President Cyril Ramaphosa announced on 31 July 2018 that the ruling ANC would support an amendment to Section 25 of the Constitution to clarify the conditions for land expropriation without compensation.

By doing so he was arguably acting to reclaim authority over the land narrative in view of the forthcoming election, as well as to limit its divisive politicisation and to manage public expectations.

If an amendment is passed, expropriation without compensation is likely to be applied with discretion, guided by a policy framework that seeks to minimise adverse socio-political and economic impact.

In his recorded statement broadcast on national television late on 31 July, President Ramaphosa addressed the issue of land reform in South Africa.

Speaking as president of the ruling ANC – after a two-day policy convention by the party’s national executive committee – Ramaphosa announced that the party “will, through the parliamentary process, finalise a proposed amendment to Section 25 of the Constitution that outlines more clearly the conditions under which expropriation of land without compensation can be effected”.

The reactions

Reactions to Ramaphosa’s unexpected address have been consistent with the polarising nature of the land reform debate.

For some, the president’s remarks are further evidence of a tilt towards unbridled populism in South Africa – at the risk of societal fragmentation and economic downturn. The alarm has been sounded over Zimbabwe-esque land seizures.

For those who have previously held more moderate views , concern has now been raised over a possible shift in Ramaphosa’s position, after previously indicating his reluctance to endorse such a constitutional amendment during the ANC’s land conference in May.

A third cohort – those agitating for extensive and prompt land reform – welcomed Ramaphosa’s address, but with the proviso that it is followed by meaningful steps to enact the constitutional amendment.

Finally, market sentiment was notably dented by the announcement, as seen with the depreciation of the South African rand by 16 cents to the US dollar within an hour of the broadcast.

Meanwhile, the country’s ranking on the International Property Rights Index – which measures the strength of physical and intellectual property rights‚ and the legal and political environments – declined on 8 August from 27th in 2017 to 37th.

Dissecting Section 25

Stated verbatim, crucial provisions of Section 25 read as follows:

(2) Property may be expropriated only in terms of law of general application—

(a) For a public purpose or in the public interest; and

(b) 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.

(3) The amount of the compensation and the time and manner of payment must be just and equitable, reflecting an equitable balance between the public interest and the interests of those affected, having regard to all relevant circumstances,

(4) For the purposes of this section—

(a) the public interest includes the nation’s commitment to land reform, and to reforms to bring about equitable access to all South Africa’s natural resources; and

(b) Property is not limited to land.

Evidently, Section 25 does in fact allow for the “limitation” of property rights including expropriation without compensation, on the condition that it is in line with the public interest, arrived at via legal process and is just and equitable.

What is of concern in the current wording is determining the precise conditions of “public interest” for which “just and equitable compensation” equates to no compensation. Additionally, there is a question of whether or not the text – and associated policy – should apply to other forms of property. If limited to land, what types of land, and how should it be used or distributed? Furthermore, what authority do the various levels of “the state” have in matters of expropriation?

Collectively, these questions highlight the need for a clarifying amendment which, according to some political commentators, may actually strengthen property rights and give confidence to the market, as truly envisaged by Section 25.

For others, such an amendment is not unnecessary, as the Constitution in its current iteration is sufficiently enabling of expropriation without compensation. In fact, the president himself relayed this point during the May conference and the opening remarks of the 31 July statement. The issue, according to these – predominantly legal – experts, stems from the ANC government’s failure in the past 24 years to propose a law or case that would test Section 25. Such a procedure would have established a judicial precedent that sets the parameters for expropriation without compensation.

Instead, the government previously adopted a “willing buyer, willing seller” approach to land reform, in adherence with global practices rather than constitutional mandate. On 5 August, the ANC retrospectively – and rather expediently – moved to undertake such a test on 139 farms. However, the general feeling is that this is too little, too late. The past 24 years are now a sunk cost and in the prevailing political circumstances, an amendment is needed and is somewhat inescapable for Ramaphosa, given the publicly binding nature of the 31 July statement.

Ramaphosa’s calculus

While there is continued disagreement on the necessity of a Section 25 amendment, political circumstances likely provided the greater impetus for Ramaphosa to address the nation on land reform.

For one, the Economic Freedom Fighters – the leftist opposition party with 8 percent representation in the National Assembly – has attempted to monopolise the discourse on land reform in the country.

Tellingly, in many of the Constitutional Review Committee public hearings, the EFF’s cadres have dominated proceedings while their message has noticeably resonated with the majority-poor black South African population.

Even in broadcast and online media spaces, the beret-wearing leaders and their effervescent supporters have been the most vocal on the issue of expropriation without compensation. There are also reports that certain sections of the ANC are in support of the EFF’s agenda, which may have prompted the president to make his statement prior to the formal conclusion of the policy convention and the usual press briefings. While possible, these latter reports remain poorly substantiated.

Amid general uncertainty on the ANC’s land position, the EFF’s machinations have arguably heightened public expectations for radical expropriation policy. There was thus concern that such expectation needed to be reined in, especially given an upcoming general election in 2019. Accordingly, Ramaphosa’s likely calculation in making the early statement was to reclaim the electoral high ground from the EFF, to manage public expectations regarding any amendment to Section 25, and to reassure markets that he is still in control.

