Where is South Africa heading?

Our country is facing a bleak future ahead, unless economic stability and growth are achieved and maintained. Poverty and unemployment are some of the factors contributing to this, according to Bennie van Zyl, TAU SA general manager.

With rampant crime levels, poverty and unemployment on the rise, the country is facing a bleak future unless economic stability and growth are achieved and maintained. The vast majority of problems facing households across the board has roots in the stagnation of the economy and the bleak outlook on turning the tables and ensuring sustainability.

This requires the application of sound economic principles which need to be applied correctly, timeously and where optimum results are required. A government should have two primary objectives – to ensure the safety and security of the population, and to create a climate within which entrepreneurs can operate with confidence, knowing that their investments will return profits and result in a vibrant economy.

Without these two requisites, growth will be impossible. Sadly, this is currently not the thinking in South Africa. A scrutiny of government policies, bills and acts taking shape indicates there can be no conclusion other than the fact that government is intent on creating a socialist dispensation. Should this be the case, it could mean the end of foreign and local investment which will have disastrous socio-economic effects.

Section 25 of the Constitution deals with property and states the following clearly in Sec 25 (1), (2) and (4):

  • No one may be deprived of property except in terms of law of general application, and no law may permit arbitrary deprivation of property.

Property may be expropriated only in law of general application: 
– for public purpose or in the public interest; and
– subject to compensation, the amount of which and the time and manner of payment of which have either been agreed to by those affected or decided or approved by a court.

For the purpose of this section:
– the public interest includes the nation‘s commitment to land reform, and to reforms that bring about equitable access to all SA’s natural resources; and
– property is not limited to land.

Compensation
In Sub-section 1, no reference is made to compensation when “deprivation” is applied. This creates a loophole to deprive a person of assets without compensation. This has already been applied where mineral and water rights were “deprived” but not expropriated. In the case of Agri SA vs the Minister of Minerals and Energy, the Constitutional Court found that mineral rights were deprived, therefore, no compensation had to be paid.

This implies that government has already utilised Section 25 (1) to gain control over assets of monetary value by appointing itself as the “custodian” without compensating the original owner, to the financial detriment of the latter. The argument by government is that it is not the “new owner” but the “custodian acting in the interests of the people of SA”.

In accordance with the Constitution, which clearly states that property is not restricted to land, the implication is that any asset can be “deprived”. Whereas previously the focus was primarily on land and associated assets, ie, mineral and water rights, a shift to other assets is now becoming obvious. In practice, it should be noted, the implications of “deprivation” and “expropriation” for the owner is the same – the loss of these assets.

The proposed Promotion and Protection of Investment Bill also creates the possibility that any asset can be “deprived” by the state. In this manner, private ownership, which forms the basis of economic activity, is affected. Although the Constitution is hailed as a prime example of citizens’ rights, it is a useful instrument through which government can attach property.

In fact, it places government in a position to influence the utilisation of private property by organs of state.And it does not end there. Several other acts, bills and policy statements are being put in place to enable the state to regulate ownership and utilisation of private property and assets. In the application of restitution, it is increasingly obvious that the expectation of claimants to become “owners” is ill-founded.

In many cases claimants are only allowed to use the land whilst title deeds are retained by government. Such land is therefore nothing more than “dead capital” upon which people are placed and not “working capital” which can be used as collateral to obtain funding. The same principle is applicable to RDP houses. The occupants are at the mercy of government’s disposition while unable to utilise the property to their own advantage.

Acts and bills which affect property rights include The Security of Tenure Act, Labour Tenants Act, The Infrastructure Development Bill, The Property Valuation Act, The Restitution of Land Rights Act, The Black Economic Empowerment Act, etc. SA needs foreign and domestic investment to solve its problems. The question may well be posed: which person would be willing to invest, well knowing that the risk of losing his assets is now very real?

The gradual process of nationalisation and the establishment of socialism must have a negative impact on investment decisions. Without such investments, the country is doomed to stagnate and eventually disintegrate economically. In essence this means that the governing party’s current policies cannot be tolerated any more.

A new approach is thus called for. The collective expertise and capacities of entrepreneurs need to be utilised to enforce a realistic policy environment which will entice investors, both big and small, to ensure growth and sustainability. The alternative is to “redistribute” everything until there is nothing left.

The views expressed in our weekly opinion piece do not necessarily reflect those of Farmer’s Weekly.