Celebrated naturalist Sir David Attenborough warned the annual World Economic Forum (WEF) at Davos of the dangers environmental threats posed to the future of the world. ‘What we do now, and in the next few years, will profoundly affect the next few thousand years,’ he remarked. ‘The Garden of Eden is no more’.
On the sidelines of the meeting, he added that the prospects for economic growth were rapidly dwindling, and new economic models were going to be needed.
One has to wonder how President Cyril Ramaphosa felt about this. As much as being a platform to solve the pressing issues confronting the Earth, the WEF is a convocation of some of the world’s wealthiest and most influential politicians and businesspeople. It is a unique, perhaps unparalleled opportunity for countries to market themselves to investors, and to showcase the opportunities they offered.
For the president and his team, Davos was a platform to do this – albeit one somewhat diminished by the absence of such important world leaders as Donald Trump, Xi Jinping and Theresa May. And while Sir David may have predicted the end of growth, the South African delegation was there to fire it up. The country’s somewhat forgotten National Development Plan put the country’s annual GDP growth needs at a sustained 5.4%, underwritten by an investment rate of 30% of GDP. Last year, growth is expected to have been less than 1%.
President Ramaphosa specifically made the point that without this number lifting dramatically, and keeping up the growth momentum for years, South Africa will have little chance of dealing with the debilitating socio-economic problems that plague the country.
Unfortunately, President Ramaphosa’s intervention at the WEF, seen alongside recent developments in the country – notably the ruling African National Congress’s (ANC’s) election manifesto – are unlikely to do much to convince his interlocutors that putting their money into South Africa is a good bet.
For the last year, South Africa has been dogged by the spectre of the policy of Expropriation without Compensation (EWC), something championed by the ruling party, the government and by President Ramaphosa personally. Reversing Attenborough, the President declared in early 2018 that EWC would transform South Africa into a ‘Garden of Eden’.
The threat to property rights has been seen by businesspeople both in South Africa and abroad as a major obstacle to investment, and rightly so, since security of assets is axiomatic for any business activity.
The president has received some applause for supposedly assuaging investors’ concerns on this matter at the WEF, although a closer examination of his comments raises questions about that. He referred repeatedly to the ‘land issue’, and to ‘land reform’, not to EWC. This follows a change of rhetoric that has been evident for some months, conflating certain issues and dodging others.
There has seldom been any objection to land reform, whether on economic or moral-historical grounds – quite the contrary, since a well-executed land reform programme could be an unambiguous positive for the country.
What is both reckless and hazardous is the shift to a policy that allows the state to seize property without paying for it. While there are important normative and political issues (the ability of the state to deprive people of their property creates the space for abusing civil liberties, and never more so than when a state finds itself under pressure), on purely pragmatic grounds, it is a deeply flawed idea.
The ability to confiscate property does nothing to deal with the failings of land reform. Compensation requirements have never been shown to have been a hindrance to land reform – unlike, say poor project design, an incapacitated bureaucracy, trifling budget allocations and general political indifference over the years. While the WEF was ongoing, headlines announced a major corruption scandal in the land reform system.
Something not properly discussed in the president’s remarks was the creep towards EWC. The impending constitutional amendment was discussed – although invoking the protection afforded by constitutional governance while simultaneously meddling in those protections is a remarkable contradiction. On the Expropriation Bill, he remarked that it ‘identifies a number of portions and parcels of land that should be looked at when it comes to expropriation’. Note, this was presented as expropriation – a universal fact of governance – not expropriation without compensation. He also neglected to mention that the bill specifically states that EWC is not limited to the types of property it sets out.
There was also no mention of the regulations gazetted in terms of the Property Valuation Act in terms of which the state entitles itself to generous discounts when expropriating property for land reform.
It is also not only about land. Land has served as an idiom for the broader introduction of EWC. After years of circling the periphery of debate, the ANC’s manifesto has put the issue of prescribed assets firmly on the agenda, raising questions about the security of pension funds. The manifesto seems to go much further, suggesting new encroachments into property holdings, including worker ownership schemes and more financing for empowerment.
A weakened property rights regime is necessary for the expansive ambitions of statist policy. Veteran journalist Ferial Haffajee has observed: ‘If the private sector was hoping that Ramaphosa would be a business-friendly president, his first manifesto does not yet show that.’
Some wisdom might be found in another remark by Sir David: ‘The enormity of the problem has only just dawned on quite a lot of people … Unless we sort ourselves out in the next decade or so we are dooming our children and our grandchildren to an appalling future.’ This sounds eerily applicable to South Africa’s economic direction.
Terence Corrigan is a project manager at the Institute of Race Relations. Readers are invited to take a stand with the IRR by sending an SMS to 32823 (SMSes cost R1, Ts and Cs apply).