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The Act is intended to aid the government in its express desire to substantially increase expropriation and do so at zero or other non-market-related compensation.

This is for the purpose of increasing state ownership of property. It affects land and all other assets, and emboldens lawlessness in a country already suffering high crime levels and frequent land grabs. It is a serious threat to economic order in South Africa, unconstitutional, and ought to be opposed.

Despite posing a serious threat, the Expropriation Act is not an altogether unique policy of the current government.

Existing legislation which also seeks to dispossess people of property, includes the Broad-Based Black Economic Empowerment Act (last amended 2013) and the Competition Amendment Act of 2018. 

Like the Expropriation Act, these Acts seek to exploit the concept of “public interest” to force the transfer of property or management control at below-market prices from businesses with white owners to the state and its hand-picked recipients. 

Publicly, these Acts are defended with an appeal to the public interest and supporting flourishing black communities, but in practice, the proceeds of this economic extraction are enjoyed at public expense by a limited, government-connected group. As a consequence - and given the integrated nature of the economy - virtually everyone is harmed through a colour-blind negative multiplier effect.

One of the false justifications offered for the Expropriation Act is that of land restitution. 

Land restitution refers to restoring ownership or providing compensation to those dispossessed without proper compensation under the 1913 Land Act and thereafter. However, of the more than 70,000 claims lodged in the 1990s, more than 90% have been finalised. Unfinalised claims are either due to lack of merit in the claims or government bureaucratic incompetence.

The Expropriation Act is neither necessary nor actually intended for finalising the restitution process. Moreover, it is not intended for transferring ownership of land to landless people. Rather, it proposes means by which the state can get its hands on more property and then use this to entrench its control over the economy and political and social life. Therefore, both state ownership of property will increase, and land frustrations will remain unresolved, leading to rising anger and chaotic land grabs.

It must be understood that the real reason the Act provides for sweeping powers of expropriation of any asset, at non-market-related or even “nil” compensation, is that the government intends to undertake this at a meaningful scale.

Otherwise, there would have been no need to push it through. 

As such - and amid the government’s track record of harmful state action and state failure - no credence can be given to the government’s recent assertions that “The Act will be implemented responsibly to avoid negative economic impacts.”

Instead, the way to prevent negative economic impacts is to repeal the Act.

These harms are not just future tense, but have already begun. 

By signing the Expropriation Act, and therefore making explicit the threat even before implementation, the government has acted irresponsibly. It has immediately reduced the perceived security of property, lowering the attractiveness of building businesses and making long-term investments, and corroding trust in a vital pillar of social order.

It is not entirely clear how quickly the state will seek to implement the Expropriation Act. State inefficiency, the negative reaction from influential organisations and international trading partners, and practical complexity mean it may take several years to experience its worst effects. Whatever window of time this offers should be seized to counter and reverse the Act, or render it practically impotent instead of conceding to the state such sweeping powers.

The purpose of Sakeliga’s initial legal challenge will be to strike the worst clauses from the Act, i.e. those clauses that would aid in unwarranted expropriation and expropriation at non-market related prices. 

These clauses are in violation of section 25 of the Constitution of South Africa, providing as they do for, inter alia, so-called “nil” compensation, expropriating so-called unused land, and precluding relevant factors when determining compensation.

We expect this initial litigation to be protracted, possibly continuing for up to several years, eventually resulting in a circumscribed Act. We are in contact with several parties also considering litigation, and consider our litigation to be complementary and necessary from an economic perspective.

Following the conclusion of the initial challenge, or possibly in parallel, we expect to intervene in as many test cases as necessary to support the development of sound jurisprudence on market-related compensation and the limits to state expropriation.

Besides litigation, Sakeliga will continue implementing its strategy of developing alternative structures to failing state institutions. These include promoting an alternative and sound ethical basis for resisting harmful state intervention through maximum appropriate non-compliance, deepening our relationships with international trading partners to encourage appropriate policy responses, and supporting local business chambers to ensure public and private property is protected in urban and rural communities across the country. 

Issued by Sakeliga