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Sunday, March 29, 2020

South Africa Considers Legislation That Would Allow the State to Seize Any Citizen’s Property

Secure property rights are essential for economic growth and progress in the developed world.

Image Credit: Pexels

South Africans had until 29 February 2020 to comment on their country’s Draft Constitution Eighteenth Amendment Bill. The bill focuses on the expropriation by the state, of land and all “improvements” on it, and in some cases, at the apparent whim of government officials, of ‘nil’ compensation.

The proposal indicates a desire on the part of many in the ruling party, the African National Congress (ANC), and the socialist so-called Economic Freedom Fighters (EFF), to place South Africa squarely on paths similar to those followed by Venezuela and our neighbors to the north, Zimbabwe. Once enacted, the bill will result in a similar state of affairs to that which black South Africans were forced to endure under apartheid: a fundamental lack of security in their property, with the persistent threat of state seizure hanging over the entire population.

Redress of past wrongs is a moral imperative. However, expropriation without compensation will not achieve that redress because it will dilute the property rights of black South Africans, wiping away the progress made since apartheid ended. The move towards no-compensation expropriation hearkens back to a time when South African society was partitioned into racial groups. How one could live, worship, trade, and work was determined by the whims of officials in government.

The bill will empower state officials to seize any citizen’s property. This kind of power for the state betrays the constitutional objective of limiting government power, increases arbitrariness in the Constitution itself, and thus strongly undermines the rule of law. A weakening of property rights results in a weakening of the rule of law, a crucial institution South Africa needs for any sort of future prosperity.

South Africa’s economy and international reputation have been damaged significantly by state capture of a large part of the economy, which took place during the tenure of the former president, Jacob Zuma. As a result, projected growth for 2020 is a paltry 0.7 percent.

The power of the state has increased significantly over the last 10 years. Big businesses must cozy up to the government to obtain “permission” to operate, preventing smaller business from competing. Expropriation without compensation, because it gives state officials exponentially more power, will undoubtedly increase the potential for more state capture, incentivizing officials to solicit bribes from wealthy landowners in exchange for not seizing their land, or allowing those who seized the land to “redistribute” it to their political allies, as happened in Zimbabwe. This is no environment conducive to economic stability, or to the economic growth that South Africa needs.

Secure property rights are essential for economic growth and progress in the developed world. With GDP growth hovering around one percent in South Africa, Parliament cannot afford to enact legislation that will fundamentally shake investor confidence by weakening the protection of their rights currently provided by the Constitution.

The year 2020 sees South Africa starting at an estimated tax revenue shortfall of between R50 billion and R130 billion ($2.9 billion and $7.6 billion). Expropriation without compensation will drastically reduce business confidence, reduce business investment, weaken the economy, drive away foreign investment, and reduce taxes received by the government. One of the many consequences will be that the already struggling state will not be able to provide essential services for the poor.

While the EFF and ANC political parties have pushed for the amendment, this move would be immoral no matter which party originated it. The bill will make it possible for any government in the future to expropriate the property of those it sees as enemies of “progress,” the “revolution,” or simply nuisances standing in the way of political goals. No political party or coalition of parties should have this level of power over people’s lives.

Now is the time to limit the state’s control over South Africans’ lives. The path of fewer or weaker individual rights is not the correct one for South Africa. South Africans cannot lift themselves out of poverty without the knowledge that their property will always be secure.

  • Chris Hattingh is Project Manager at the Free Market Foundation. He has an MPhil in Business Ethics from Stellenbosch University. He is the author of published articles on consumer rights, economic freedom, inequality and individual freedom.