In Final Plea, Economists Implore South Africa to Abandon Expropriation Plan

Numerous economists from around the world explain why land expropriation is a terrible idea.

It is now well-known that South Africa’s parliament intends to amend the Constitution to allow the government to expropriate (forcibly seize) private property without being required to pay compensation. On November 15, 2018, the parliamentary Constitutional Review Committee finally officialized this intention by formally recommending that the Constitution be changed.

Less than a week later, on November 20 and 21, my employer, the Free Market Foundation (FMF), hosted a conference in Johannesburg that brought together 23 participants from around the world.

Where governments have been allowed to seize property arbitrarily, economies have been left in ruins.

The goal of the “Conference on Security of Property Rights” was to allow experts from Africa, Venezuela, India, and the United States to share with South Africa the invariably detrimental experiences that other countries have had with similar policies of expropriation without compensation. Of the 22 speakers, two were from Venezuela (via video), one from India, one from the US, five from Africa— representing Nigeria, Kenya, Burundi, and Ghana—and 14 from South Africa.

All the speakers had the same story to tell: where governments have been allowed to seize property arbitrarily and without the necessary checks and balances (like being required to pay compensation), economies have been left in ruins.

FMF director Temba Nolutshungu neatly summarized the conference in this video:

Below are all the other presentations:

Leon Louw (Free Market Foundation, South Africa)

Leon Louw, the Executive Director of the Free Market Foundation, criticized the basis of the expropriation narrative in South Africa, which came in the form of several “land audits” conducted by the government and by civil society organizations. These audits paint a picture of a small number of wealthy white landowners hogging up the vast majority of South Africa’s land. Louw questions the very premise upon which the audits are based.

Land audit nonsense: Why “left” and “right” wing audits are virtually meaningless

Maria Corina Machado & Sary Levy Carciente (Liberal activists, Venezuela)

Maria Corina Machado is a former member of the National Assembly of Venezuela and a former presidential candidate. Sary Levy Cariente is a professor at Venezuela’s National Academy of Economic Sciences. Both are dedicated believers in a liberal, free-market paradigm and shared the horrific story of Venezuela’s descent into authoritarian socialism and warned South Africa not to follow suit.

Lessons from Venezuela

Barun Mitra (Liberty Institute, India)

Barun Mitra is the founder and director of the Liberty Institute in India. He shared India’s experiences with socialist land reform after it gained independence from the British Empire. Today farmers have insecure property rights, for which all of India suffers. “Without security of property, a sense of citizenship with a stake in the community is lost.”

Lessons from India

Rejoice Ngwenya (Coalition for Market and Liberal Solutions, Zimbabwe)

Rejoice Ngwenya is one of the few full-time liberal activists in South Africa’s northern neighbor, Zimbabwe. Ngwenya heads the Coalition for Market and Liberal Solutions and unequivocally warned South Africa against following in the footsteps of Robert Mugabe, whose program of expropriation without compensation left the former breadbasket of Africa a basket case.

Lessons from Zimbabwe

Olumayowa Okediran (Students For Liberty, Nigeria)

Olumayowa Okediran has been intimately involved with student libertarian activism throughout Africa since bringing the international Students For Liberty (SFL) group there in 2013. Today, he is SFL’s Assistant Director of International Programs. In Nigeria, he said, freehold ownership has been abolished and replaced with a system of leasehold whereby citizens are tenants on the property of the State. Olumayowa hoped South Africa would avoid going down the same route.

Lessons from Nigeria

Franklin Cudjoe (IMANI Centre for Policy and Education, Ghana)

Franklin Cudjoe is the founding president of the IMANI Centre for Public Policy and Education in Ghana. He explained how international investors have recently begun preferring Ghana over South Africa, a fact he ascribes partly to the uncertainty around security of property rights. “You toy with this business of expropriation without compensation at your own peril.”

