ANC drawing back from EWC plans? Anthea Jeffery dives in

The Economic Freedom Fighters (EFF) are demanding that the Ad Hoc Committee – those responsible for drafting an EWC constitution amendment bill – change the bill to give the state control over all of South Africa’s land. The ANC, who have been in favour of going forward with land expropriation, seem to be distancing itself from this demand, says Anthea Jeffery of the IRR. Could it be that the ANC is retreating from it’s EWC plans? Not likely, says Jeffery. “Mr Xaba’s current concern for property rights may seem like a breath of fresh air and bring hope to many that the ANC is drawing back from its damaging EWC plans. In a host of other spheres, however, the ruling party’s determination to expand state ownership or control – as a crucial element in its socialist-orientated National Democratic Revolution (NDR) – continues apace.” The IRR’s Head of Policy Research notes that the controlling party still plans on going forward with the Expropriation Bill of 2020, the National Health Insurance Bill and the prohibition of firearms to be used in self-defence, among other things. – Jarryd Neves

Has the ANC leopard changed its NDR spots?

Seeming discord between the ANC and EFF

The ANC seems to be distancing itself from the EFF’s demand that the Ad Hoc Committee responsible for drafting a land expropriation-without-compensation (EWC) constitutional amendment bill should drastically change the existing text of the EWC Bill to give the state custodianship over all the country’s land.

This divergence emerged from last Friday’s meeting of the Ad Hoc Committee, when the EFF once again pushed strongly for the state’s existing custodianship of water and mineral resources to be extended to all land – and the ANC seemed to demur.

The EFF has been demanding state custodianship over all land for many years. On this basis, as the EFF puts it, all title deeds will become ‘meaningless’ and current landowners will need (revocable) 25-year leases from the state to keep using the homes, farms, factories, or other business premises they previously owned.

The ANC has been less overt in pushing for land custodianship but has long supported the idea. This was particularly evident in the Preservation and Development of Agricultural Land Bill of 2014, since withdrawn, which planned to give the state custodianship over all non-urban land.

In January 2019, moreover, a senior land department official, Masiphulo Mbongwa, told the World Economic Forum meeting in Davos (Switzerland) that the government planned to amend the property clause in the Constitution and then adopt a National Land Act – modelled on relevant water and mining legislation – which would give the state custodianship over all land.

Cold water on the EFF’s demand

At the Ad Hoc Committee meeting on 21st May, the ANC nevertheless poured cold water over the EFF’s demand that the state’s custodianship of the country’s land should be written into the Constitution.

Custodianship would have ‘a deleterious effect on all existing rights in land’, said the ANC’s Vuzumusi Xaba, for it would mean the ‘cancellation’ of all such rights. How would the ANC explain this, he queried, ‘to the residents of KwaMashu, Ntuzuma, Alexandra, Soweto, and Nyanga, who had recently been given full title deeds by the government to the houses they had occupied for decades before 1994?’

Now that the ANC government had restored the dignity that apartheid had so long denied them, ‘how would he explain to them that their rights would be cancelled and converted to leasehold?’ How would he explain such a shift to the communal property associations to which land had been restituted? And ‘how would he explain to the residents in Bishopscourt, Sandton and Westville that state officials would administer and supervise the proposed new [custodianship] tenure on their property?’

Mr Xaba’s claim that the ANC is solely responsible for expanding home ownership to black South Africans ignores all that the National Party government belatedly did, from the late 1970s to the early 1990s, to transfer such ownership to millions of black people in Soweto and a host of other townships. It also fails to acknowledge the breadth of home ownership in South Africa today, for this currently extends to some 11 million families of whom close on 8.8 million are black.

In addition, while it might seem that Mr Xaba is opposing the EFF’s dangerous custodianship ploy as a matter of principle, he is in fact keeping the back door to this open. For Mr Xaba also wants to retain the ‘deprivation’ clause in Section 25(1) of the Constitution – which the EFF seeks to remove – because he sees it as providing a crucial foundation for uncompensated custodial (and other) takings in the future.

The value in the ‘deprivation’ clause

Section 25(1) currently says that ‘no one may be deprived of property’ unless this is done under ‘a law of general application’ and in a way that is not ‘arbitrary’. The great value of ‘deprivation’ as opposed to ‘expropriation’, says Mr Xaba, is that deprivation need not be accompanied by the compensation that expropriation generally requires.

At last Friday’s committee meeting, Mr Xaba put it thus: ‘The Constitution provides two ways in which the state may interfere with property rights, which are deprivation and expropriation. The two have a different meaning. Whilst expropriation is deprivation, deprivation is not expropriation… In expropriation, the expropriated property vests with the state. In deprivation, there is no [such] vesting… It was through deprivation that the state became the custodian of mineral rights.’

A week earlier, at the Ad Hoc Committee’ s meeting on Friday 14th May, Mr Xaba had also stressed the importance of ‘retaining deprivation as it is’. He then said: ‘It [deprivation] authorises a limitation in the use, enjoyment or disposal of property…without compensation. The right in land may be terminated with no requirement for the state to pay any compensation, as opposed to expropriation. Expropriation occurs around the world [and] it is legally expected that there be some compensation.’

The EWC Bill was needed to circumvent this global expectation and achieve the objective of ‘having land without paying a cent’. However, the EWC Bill should not ‘get rid of the other instrument, deprivation, that is provided for in the Constitution’, for ‘the state could invoke this when [it] needed to deal with the issue of deprivation’ in the future.

