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Government’s plans to expropriate land without compensation would be disastrous for the South African economy, US Secretary of State Mike Pompeo said.
The policy proposal is an example of centralised planning that has failed in other African states such as Zimbabwe, Tanzania and Ethiopia, Pompeo told reporters on Wednesday in the Ethiopian capital, Addis Ababa.
“South Africa is debating an amendment to permit the expropriation of private property without compensation,” he said. “That would be disastrous for that economy, and most importantly for the South African people.”
African economies need a “strong rule of law, respect for property rights, regulation that encourages investment” for inclusive and sustainable economic growth, Pompeo said.
The rand has proved sensitive to White House comments on the issue in the past. It slumped in August 2018 after President Donald Trump asked the secretary of state to “closely study the South African land and farm seizures and expropriations”.
This wasn’t the case on Wednesday. The rand gained for the first time in three days, advancing 0.4% to R14.95 per US dollar by 11.52am in Johannesburg.
“As long as the US doesn’t threaten sanctions against South Africa, the domestic news flow about South Africa’s failing state-owned enterprises and political inability to deal with the problem is enough to keep the rand on the back foot,” said Per Hammarlund, a strategist at SEB in Stockholm, Sweden.
“Pompeo’s comments are not threatening enough to make a bad situation worse for the rand.”
On the final day of his three-nation swing across the continent, Pompeo said: “If there’s one thing you should know about our president – my boss – you should know he loves deals,” Pompeo said of Trump. “He wants more to happen between the US and nations all across Africa.”
Pompeo has made business ties the main focus of his trip to Senegal, Angola and Ethiopia this week.
In Angola, he praised what he called government’s push to clean up rampant corruption of years past. His message is all part of a bid to lure African nations away from their deepening relationships with China and advocate for the US approach of business partnerships and private-sector investment.
He didn’t mention China by name in his speech, but he’s called out the threat posed by countries’ willingness to take on expensive debt from the country during his trip, and the target of his criticism was clear.
“Not every nation doing business in Africa from outside the continent adopts the American model of partnership,” Pompeo said. “Countries should be wary of authoritarian regimes and their empty promises. They breed corruption, dependency, they don’t hire the local people.”
– Bloomberg
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