While politically prudent, there is an argument to be made that the president’s statement is in breach of due process, based on that it was made days prior to the conclusion of the review committee’s countrywide public hearings. Equally, it came a month ahead of the publication of the review committee report, whose recommendations were intended to inform any expropriation-related amendment.

However, Ramaphosa’s statement doesn’t necessarily invalidate the purpose of the review committee, which still has a crucial role in shaping the nature of any amendment and associated policy. In fact, it may be for this reason that the president did not specify the nature of the amendment that the ruling party may pursue.

The envisaged policy

In contrast to his various sentiments on a constitutional amendment, the president’s position on expropriation itself has barely wavered.

Early in the debate, Ramaphosa specified that any such policy would be pursued without endangering food security and without undermining economic growth and job creation; the latter of which is of increasing concern following the recent rise in unemployment from 26.7 percent to 27.2 percent.

The president will also be aware of the unfavorable sentiment towards emerging market assets and the property-related concerns that have been relayed by international capital to South African investment envoy, Trevor Manuel, amid his ongoing R1.2-trillion investment drive.

Given the president’s cognisance of these imperatives, and other legal and institutional factors, the forceful and arbitrary confiscation of property – as happened in Zimbabwe – is unlikely. Furthermore, as long as the narrative continues to be steered by Ramaphosa himself, policies envisaged by radical opposition groupings – which are not as extreme as Zimbabwe, but are more populist and less considered than those seemingly envisaged by Ramaphosa and the ANC – are equally unlikely to be implemented.

Instead, the president may attempt to bridge the apparent political-economic divide on land expropriation and use it as an engine for economic growth. One way to do this is to chart a policy that targets the so-called “easy wins” that satisfy political demands while accruing economic gains or avoiding further anxiety. Given his utterances, the president has certainly taken this into consideration and it should be reflected in a balanced policy framework.

The Signal

The contents of Ramaphosa’s land reform statement are consistent with the measured approach adopted by the president to date, in an attempt to balance somewhat conflicting demands from the masses and the market. The timing also speaks of an incumbent who is working to reclaim and contain what is a politically sensitive yet electorally profitable narrative after seeing the more radical and outspoken EFF take the initiative and push the narrative to unwanted extremes.

After Ramaphosa’s gambit, it is possible that the EFF will attempt to retake the initiative in forthcoming weeks through rhetoric and even public gatherings.

While the president is obviously aware of the sensitivities surrounding a constitutional amendment, it is arguably warranted by political pressures and legal uncertainty. In fact, after making the 31 July statement, Ramaphosa may be publicly bound to make good on the amendment.

Any proposed amendment is likely to be guided by the review committee’s report to Parliament in September; equally, it should be complemented by the findings of the 139 cases of expropriation being tested by the ruling party. Textually, it is unlikely that Section 25 will be fundamentally altered. Rather, any changes will attempt to resolve the precise conditions for when it is just and equitable to withhold compensation for expropriated property – specifically land – and other key related questions.

To pass the amendment, several procedural requirements must be met. First, a bill to amend Section 25 must be introduced to Parliament and the National Council of Provinces (NCOP). Thereafter, it must be opened to public commentary and critique – bearing in mind that a vote on the bill cannot occur within 30 days of its presentation to Parliament. At the vote, the bill must be endorsed by two thirds of the 400-member National Assembly and by six of the nine delegates of the NCOP. If the proposed bill impinges on Section 1 – which contains the founding principles and provisions, such as the rule of law – it would require the vote of 75 percent of the National Assembly.

Once the existing expropriation bill is redrafted and represented to Parliament with the desired amendments to Section 25, it is likely to pass. As the amendments to Section 25 are likely to be considered as “limited”, only a two-thirds majority would be required to pass the bill, and the pro-land reform ANC and EFF alone collectively have 66.5 percent of seats in Parliament.

Amid economic and political considerations, it is expected that any subsequent land reform agenda will begin by prioritising idle state-owned land near urban settings for low-income housing purposes, and idle farmland for agricultural purposes. In the latter case, this could be done by realising the productive potential of otherwise unused land and potentially offering employment opportunities for local farm labour.

The explicit concerns over food security and economic losses suggest that productive farms are unlikely to rank highly in the government’s purview for expropriation, unless for purposes of restitution. In such cases, where claimants can point to clear historic dispossession, the government may seek to strike an agreement with the current occupants so as to not disrupt operations, especially given the reality that most such properties have been transacted. Failing which, the government is likely to compensate either party, in a process that will be decided in court.

Elsewhere, the government could similarly target unused buildings or plots in city centres for more productive or residential use, in addition to abandoned mines and mine dumps. In both cases there are challenges, including municipal and other debt which should factor into the government’s consideration.

Finally, it is important to recall that – if passed – expropriation without compensation would exist as a policy alternative and not an obligation. As has been the case since 1994, expropriation without compensation may seldom be applied. Furthermore, any prospect of abuse is likely to be checked by a proactive Constitutional Court and potential backlash from the broad international system to which South Africa is significantly exposed. DM

Menzi Ndhlovu is a senior political risk analyst at Africa-focused risk consultancy, Signal Risk