South Africa’s agribusiness sector has long believed that land ownership should reflect far greater equitability and give effect to the constitutional ideal of restoring dignity in an equitable and just society.

By Deon van Wyk, ABSA Regional AgriBusiness Manager (email: deonvw@absa.co.za)

Right from the onset, the business sector has maintained that this should be done in a manner that is premised on market principles, and that does not undermine or dilute property rights, but ensures inclusive and sustainable transformation of the agriculture sector.

Any deviation from the principle of payment for property at market value represents a dilution of property rights, and would undermine the value of agricultural assets. Payment for property at market value is the means to broaden access to property rights without diluting those same property rights, and the trust that financial institutions place in the land market as security.

As it currently reads, the Constitution makes provision for expropriation in the public interest subject to just and equitable compensation. The difference between just and equitable compensation and market value is open to much debate, but the state has been very reluctant to exercise these powers over the past 22 years because of the uncertainty of the effect it could have on land markets and financing. Ironically, this means that the courts were never able to engage with the concept of equitable compensation to provide society with answers.

While the context of just and equitable compensation is still unknown, the ANC’s recent policy decision to include expropriation without compensation as one of the mechanisms to acquire land for redistribution will, in all likelihood, place the existing R160 billion public and private investment in agriculture under threat, and deter any further investments in the sector.

Following the ANC’s decision, businesses have repeatedly engaged with representatives of the ruling party to impress upon them the potential ramifications of such a policy, including the fact that it is incongruous with economic growth.

Organised agribusinesses have offered a number of public-private partnership models that could be implemented to achieve land reform in line with both the Constitution and the National Development Plan (NDP).

Should expropriation without compensation be pursued, it will require an amendment to the Constitution. The likely steps followed would be:
• A Section 74 Bill would be drafted and submitted to Parliament, proposing amendment of Section 25 of the Constitution.
• Such a bill will likely be initiated by the Minister of Justice and Constitutional Development, and be published in the Government Gazette at least 30 days before being introduced to Parliament. This will allow the public to make written submissions on the proposed amendments. The bill must also be submitted to the various provincial legislatures for their comments.
• The Bill is thereafter introduced to the National Assembly (NA) and the National Council of Provinces (NCOP) by the Minister, along with all written comments received from the public and the provincial legislatures.
• The NA and the NCOP will also take steps to facilitate further public involvement by way of either written or oral submissions.
• Thereafter, first the NA, and then the NCOP, must pass the Bill by a two-thirds majority, but this cannot occur within the first 30 days of the Bill’s initial introduction.
• If the NA and NCOP pass the Bill, it will be sent to the President for assent. Once the Bill is enacted by the President, the Constitution will be amended in line with the Amendment Act.
• However, this would still not allow the state to expropriate at will, as the draft Expropriation Bill currently serving before Parliament will still need to be passed to provide for the process that must be followed upon expropriation.

Changing the Constitution
There has been some debate on whether a 66% or 75% majority is required for the Bill to be passed. Our present understanding is that 75% would only be required if changing the property clause is seen as changing the rule of law. This argument is based on international definitions outlining the contexts of the rule of law, but there is no precedent in South Africa’s Constitutional law that property rights are part of the rule of law.

It is therefore unlikely that the founding principles of the Constitution, which require 75% of the NA’s vote, will need to be amended to remove the need to pay compensation upon expropriation. This implies that 66% of the vote would be required to change Section 25.

An amendment of the rule of law would have far reaching consequences not only for property, but for the South African legal order as a whole, as it would permit de facto land grabs without administrative process. But since the ANC has said that expropriation will be within the rule of law, it seems there is no intention to change the rule of law.

Should the constitution be amended as outlined above, it will not condone a ‘land grab’ approach as the right to administrative justice, the right to have disputes settled in a court of law, and the right not to be evicted without a court order will not be affected, as South Africa still functions according to the principle of the rule of law.

Currently, farmers have the right to challenge the expropriation of their lands in court, as well as whether the proposed compensation is just and equitable. Should the Constitution be amended, farmers will still have the right to challenge the expropriation of land, but not the lack of compensation.

Thus, the steps to amend the Constitution make provision for public input, which Absa will use to convey the benefits of free market principles. This is to ensure that land reform is carried out in a manner that allows new entrants to own and manage viable enterprises, and agriculture to continue to be viable, grow, and contribute positively to national food security and economic growth.

After all, the ANC has said that the Constitution will only be amended if the amendment will not negatively impact agriculture, food security or other sectors.

Note: This article is intended to be an interpretation of the process that is likely to evolve in the development of a law on expropriation without compensation. It is solely for information purposes and does not represent Absa’s view on the matter.

Source: Langa Simela & Theo Boshoff