Land expropriation could spark banking crisis, warns Nedbank

2018-09-07 17:40

Plans to change the Constitution to allow the expropriation of land without compensation could hit property prices and trigger a banking crisis, the chief executive of Nedbank told Parliament on Friday.

President Cyril Ramaphosa announced on August 1 that the ANC planned to change the Constitution to allow land to be expropriated without compensation, because whites still own most of South Africa’s territory.

Speaking to the Constitutional Review Committee, which is investigating proposed changes to the Constitution, Mike Brown said there was no need to alter the law because the existing legislation already allowed the state to expropriate property for land reform purposes.

“As a commercial bank, we are a key role player in funding the economy and any material impact to property prices would adversely affect confidence in the banking system and could trigger a classic banking crisis with significant negative knock-on effects on the economy," Brown said.

Nedbank is the fourth largest bank in South Africa.

Since the end of apartheid in 1994, the ANC has followed a “willing-seller, willing-buyer” model under which the government buys white-owned farms for redistribution to blacks.

Progress has been slow and most South Africans believed something has to be done to accelerate change, providing it does not hurt the economy or stoke unrest.

Lewis Nzimande, co-chairperson of the committee, commended the presenters for their contribution to the process.

“We heard over 40 presentations over the last four days. These oral presentations emanate from the more than 700 000 written submissions the committee received.

Nzimande said the vast majority of the presenters clearly had in mind to take the process forward, whether they were for or against an amendment of the constitution.

“We had a few hiccups, but it was expected when the emotive issue of land is discussed. It was important, however, that all parties respect one another’s views and are not insulting or condescending,” said Nzimande.

The committee was instructed by the National Assembly and the National Council of Provinces to ascertain whether a review of section 25 of the Constitution and other clauses is necessary, to make it possible for the state to expropriate land in the public interest without compensation, and also to propose constitutional amendments where necessary.

The committee has already held hearings in all provinces.

Today the committee heard from the banking sector, the Legal Resources Centre, the Limpopo Communal Institute, the Tshwane Inner City Arts and Culture Heritage Forum, Afrisake and Vumelana Advisory Forum.

The Banking Association of South Africa said security of tenure makes it easier for individuals to interact with the banking sector. Basa did not believe it was necessary to amend Section 25 of the Constitution.

The John Langalibalele Dube Institute did not support an amendment of the Constitution to provide for expropriation without compensation, while the Vumelana Advisory Fund said the “problem” in South African had been misdiagnosed.

The Legal Resources Centre told the committee that the state already had the tools to expropriate the land with no compensation. It was then up to the land owner to take the matter to court for a decision on why the land couldn’t be used by resident workers.

Nzimande said the committee would meet on Wednesday next week to adopt a way forward with its programme. – Reuters

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May 19 2019