The manner in which the government and the African National Congress are handling the question of expropriation without compensation (EWC) is threatening South Africa’s economic and political stability and could trigger a crisis of catastrophic proportions. The country today faces risks greater than at any point since 1994.
These are the key points of a briefing by the Institute of Race Relations (IRR) (Thursday) evening.
We at the IRR warn that the question of EWC is turning local and foreign investor perception alike against South Africa, and that deepening anxiety over EWC is alone sufficient to preclude the possibility of an economic recovery.
EWC is effectively making South Africa uninvestable.
Although there are some in the chattering classes and on the left who think foreign and local investment is somehow a negative, the fact is South Africa depends on it. Our economy is simply too small to create the growth and jobs that we need without outside investment.
And if we make South Africa a jurisdiction where nobody will invest we will all suffer – particularly the poor.
At the same time, social and political tensions are being heightened by promises and expectations that could not possibly be met.
Already, the IRR has tracked a considerable increase in violent anti-government protest action. Significant destruction of infrastructure is taking place and the IRR anticipates further sabotage and obstruction, particularly of transport routes and infrastructure.
We are already seeing what can only be described as a low-level civil conflict in parts of the country – the clashes in Hermanus and the unrest in Coligny come to mind.
Incidents such as these are only likely to increase, as the economy continues to grow at such a sluggish pace. Economic growth is not keeping up with population growth, with the result that we are all getting poorer.
The horrific unemployment numbers add fuel to the already roaring fire. As things stand, the state of the country is likely to get worse before it gets better (and as things stand the possibility of things getting better is not great).
As our CEO, Dr Frans Cronje, says: “Our assessment is that South Africa faces the serious prospect of widespread social and economic destabilization – and the risks are greater than at any point since 1994.
“We see little prospect of social and economic stability being achieved in a policy environment dominated by threats to expropriate assets without compensation.”
We need a decisive policy shift if we are to avert disaster. Property rights need to be secured, and this needs to be coupled with real land reform, in rural areas and cities.
To do this, the budget for land reform needs to be increased and competent bureaucrats put in charge of the process.
Laws and red tape which restrict business (which means fewer jobs and wealth is created) need to be abolished – the Mining Charter comes to mind.
At the same time, we need to make sure our schools work – currently, the vast majority are dysfunctional. An easy jumping point off here is to give parents control of schools, and remove the destructive influence of the South African Democratic Teachers’ Union from our educational institutions.
Policies such as Black Economic Empowerment must be re-examined, and policies, which empower people based on disadvantage, rather than race, must now be implemented.
South Africa has looked into the abyss many times, and we are again at one of these points.
However, this may be the time that we are less fortunate and we no longer just gaze, but plunge headlong, into the abyss.
Marius Roodt is Head of Campaigns at the IRR.
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