OPINION: Ramaphosa`s meeting with German President speaks volumes

Source: Business Report, 21/11/2018

That undisguised concern is the looming prospect of expropriation
without compensation (EWC) in a new phase of ‘land reform’
conducted by a state legally empowered to take private property
without paying for it.

Not for the first time, the emphasis of those headlines â€` ‘no land
grabs’, investors ‘reassured’ â€` reflect the president’s strenuous
efforts to play down the risks and insist that whatever comes to
pass will be lawful and orderly and thus hold no danger to
investors.

The question that must arise is, simply, when is an assurance an
assurance you can bank on?

To say that EWC will be introduced in a lawful way is not
reassuring; South Africa can look back at a century of devastating
dispossession enacted by law. Lawfulness does not convert bad
policy into good policy.

Embarking on ‘orderly’ land expropriations without compensating
owners is not reassuring either. Whether a mob or a department of
state does the taking, the effect is indistinguishable â€` except
for the fact that if the state does it, and does it legally, the
scope for any appeal to justice is that much narrower.

Finally, to say that investors can and do feel assured as the
economy is open for business and is a safe bet stands in flat
contradiction to the data; less than 1% growth nearly a year after
the promise of a ‘new dawn’, and mounting unemployment (9.7
million by the expanded version), with some 300 000 more South
Africans finding themselves without a formal job since this time
last year.

Whatever investors or foreign leaders say in public, the numbers
express an inescapable truth.

And nobody is in any doubt that the gathering enthusiasm for
expropriation without compensation sponsored by the ANC and led
from the front by Cyril Ramaphosa is chiefly responsible for
switching on the hazard lights. Property rights anchor investment
and if you threaten them, you chase investment away. EWC cannot be
championed as anything but an investment killer, for the simple
reason that a threatened dilution of property rights places all
investment at risk.

The danger of EWC goes well beyond farmers losing maize fields and
cattle ranches. Property rights are indivisible, and if the
precedent is set on land (as it was in the case of mining and
water rights) then it can be expanded to wherever there is wealth
to be extracted.

No investor is blind to this risk â€` or misled into thinking that
taking property without paying for it really is the historical
imperative on which land redress or the success of emerging black
farmers depends .

If President Ramaphosa cannot by any measure be held solely to
blame for the complex economic and policy deficiencies that lie at
the root of South Africa’s plight, the same is not true of the low
credibility of his reassurances to his country, world leaders and
the foreign investors on whom the country depends.

Many may wonder if Germany’s President Steinmeier could really
have come away from his meeting with Mr Ramaphosa feeling
reassured given that their encounter followed only days after the
ANC had put its stamp on a recommendation to tamper with the
property protections in the Bill of Rights.

Are we to speculate that Mr Ramaphosa confided that he himself
wasn’t in favour? Or that, as some of his supporters argue, EWC
has been foisted on him by his rivals?
If either was true, it would mean the president had limited
influence on the party he led, and that any assurances he chose to
give could not carry sufficient weight to be credible.

What is distressingly credible is that South Africa’s intensifying
efforts to assure everyone that everything will be all right is
only confirming the very real danger we are facing.
Being honest about just how bad eroding property rights will turn
out to be for all South Africans has to be the first essential
step towards averting the disaster that threatens us.