Don’t be afraid of EWC

By Reg Rumney

Much energy has been expended on backing – or opposing – the dreaded three-letter abbreviation EWC or Expropriation without Compensation. But EWC is not to be feared and may not even make it into law.

There is a 50-50 chance it will not pass muster in Parliament, according to a member of the panel on land that was tasked with figuring out under what conditions EWC, as it has become widely known, would be necessary.

Wandile Sihlobo, chief economist of the Agricultural Business Chamber of South Africa (Agbiz), was reflecting at a Seriti Talks briefing at the Seriti Institute recently on the work of the Expert Advisory Panel on Land Reform and Agriculture on which he served.

Sihlobo explained the panel, set up in September 2018 with the broad objectives of balancing the need to use land for economic growth and job creation and for restorative justice, was divided on EWC. Any disagreements, however, were rendered moot by Parliament’s decision to go ahead with EWC. The panel’s mandate, then, was to decide how EWC would be implemented and what for exactly.

Returning the land has become symbolic of socio-economic justice and EWC is seen as a key part of that. For some, the wording of “without compensation” might hint not at restorative but at retributive justice.

In itself, expropriation is a remedy widely available to states around the world including the US and is not controversial. Amending the constitution, however, is what worries some, especially as, according to Sihlobo, the panel’s other recommendations do not need constitutional amendment.

In the light of events in neighbouring Zimbabwe, where land grabs disrupted agriculture and ran roughshod over the rule of law, investors have a right to feel nervous. It might help investor sentiment that, as the panel specifically recommends and the ANC government which set up the panel may well accept, EWC should focus on certain cases for expropriation, among others, abandoned land, hopelessly indebted land and unused land owned by State entities.

“The panel said if EWC were to happen it would be pretty much be the last resort.” And, Sihlobo adds, it should be limited to certain cases.

He says that in meeting investment bankers in Britain and the US after the report was published, it became clear investors wanted clarity on exactly what circumstances would allow land to be expropriated with nil payment so that they could reckon the effect on the South African economy.

Why Sihlobo thinks that EWC is not a certainty is that an amendment to the constitution needs a two-thirds majority in Parliament. The ANC by itself commands only 57,5% and would need the EFF – the movers of the February 2018 expropriation motion – to back the ANC with its 11%. But the EFF official position is of wholesale, not targeted, expropriation and it may reject the ANC government’s formulation altogether, thus defeating the amendment altogether.

Should EWC stall, this does not mean land reform is dead. On the contrary, perhaps the EFF has done the country a favour by reviving the land focus that was the preserve of the Pan Africanist Congress for decades. The panel document is wide-ranging and looks at issues such as the impediment to land reform of corruption – with specific proposals to combat it.

Sihlobo believes the focus on EWC, necessary as it is, has diverted attention from the panel’s other controversial recommendations. These include an inquiry into a “land tax” which would tax agricultural land according to its use to discourage owners holding on to large and unproductive landholdings. Along with this is an assessment of “land ceilings,” i.e. limiting the total area of land that any individual or company may own to reverse what the panel document describes as “the trend towards concentration of land ownership, which is antithetical to land reform”.

Sihlobo, noting that there was no consensus on land ceilings, doesn’t support them because they don’t take into account economies of scale and that South Africa needs a mix of large and small farms for global competitiveness, job creation and economic growth. This does not mean that all farms should stay large. The panel identified the need for movement on simplifying subdivision of farming land, because sometimes farmers want to give out portion of land to farm workers, but subdivision comes at a cost because the Subdivision of Agricultural Land Act 70 of 1970 has not been properly repealed.

Less controversial but no less important are the panel recommendations on funding land reform, along with other initiatives that can run in parallel. The panel’s idea is a Land Reform Fund, with finance from the private sector and a re-appropriation of money the government already spends on agriculture-related social development and land reform. The focus would not only be on commercial farming. About 30%-40% would go to developing smallholder farming, he says. And all this can be done without changing the legislation.

Another burning need identified was a land audit to determine exactly who owns what. “The statistics are all different,” Sihlobo says of the figures on how much land is owned by black people in terms of the 30% target government enunciated some time ago. “Government says it is 9%, Agri-SA says 27%, my colleagues at Stellenbosch University say 21%.”

Problems with water allocation and water rights in land reform – and the problems of water infrastructure in South Africa in general – also have to be solved along with, among others, land tenure and labour tenancy.

All these things have been overshadowed by the EWC debate, about which Sihlobo says there will be more clarity soon. The panel has briefed Cabinet, and by the end of September Ministers must give feedback on the report.

  • Reg Rumney works as a communications adviser to the Seriti Institute.