SA’s expropriation plan a damp squid for investors

7 months ago written by
Land Expropriation

The South African government’s commitment to expropriation without compensation offers the international community little reason to be optimistic about investing in the country.

Neither does the Minister of International Relations and Cooperation Lindiwe Sisulu’s appeal not to ‘panic or be alarmist’ about the expropriation plans give the the international community any reason for optimism.

The Institute of Race Relations (IRR) says in a statement Sisulu’s appeal not be alarmist is unlikely to provide much reassurance to foreign investors and their governments, since members of the government and the ruling party have repeatedly affirmed their commitment to this course of action.

The IRR says “the prospect of an abridgement of property rights through an amendment of Section 25 of the constitution, or the introduction of a system of state ‘custodianship’ of all land in South Africa (with the strong possibility that these intrusions would ultimately not be limited to land) has rightly sparked deep concern about the security of investments. No less than those of South Africans, the investments of foreign citizens or foreign-based companies in South Africa stand to be made vulnerable to seizure should these measures find their way into law.

“This is not merely theoretical. In the face of much criticism, South Africa has in recent years been declining to renew its bilateral investments treaties, diluting the protections they provided in favour of the Protection of Investment Act of 2015. Interestingly, one of the provisions of this act is explicitly that investors are entitled to the rights under section 25; the measures being contemplated would directly undermine this.”

This is not the only concerning signal that South Africa has sent to foreign investment and the rights of investors, warns the IRR. “The Private Security Industry Regulation Amendment Bill, for example, sought to confer extraordinary powers on the state to expropriate foreign-owned security firms. The proposed policy would align closely with this.”

Now that Minister Sisulu has invited the international community to support the government’s efforts to deal with the impact of apartheid policies she might be surprised to see that there remains a substantial pool of goodwill towards South Africa – many in foreign governments and in foreign businesses would be glad to do so. Suggesting support for a proposal that will be inimical to their interests and damaging to South Africa’s economy is, however, a step too far.

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