Reminding ourselves why EWC is unnecessary

Most South Africans have heard about why expropriation without compensation (EWC) is unnecessary, but this is often forgotten in light of energetic new populist appeals in its favour. It is therefore worth once again reminding the public that EWC is not only a disastrous idea for any society and economy, but it also serves no public-interest purpose.

Two processes are currently underway to realise EWC: The first and most important is the Constitution Eighteenth Amendment Bill. This proposed amendment to the Constitution will make it possible for government to expropriate property without being required to pay compensation. Parliament will be empowered to decide under which circumstances this may happen. The second process is the Expropriation Bill, which is the legislation that Parliament is using to determine said circumstances.

Both these interventions will, if enacted, turn back the progress made in the realisation of people's property rights, invariably chasing away potential investment and leading to an even greater exodus of wealth (at least 5,000 dollar millionaires have left South Africa since 2017, according to New World Wealth). The prospects for historically disadvantaged individuals to become owners with protected rights will also be severely diminished. EWC, which is unconcerned with restitution (a matter of justice), is not the way forward.

But that aside, there are various reasons why government has no good reason to pursue EWC.

On a practical level, government does not lack the ability to pay market-related compensation for property that it expropriates for land reform purposes. Government has convinced many South Africans that EWC is all about land, particularly agricultural land, rather than private or personal property in general; let's assume this is the case (it's not).

Professor Sope Williams-Elegbe of Stellenbosch University writes that of the R800 billion annual public procurement spending in South Africa, about half might be lost to corruption. The market value of most farms on sale according to cursory research is below R10 million, but let us assume the average market value is R20 million. If the R400 billion lost to corruption in public procurement alone every year was spent on acquiring large swathes of agricultural land, at market rate, government would be able to transfer more than 20,000 such plots every year. According to AfricaCheck in 2017, there were 40,122 farming units in total in South Africa. It would therefore take government two years to buy all the farms in South Africa at their market value and give them to beneficiaries.

A far more conservative estimate from National Treasury from 2010 puts the number at R30 billion per year lost to corruption. Assuming this is the case, with that money government can purchase and transfer over 1,500 farms every year.

This is an oversimplification; farms differ wildly in size and usefulness. But it cannot be escaped that the taxpayer provides government with more than enough financial resources to undertake a substantive land reform programme aimed at transferring massive amounts of agricultural land to deserving beneficiaries. There is no need for government to expropriate anything without paying compensation.

But there are more important reasons than mere financial ability for why EWC is unnecessary.

Firstly, municipalities all around South African own millions of houses in which millions of families live. No record of the exact number exists, but it is likely north of five million. These municipally owned homes were largely constructed by the Apartheid regime to provide housing for "temporary sojourners" – blacks who ostensibly belonged in the homelands, but who worked in the cities.

In 1991, these occupants were legally made into owners by the Upgrading of Land Tenure Rights Act. Local governments have been slow to make this a reality, with millions more still needing to receive title deeds. The Free Market Foundation's Khaya Lam land reform project is at the forefront of expediting this process.

Government can, and should – instead of expropriating private property – empower millions of poor South Africans with ownership of the places they have lived for generations.
There's more that government should be doing. All spheres of government, State enterprises, and other public institutions own a lot of land across the country. By no means does government own more than the private sector (and this is as it should be – government has no business sitting on property). Much of this government land is arable, in the north and east of South Africa. Government, in other words, has within its power the scope to immediately transfer great amounts of property to the deserving poor, even free of charge, if it wishes.
Thirdly, government-built housing (often associated with the RDP-house programme of the 1990s) is characterised by insecurity of tenure. Beneficiaries of these homes are not homeowners, as they are prohibited by law from selling these houses for a period of time. This condescending approach to ownership is not the stuff of actual transformation, and must be ended.
This is related to my final point: Whatever government does, it must cease being an owner itself, and ensure the beneficiaries of its land reform programme become owners in title. Leasehold is inherently insecure, and will not redress the injustices of the past.
What is the conclusion we are to draw from all of this?
EWC is a ruse. Government wants the legal authority to seize property with as few impediments as possible. It has nothing to do with the public interest or with land reform.
Not only does government have the means to do what it claims it wants to do – acquire agricultural land to transfer to black South Africans to normalise ownership patterns – but it also has far less damaging, and far more empowering, avenues toward real land reform: Bestowing ownership upon the poor in urban areas, which is fundamentally where most South Africans want to live anyway. Only with ownership can choice and true empowerment and transformation result.
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