AfriForum calls ANC #LandExpropriation plan 'catastrophic'

AfriForum Chief Executive Kallie Kriel. File picture: Dumisani Sibeko

AfriForum Chief Executive Kallie Kriel. File picture: Dumisani Sibeko

Published Aug 1, 2018

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JOHANNESBURG - South Africa's white farmers

on Wednesday criticised the ruling African National Congress'

(ANC) decision to endorse constitutional changes to allow the

state to seize land without compensation, saying the move would

be "catastrophic".

On Tuesday night, President Cyril Ramaphosa announced the

decision by the ANC's top decision-making organ to push ahead

with plans to amend the constitution to allow for the

expropriation of land without compensation.

More than two decades after the end of apartheid, whites

still own most of South Africa's land and ownership remains a

highly emotive subject.

Investors said Ramaphosa's speech was aimed at winning

political points ahead of an election in mid-2019.

AfriForum, an organisation that mostly represents white

South Africans on issues like affirmative action, said in a

statement land expropriation without compensation would have

"catastrophic results ... like in Venezuela and Zimbabwe".

"History teaches us that international investors, regardless

of what AfriForum or anyone else says, are unwilling to invest

in a country where property rights are not protected,"

AfriForum's Chief Executive Kallie Kriel said.

Analysts at investment giant Old Mutual said the president

was aiming to control the narrative around land reform, which

has so far been dominated by the opposition Economic Freedom

Fighters (EFF) party, before the election.

"It could be a very clever chess move," Old Mutual

Investment Group's managing director Khaya Gobodo said at a

media briefing, adding that Ramaphosa was trying to reduce the

possibility of negative outcome from the land expropriation

exercise by clearly staking out ANC's plan on the matter.

MARKETS FRET

Market reaction to the speech was initially negative, with

rand falling as much as 2 percent, but recovered almost

half of those losses on Wednesday.

The 2044 bond chalked up the steepest

losses, falling nearly 1.4 cents to its lowest level in nearly

four weeks, according to Tradeweb data.

The cost of insuring exposure to South Africa's sovereign

debt also rose with five year credit default swaps

climbing as high as 188 basis points, an 8 bps

jump from Tuesday's close and a near-three week high, according

to data provider IHS Markit.

South Africa's parliament in February passed a motion

brought by the radical left party, the EFF, to carry out land

expropriation without compensation.

A team of lawmakers was then given the task of canvassing

public opinion on whether section 25 of the Constitution needs

amending to allow for the expropriation of land without

compensation. The process is still ongoing, and analysts said

Ramaphosa's speech had pre-empted the lawmakers' work.

Some analysts said it was not all doom and gloom and that

eventually Ramaphosa will propose relatively limited amendments.

"Land will not be nationalised, there will be no

Zimbabwe-style land seizures and the constitution will only

allow expropriation without compensation in a narrow set of

circumstances," Ben Payton, Head of Africa at Verisk Maplecroft,

said.

(Additional reporting by Alexander Winning in Johannesburg and

Karin Strohecker in London

Editing by James Macharia and Angus MacSwan)

Related Topics:

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