Mr Xaba’s explanation of the difference between deprivation and expropriation is difficult to follow. However, the conflicting judgments of the Pretoria high court and the Constitutional Court in the Agri SA case help explain his point.

Conflicting judgments in the Agri SA case

The Agri SA case began after a company called Sebenza (Pty) Ltd found it lacked the funds needed to convert an unused ‘old-order’ mining right it had bought in 2001 for R1m into a ‘new-order’ mining right under the Mineral and Petroleum Resources Development Act (MPRDA) of 2002.

This was important because the MPRDA not only vested all mineral resources in the custodianship of the state, but also required that all unused old-order rights be converted to new-order rights within a year – failing which they would ‘cease to exist’.

Since Sebenza could not afford the application fee for this conversion, its unused mining right came to an end after a year, prompting it to sue for compensation.  Agri SA, a lobby group for commercial farmers, many of whom had earlier owned unused old-order rights to the minerals beneath their land, took over the claim and brought it before the Pretoria high court.

The high court found that Sebenza had lost all the competencies of ownership it had previously enjoyed, while the MPRDA had given the mining minister substantially similar powers. The state had thus acquired ‘the substance of the property rights’ that Sebenza had previously owned – and it made no difference that the state’s competencies were termed ‘custodianship’ rather than ‘ownership’. Expropriation had indeed occurred and compensation of R750 000 was payable.

However, this ruling was in time taken on appeal to the Constitutional Court, which overturned it. The main judgment was penned by Chief Justice Mogoeng Mogoeng, who ruled that ‘the assumption of custodianship’ did not amount to expropriation because it did not make the state the owner of the right in issue.

Stated the chief justice: ‘Whatever “custodian” might mean, it does not mean that the state has acquired and thus become the owner of the rights concerned.’ No expropriation had thus occurred and so no compensation was payable.

What the Pretoria high court had seen as a meaningless distinction between the state’s powers as ‘owner’ or ‘custodian’ thus became an issue of major legal and monetary importance. Chief Justice Mogoeng’s approach also suggested that Sebenza’s ownership of the mining right – for which it had paid R1m – had simply vanished into thin air, whereas it had in fact been transferred to the state, as the high court had acknowledged.

Chief Justice Mogoeng’s ruling is clearly flawed, for it overlooks the generally accepted meaning of ‘expropriation’ in domestic and international law, was criticised for this by three Constitutional Court judges, and opens the way to other uncompensated takings carried out under the rubric of ‘custodianship’.

The flawed Mogoeng judgment was also confined to the particular facts and so cannot be used to found a broader legal principle. This defective ruling is nevertheless what underpins Mr Xaba’s enthusiasm for the ‘deprivation’ clause – and his belief that the state can use it to take custodianship of land at some future point without compensation having to be paid.

Has the ANC leopard changed its NDR spots?

Has the leopard then changed its spots? Does Mr Xaba’s criticism of the EFF’s custodianship proposal – and his newly expressed concern about the property rights of homeowners in areas ranging from KwaMashu to Bishopscourt – mean that the ANC no longer wants the custodianship of all land?

Or is the ANC simply playing a longer game? Is it using its EFF catspaw to generate enormous anxiety over the custodianship issue, so that it can then distance itself from the EFF’s proposal and thereby win broad public praise for its supposed moderation?

Does the ANC hope that public relief over this issue will then make it easier to achieve its real objective – which is probably to change the EWC Bill so that it strips the courts of their current powers to adjudicate on the compensation payable on expropriation and confines them to reviewing the reasonableness of executive decisions on what those amounts should be?

Does the ANC also believe that the deprivation clause it wants to retain will indeed give the state the capacity to take custodianship of all land at some time in the future – and ‘with no requirement…to pay any compensation’, as Mr Xaba puts it?

Mr Xaba’s current concern for property rights may seem like a breath of fresh air and bring hope to many that the ANC is drawing back from its damaging EWC plans. In a host of other spheres, however, the ruling party’s determination to expand state ownership or control – as a crucial element in its socialist-orientated National Democratic Revolution (NDR) – continues apace.

To name but a few examples, the ANC is still pushing ahead with:

  • the damaging Expropriation Bill of 2020, with its ‘nil’ compensation provisions and skewed procedural rules;
  • the National Health Insurance (NHI) Bill of 2019, which could in time see the transfer to the NHI Fund of medical scheme reserves currently valued at R90bn;
  • the erosion of pharmaceutical patent rights, ostensibly to help counter the Covid-19 pandemic;
  • a 20% ‘free carry’ for the state in all oil and gas exploration and extraction operations;
  • the diversion of pension savings into flawed infrastructure projects (and the ruling party’s patronage machine) under pending changes to Regulation 28;
  • state ‘co-ownership’ for all data privately generated from ‘South African natural resources’ (whatever that might mean); and
  • the effective prohibition of privately-owned firearms used in self-defence.

All of which suggests that the leopard’s spots remain just the same as before. And that, as the end-May deadline for the drafting of the EWC Bill draws ever closer, South Africans might suddenly find themselves confronted by the removal of the courts’ powers to adjudicate on compensation – and with no time left over to voice their strong objections.

  • Dr Anthea Jeffery holds law degrees from Wits, Cambridge and London universities, and is the Head of Policy Research at the IRR. She has authored 11 books, including People’s War: New Light on the Struggle for South Africa and BEE: Helping or Hurting? She has also written extensively on property rights, land reform, the mining sector, the proposed National Health Insurance (NHI) system, and a growth-focused alternative to BEE.

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