With the government budget deficit expected to pass 40% this year, the African National Congress’s (ANC) options to source the coal needed to fuel its gravy train are dwindling. There should be little doubt that the new expropriation law is intended to make up for this insufficiency.
The new bill was introduced by Minister Patricia de Lille as a measure intended to ‘make explicit what is already implicit’ in the Constitution. This was met with a chorus of naïve praise from most of the commentariat, who seem to have not read the bill itself. In fact, if passed, this bill will constitute a terrible assault on the property rights of South Africans, will likely have little effect in speeding up the process of land reform, and is likely to target poorer people who cannot afford to fight the state in court.
The new bill grants powers to municipalities to expropriate ‘property’ – which is not limited to land – at a price that is to be determined by a municipality, based on a number of criteria which it sets out. If the party whose property is being expropriated does not agree to the price, they make take the expropriating authority to court, but only after the property has already been seized.
In other words, the onus is on the party from which property is being expropriated to prove an injustice. This grants local governments around the country enormous discretionary powers. Though this bill may seem a slight improvement on the previous draft law, the original aim seems to have been blurred. Not only does there appear to be little mention of land reform in this bill, but the nature of the bill means that poorer victims of expropriation will likely have little recourse in defending themselves against a state intent on taking their assets.
Sleight of hand
Consider that property assets are a means of earning a living. A farmer cannot make a profit unless he is able to use his land, equipment, and other resources such as animals and labour to create a product. Should the government expropriate a farm, it is only once that farmer has lost his farm that he may challenge the government in court – by which time he will have lost his source of income and ability to pay lawyer’s fees. It is a subtle but powerful sleight of hand on the part of the lawmakers to give the government this kind of advantage.
It can only be concluded, therefore, that the greatest victims of such a bill will be the poor, as they would lack the money to fight the government in court. Wealthier citizens, with their financial resources, well-organised networks and support structures, might be able to litigate more successfully, but for poorer South Africans, expropriation under this bill would mean surrendering their livelihoods to the discretion of already-corrupt local municipalities and their cadres. Given the track record of local governance in much of rural South Africa, there is very little reason to think that the powers granted to municipalities would not be abused.
Be sceptical of commentators who hail this bill for providing certainty on property rights. The ANC has undoubtedly changed its tack with this bill, but the reasoning is far more insidious.
Fiscal cliff
South Africa was hurtling toward a fiscal cliff prior to the Covid-19 pandemic. The economic lockdown that followed has accelerated the process.
Borrowing is skyrocketing to over 40% of the budget, while the tax base is fragile and shrinking. As a result, the revenue sources the ANC relies on to feed its patronage network of cadres is getting smaller and smaller. A recent strike by Cosatu to press for higher wages demonstrates that, even as South Africa and the world face the worst global economic crisis in a century, the hunger for wage increases persists.
Nobody should be fooled into thinking that ANC members are unaware of the consequences of their policy decisions. On the contrary, the data is so strong that it would be impossible for the ANC not to realise the risk. Polling data from the Centre for Risk Analysis shows that, as South Africans become increasingly urbanised and better educated, they are less likely to vote ANC. Add to this that ANC support among young people is hovering about the 50% mark and you see the kind of existential demographic challenge that the ruling party faces.
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There is also the general trend that ANC support tends to rise or fall in line with South Africa’s rising or falling economic performance. The ANC’s highest voter share was not in 1994, at the zenith of liberation, but rather 2004, when lives had materially improved under the pro-growth policies of Nelson Mandela and Thabo Mbeki.
More significant signal
The fiscal situation, read alongside the ANC’s dwindling support, might give the more significant signal that the ANC is even more aware of its finite lifespan as a governing party, finding itself in a crisis at the end of a decade-long low-growth trajectory. In just three years, Cyril Ramaphosa has overseen two technical recessions, and only two of the last ten quarters have had positive GDP growth. This, combined with the sorry state of many municipalities across the country, could mean that the ANC faces a significant challenge in next year’s local government elections.
There is little doubt, then, that a priority for the party is to find another vehicle for wealth extraction, and it appears this is precisely what the Expropriation Bill could be used for. The ANC appears to have embarked on a strategic retreat regarding prescribed assets, given the media storm over the threat to pensions and savings. It is telling, then, that a revised expropriation law should now be put forward, with claims that it offers ‘more certainty’ on property rights, while giving the state enormous powers to extract wealth from property.
Be very sceptical of the motives behind this bill. Ultimately, the thing the ANC cares most about is staying in power, as losing it would derail the National Democratic Revolution. The wording of this bill tells us that it has little to do with land reform – which, after all, is a low priority for most South African voters – and much more to do with clinging to power.
Perhaps then the most poignant lesson is that the introduction of this draft law shows that the ANC is well aware of the risk of electoral defeat – a defeat it is anxious to delay at all costs.
