Expropriation Act fallout: SA institutions sound alarm over threats to property rights and economy

Key topics.Critics warn the Act undermines property rights and investor confidence.Expropriation without compensation raises constitutional and economic concerns.Free SA and IRR call for repeal and court challenge to protect property rights..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here..The seventh BizNews Conference, BNC#7, is to be held in Hermanus from March 11 to 13, 2025. The 2025 BizNews Conference is designed to provide an excellent opportunity for members of the BizNews community to interact directly with the keynote speakers, old (and new) friends from previous BNC events – and to interact with members of the BizNews team. Register for BNC#7 here..If you prefer WhatsApp for updates, sign up to the BizNews channel here..Free SA condemns President Ramaphosa's assent to the Expropriation Act.Issued by Free SA.Free SA, the Foundation for the Rights of Expression and Equality, has strongly criticised President Cyril Ramaphosa for signing the Expropriation Act into law, warning that the legislation poses a serious threat to property rights and investor confidence in South Africa..The Expropriation Act, originally drafted before South Africa's recent national elections in 2024 which saw the creation of the Government of National Unity (GNU), reflects a disconnect between the presidency and the people of South Africa. Despite its passage through Parliament, the Act fails to consider the new political reality, where South Africans have clearly rejected the ANC's failures and policy missteps in recent elections. Free SA asserts that the Act is a dangerous step towards the erosion of property rights, which will have dire economic consequences. By granting the state broad and unchecked powers to expropriate property, including under vague circumstances of 'nil compensation,' the Act creates uncertainty that will deter both local and foreign investment. At a time when South Africa needs economic stability and growth, this legislation signals to investors that their assets may not be secure, further weakening confidence in the country's ability to uphold constitutional property protections.."The President's assent to this legislation is a step backward for South Africa," said Free SA spokesperson, Nolu Hlophoyi. "This Act grants the state wide-ranging powers of expropriation that are fraught with dangers for individual property rights and the broader economy. It risks driving away investment at a time when South Africa desperately needs economic growth and stability. GNU members must push back against this Act and ensure that property rights remain protected.".Free SA calls on the GNU partners to resist the implementation of this Act and to advocate for a review or repeal. GNU members must uphold the principles of constitutionalism and protect South Africans from policies that could deepen economic uncertainty and mistrust in government. Free SA warns that this approach undermines the very principles of economic freedom and security needed to rebuild South Africa's economy in a post-ANC majority era. The GNU must take decisive action to prevent the implementation of policies that would deepen economic uncertainty, drive capital flight, and stifle private-sector development..To mitigate immediate concerns, Free SA will develop and propose draft regulations under the Act, urging the President to issue these to provide clarity on when and how the state may use its expropriation powers. This step is essential to allay fears, safeguard property rights, and restore investor confidence. However, Free SA maintains that the Act itself is inherently flawed and should ultimately be repealed and replaced with legislation that upholds constitutional property rights while addressing genuine developmental needs..Free SA will continue its efforts to hold government accountable, ensuring that the people of South Africa are informed, engaged, and empowered to resist policies that threaten their rights and livelihoods..Read more: Will the GNU actually halt the ANC's NDR?: Anthea Jeffery.Expropriation Act now law – The FW de Klerk Foundation calls on MPs to exercise Section 80 option.Issued by the FW de Klerk Foundation.On 23 January 2025 President Cyril Ramaphosa assented to the Expropriation Bill. Now known as the Expropriation Act, 2020, this law allows the State to expropriate land for "nil compensation". ."South Africa faces serious risks if the Expropriation Act, 2020 does not protect property rights, but rather limits and undermines them," says Christo van der Rheede, Executive Director of the FW de Klerk Foundation. "Who is going to invest on land where the ownership is not secured? Banks and food security are directly affected as South Africa's homeowners owe banks approximately R4 trillion and South Africa's farmers produce food on the back of debt," explains van der Rheede .The Act is legally unsound according to Daniela Ellerbeck, an attorney and the Foundation's Constitutional Rights Programme Manager, "Section 25 of the Constitution explicitly states that such expropriation is subject to just and equitable compensation being paid by the state to the person whose property is being expropriated," says Ellerbeck. "The Constitution is the supreme law in South Africa, which means that any law that contradicts the Constitution is null and void. Given that the attempt to change the Constitution to allow for nil compensation was rejected by Parliament back in December 2021, the Expropriation Act, insofar as it attempts to allow for nil compensation, is immediately open to a court challenge for being inconsistent with the Constitution," explains Ellerbeck.."This sounds alarmist, but every citizen in the country will face impoverishment and hunger if the Expropriation Act, 2020 is not changed to align with the Constitution and with sound economic principles in mind," says van der Rheede. "For this reason, the Foundation urges Members of Parliament's National Assembly to find each other. If at least a third are concerned about the Expropriation Act's constitutionality, they have a month to bring a direct application to the Constitutional Court asking the Court to find the law unconstitutional (section 80 of the Constitution).".Read more: Anthea Jeffrey: Soon-to-be-passed Expropriation Bill is unconstitutional.IRR Legal drafting papers to challenge EWC Act in court.Issued by the Institute of Race Relations (IRR).IRR Legal is drafting papers to challenge the Expropriation Act in court. The recently signed law allows for expropriation without compensation (EWC) on an open-ended range of circumstances..The are several flaws with the EWC Act, as it has come to be known, which the IRR has warned against publicly for years. Its procedural flaws alone disqualify much of the EWC Act from being implemented..However, it is worth emphasising that the EWC Act allows the state to punish private citizens, and residents, of any race, in cases where an owner primarily aims to sell their vacant property for a profit. The profit motive is treated explicitly by the EWC Act as a factor that can result in "nil" compensation being paid upon expropriation by the state..But profit is not the enemy, poverty is..Turning the pursuit of profit into a de facto crime, as the EWC Act does, turns economic growth into a dream that is once more deferred. Since 2010 South Africa has failed to grow economically in real terms, primarily due to counterproductive, anti-profit policies emanating from Parliament and the Union Buildings. This trend of immiseration is one that the EWC Act is set to perpetuate..The IRR has vocally championed the property rights of all South Africans for years, and public opinion has been shown to be strongly against the erosion of property rights. However, President Cyril Ramaphosa has failed to heed the majority's interest, the Constitution's requirements, and his presidential duty..What remains to be done is to have the EWC Act struck down in court..Read also:.Katzenellenbogen on Expropriation Bill: SA "on the verge of an economic tipping point"SA cabinet out-of-sync with the law; Ministers playing with ConCourt findings, ignoring Treasury – Patrick McLaughlinSouth Africa's Expropriation Bill poses a threat to property rights – Terence Corrigan

Expropriation Act fallout: SA institutions sound alarm over threats to property rights and economy

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