JOHANNESBURG â The FirstRand group appointed Roger Jardine, a former civil servant and outspoken campaigner for democracy as its successor to Laurie Dippenaar late last year. The former Aveng CEO and Director General in the public sector was an outspoken critic against corruption; so it’s no surprise he’s joined the chorus of concerns around certain populist policies on the ANC mantle. The big one around land expropriation, with banks having extended an estimated R1.6 trillion in loans financing real estate. Ramaphoria dovetailed on the back of these types of populist decisions, and it will be interesting to see how they play out in the lead up to next year’s national election, another potential watershed moment in this young democracy’s history. – Stuart Lowman
These policies include âhigher public-sector wages, a questionable approach to higher education funding andâ the introduction of national health insurance, the chairman of Africaâs biggest bank by value said in Johannesburg-based FirstRandâs annual report on Thursday. If governmentâs drive to amend legislation to transfer land to black owners without compensation is âimplemented poorly,â it runs the risk of compromising the property rights of South African citizens, Jardine said.
The ruling African National Congress aims to accelerate the transfer of land to black owners 24 years after the end of apartheid. With elections looming next year, President Cyril Ramaphosa has embraced the notion of expropriation without compensation and has said the countryâs constitution may need to be changed to allow for this. He has also said there wonât be a land grab and any policy changes wonât damage farming production or the economy.
âSo far, the presidency is navigating this issue well,â Jardine said. âThe process is transparent and designed to be inclusive of all views, but the assertion that mortgaged private property assets can be expropriated without compensation, and the banks will just have to absorb the loss, is a ludicrous and dangerous fallacy.â
Ailing institutions
The countryâs biggest lenders have an estimated R1.6 trillion ($109 billion) extended in loans financing real estate, according to the Banking Association South Africa. The banks also lend to state-owned companies including cash-strapped Eskom Holdings SOC Ltd. and South African Airways.
âWe need to ask ourselves if South Africa really requires a national carrier that costs the country billions of rand a year when the vast majority of our citizens do not use its services,â Jardine said. âThe banks can step in with short-term liquidity, but this is just âkicking the can down the roadâ and it is not sustainable.â
Ramaphosa unveiled plans last month to reallocate R50 billion of the national budget, set up a new infrastructure fund and implement a range of other measures to revive an economy thatâs mired in recession. Africaâs most industrialised economy contracted in the first and second quarters and the central bank projects just 0.7 percent growth this year.
The reforms in the stimulus package âare not expected to lift economic activity meaningfully over the near term,â Jardine said. âTogether with other structural reform initiatives – such as addressing state-owned enterprisesâ finances and removing other policy uncertainties – they could start to bear fruit toward the end of next year and into 2020.â