Lessons from Ghana

Penuell Maduna (Politician, South Africa)

Dr. Penuell Maduna is the former Minister of Justice of South Africa and was a key participant in the constitutional negotiations and drafting in the mid-1990s. Maduna briefly described the narrative around expropriation without compensation, especially the narrative advocated by the radical Marxist party, the Economic Freedom Fighters, and by the governing party, the African National Congress. He concluded that expropriation without compensation is not the way to bring about economic justice.

Remaking South Africa: Unfinished business

Linda Kavuka (Students For Liberty, Kenya)

Linda Kavuka is the African programs director of Students For Liberty and a Kenyan lawyer. She explained how the abundant discriminatory land laws that existed during Kenya’s colonial period were adopted by the new independent government and made land a political issue. State ownership of land and land-grabbing by State officers and their cronies were common. These problems have since been addressed to greater and lesser extents. Kavuka concluded that expropriation without compensation in South Africa would be against the Universal Declaration of Human Rights, would reintroduce racial discrimination, and would wreck Africa’s largest, most advanced, and most admired economy.

Lessons from Kenya

Aimable Manirakiza (Centre for Development and Enterprise, Burundi)

Aimable Manirakiza is the founder of the Centre for Development and Enterprise in Burundi. He briefly laid out the struggle of weakening property rights and legal protection in Burundi, noting the importance of securing the right to earn a living and not to have one’s property seized. In warning South Africa against its plans to amend the Constitution to allow seizure of property without compensation, Manirakiza quoted Ayn Rand, who said, “No other rights are possible without property rights.”

Lessons from Burundi

Tom G. Palmer (Atlas Network, United States)

Dr. Tom G. Palmer is well-known in American libertarian circles. A senior fellow at the Cato Institute and the Atlas Network’s vice president for international programs, Palmer was actively involved in Eastern Europe in the sunset years of the Soviet Union. As such, he shared with South Africa the horror stories of Eastern Europe and Asia’s experiences with the expropriation of private property. Noting that today there are millions of Zimbabwean refugees in South Africa who have fled from their country’s policy of expropriation without compensation, Palmer asked, “If you do the same thing in South Africa, where will you go?”

Lessons from Europe and Asia

Lawrence Mavundla (National African Federated Chamber of Commerce, South Africa)

Lawrence Mavundla is the national president of the National African Federated Chamber of Commerce and Industry, which is South Africa’s oldest black business association. Mavundla sought to caution South Africa against once again giving petty officials the power to seize property on a whim, something they were empowered to do during the apartheid era. His core message was that never again should ordinary South Africans live in the fear of losing their property rights.

Lessons from South Africa: “Never Again”

Temba A Nolutshungu (Free Market Foundation, South Africa)

Temba A Nolutshungu is one of the directors of the Free Market Foundation. He talked about the FMF’s Khaya Lam (“My Home”) Land Reform Project, which is dedicated to expediting the process of acquiring title deeds on former State-owned land by current tenants. An estimated five million poor, mostly black South Africans live as tenants on municipal land, a holdover from apartheid planning law, and are waiting to acquire full ownership from the democratic government. Nolutshungu argued that this is where quick and substantive land reform can happen and that expropriation without compensation would undermine the new property rights these South Africans have acquired.

Transforming the urban landscape through FMF’s Khaya Lam Project

Perry Feldman, Maria Klaas & David Ubane (Khaya Lam, South Africa)

Perry Feldman is the project manager of the Free Market Foundation’s Khaya Lam initiative. He spoke to two beneficiaries of the Khaya Lam process, Maria Klaas and David Ubane, both from the Tumahole township in the Free State province. Both David and Maria expressed joy at the fact that they were now property owners and no longer tenants of the State and said they hope this state of affairs would persist.

