bn lower than if expropriation without compensation was not implemented. Fiscal revenues would fall by
R157.5-R261.5bn. The budget deficit would increase and a downgrade of the country’s bonds to junk would be inevitable. SA would forgo as many as
2.28m jobs.

In 2018, the key feature of land reform was the parliamentary investigation into the necessity for a constitutional change. Concurrently, a number of other
measures have been taken, which include:
• Regulations introduced in terms of the Property Valuation Act set out a compensation formula. This is aimed at property acquired for land reform,
and compensation could fall significantly below the market price;
• The Expropriation Bill, currently under consideration, recognises expropriation without compensation; and
• The report of the Presidential Advisory Panel on Land Reform endorses expropriation without compensation in certain circumstances and proposes
a compensation policy in terms of which compensation will range from “zero” to “minimal” to “substantial” to “market-related” – dependent on the
circumstances.
The process of reaching a “new normal” in policy on property rights, land, and expropriation will likely be a lengthy one. Uncertainty is thus likely
to remain for the foreseeable future. However, the work of the Presidential Advisory Panel on Land Reform indicates that the country is heading for
a decision that aims to be inclusive and will contribute to a new social compact that takes all citizens as well as the impact on our economy into
account. This approach looks at all land in the country, including that which is not currently utilised, and due process is a critical dependency in the
entire initiative.
One of our key concerns as a country is our inability to implement
initiatives such as these. Therefore, extensive stakeholder engagement
will be a key feature of the process: to not only build national consensus
but also access key skills, competencies, and capabilities in the private
sector to make this initiative a national imperative and not one that is
forced on the private sector. The proposed Land Reform Agency must
be both empowered and enabled through competent resources to
execute the policy in such a way as to take SA forward as a country.