South Africa’s ANC Resolves to Change Constitution on Land

JOHANNESBURG (Capital Markets in Africa) – South Africa’s ruling party decided to complete a proposed amendment to the nation’s constitution to make it clearer under what conditions land can be expropriated without compensation, prompting the rand to weaken.

This brings the African National Congress closer to the populist Economic Freedom Fighters party, after the ANC said earlier that land redistribution will only be done in a manner that doesn’t harm the economy, agricultural production or food security. In May, the party said the government should test the nation’s current laws on land because it may not be necessary to change the constitution to ensure expropriation without payment.

Proposals to change the constitution has raised concern among some investors that it signaled a shift to a radical land-reform strategy. The rand erased gains against the dollar after Tuesday’s announcement, and was 0.8 percent weaker at 13.3739 at 7:37 a.m. in Johannesburg Wednesday.

The purpose of the amendment is to promote redress, advance economic development, increase agricultural production and food security, the ANC said in an emailed statement after a meeting of its National Executive Committee in Pretoria, the capital.

Lawmakers started a process to change the constitution to allow for expropriation without compensation in February after the ANC decided last year to adopt the measure to speed up giving black people more land. Access to land is one of the symbols of inequality in the nation of about 56 million where wealth and poverty are largely divided along racial lines.

Public Hearings
Public hearings about the proposal started last month.

While the constitution’s property clause currently allows the state to expropriate land with just and equitable compensation and also expropriate without compensation in the public interest “it has become patently clear that our people want the constitution to be more explicit about expropriation of land without compensation, as demonstrated in the public hearings,” President Cyril Ramaphosa said in a televised speech.

The ANC will contest national elections next year in the first ballot since the opposition won control of several key municipalities, including the biggest and richest city, Johannesburg, and the capital, Pretoria, in 2016.

‘Pre-election Phase’
“This is a surprising and premature announcement by the ANC because parliament is still in its review process on changing the constitution,” Lawson Naidoo, executive director of the Council for the Advancement of the South African Constitution, said by phone. “Parliament still has to gather and evaluate the many submissions that have been made. We are in a pre-election phase and the ANC announcement is part of that.”

The ANC also wants government to urgently implement a “stimulus package” to boost economic growth and create jobs, including increased investment in infrastructure and support for small businesses, while not jeopardizing the budget.

Africa’s most-industrialized economy hasn’t expanded at more than 2 percent annually since 2013 and unemployment is near a 15-year high at 27 percent.

The ANC “reaffirmed its position that a comprehensive land reform program that enables equitable access to land will unlock economic growth, by bringing more land in South Africa to full use, and enable the productive participation of millions more South Africans in the economy,” Ramaphosa said.

Source: Bloomberg Business News