EWC or economic recovery, not both – IRR

3 November 2020

The government’s drive to implement expropriation without compensation (EWC) is incompatible with South Africa’s hopes of economic recovery.

Much lip service is paid to the goal of achieving economic recovery. Steering South Africa back on to the path of growth and rising prosperity is the avowed aim of the government’s Economic Reconstruction and Recovery Plan, tabled in Parliament by President Cyril Ramaphosa last month. In fact, it contains nothing of substance and is more a wish list than anything else.

But its greatest deficiency is that the goal of growth is undermined by the government’s determination to change section 25 of the Constitution to allow for EWC.

Property and property rights underpin all economic activity, and are vital in gaining the confidence of investors without whom recovery is impossible. For this reason, threatening property rights is the kiss of death for the economy.

Pressing ahead with amending section 25 is guaranteed only to trigger an exodus of existing investors, and wreck any hope of gaining new investment.

What South Africa needs to bring its dying economy back to life is not land expropriation, but a commitment to protecting and expanding property rights, not least in the sphere of land reform.

Abandoning the pursuit of EWC and the process to amend section 25 of the Constitution must be first step if South Africa is to achieve genuine recovery.

The government needs to decide what it wants: it can either have EWC, or economic growth and investment, but it can’t have both.

Issued by Hermann Pretorius, IRR Deputy Head of Policy Research, 3 November 2020