Transforming the urban landscape through FMF’s Khaya Lam Project

Eustace Davie (Free Market Foundation, South Africa)

Eustace Davie is one of the directors of the Free Market Foundation. He, too, expressed the virtues of the Khaya Lam initiative but noted that there exists an even simpler and more affordable method of recognizing the ownership of the former tenants of the apartheid State. “Form DDD” is a deeds registry form that recognizes ownership, but stops short of processing title deeds, at virtually no cost. According to Davie, if communities around South Africa could get tenants to sign Form DDD en masse, this would lead to immediate security of tenure and make the processing of title deeds in the future easier.

Fast, affordable, simple: Khaya Lam’s property transfer process

Candice Pillay (Hogan Lovells, South Africa)

Candice Pillay is an attorney and partner at the law firm Hogan Lovells and has personally worked with many disadvantaged South Africans trying to vindicate their rights against the State. Her talk focused on the government’s housing project—often called “RDP houses”—and the ostensible title deeds that are given to beneficiaries.

RDP houses, under the Housing Amendment Act of 2001, come with restricted titles whereby beneficiaries are disallowed from selling or subletting their homes for a period of eight years. If they wish to move, they must give the house back to the government and be placed on another waiting list. Pillay suggested that the restrictive title that comes with government-subsidized homes should be replaced with full ownership.

How removing RDP preemptive clauses will make home ownership a reality

Martin van Staden (Free Market Foundation, South Africa)

As the legal researcher at the Free Market Foundation, I spoke about the work we have been doing around the Subdivision of Agricultural Land Act. The Act, enacted at the height of apartheid in 1970, prohibits farmers from subdividing their farms into smaller, more affordable plots, which they can sell or give to farm tenants or local communities without going through a bureaucratic and arbitrary process of getting permission. I suggested that if government is serious about speedy land reform, the Act should be repealed.

Subdivision law hinders quick rural land reform

Devon Windvogel (University of KwaZulu-Natal, South Africa)

Devon Windvogel is a lecturer in the School of Accounting, Economics, and Finance at the University of KwaZulu-Natal. He explained that expropriation without compensation has the potential to destroy the economic organization of South Africa, thereby leading to massive job losses. Windvogel also explained how the apartheid government severely restricted the property rights of the black majority. In other words, it is a lack—not an abundance—of property rights that caused South Africa’s poverty.

Expropriation without compensation: Yet another barrier to entry for millions of disadvantaged South Africans

Terence Corrigan (Institute of Race Relations, South Africa)

Terence Corrigan is a policy fellow at the Institute of Race Relations and is intimately involved with the institute’s land reform work. He set out the problems permeating South Africa’s post-1994 land reform policy and, as an alternative, suggested that land reform must focus on empowering new owners (as opposed to empowering the State). “It is an affront to people’s dignity to regard them as perpetual wards of a supposedly benevolent state.”

If government is serious about land reform, it should create owners, not tenants

Petrus Sitho (Property Activist, South Africa)

Petrus Sitho is a full-time activist for property rights, going around South Africa telling farmworkers that supporting expropriation without compensation will mean disaster for them. When the farms are expropriated and the State takes over, unemployment awaits.

Expropriation will cause job losses and economic decline—leave section 25 alone

Phephelaphi Dube (Centre for Constitutional Rights, South Africa)

Phephelaphi Dube is a lawyer and the director of the Centre for Constitutional Rights. She explained the workings of section 25 of the Constitution—the provision that Parliament intends to amend—and explained why it is unnecessary to do so if the government is interested in substantive land reform. All the necessary powers to pursue land reform are already in the Constitution, and going about constitutional change is ill-considered.

It is not necessary to amend the Constitution for land reform

South Africa is at a crossroads: it can choose to remain Africa’s most developed economy by respecting property rights, or it can decide to follow the example of Venezuela, Cuba, and Zimbabwe by empowering government to seize property arbitrarily and without having to compensate owners. If it decides on the latter, South Africa’s post-apartheid success story will have been a tale of a short 24-year interval between two authoritarian eras.

Further Reading

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