land expropriation

Photo: pixabay

Land expropriation: South African banks call for calm amid uncertainty

Nedbank, which is against amending the Constitution, says that it is already involved in the parliamentary process and has submitted proposals on land reform.

land expropriation

Photo: pixabay

Land expropriation without compensation is currently a South African flashpoint, with big banks now wading into the debate, calling for calm amongst investors and landowners.

It’s an interesting time for South Africa. The democratically guided issue of land reform has evoked a wide range of emotions from all who call the country home.

Landowners, particularly farmers, fear being left in the lurch, while the landless majority hope tangible property will free them from the shackles of poverty.

Land expropriation, a leap into the unknown

Just how land redistribution will play out within the South African context, nobody knows.

The ruling African National Congress (ANC) has assured farmers of their safety, while promising the majority of South Africans access to land which they can call their own. Whether land grabs will intensify and turn violent is a matter of speculation. Whether every single dispossessed South African will have access to land is doubtful.

Yet, what has already been witnessed, as a result of President Ramaphosa’s eager announcement in support of Constitutional amendments, is shaky investor confidence. Foreign investors are holding onto their hard-earned money, afraid of ploughing it into the unknown.

And, there is surely no better way to describe the tangible outcomes of land expropriation without compensation, other than it being one massive unknown.

South African banks say it’s ‘business as usual’

This widespread uncertainty has resulted in landowners questioning the role of banking institutions. The rhetoric goes: Why buy land or settle a mortgage if investment security cannot be guaranteed?

It’s a fair question because the ANC has been tight-lipped on the procedural mechanisms relating to land reform. Further breeding uneasiness, the ANC chairperson, Gwede Mantashe, downplayed the importance of financial loans incurred to improve land, dodging questions on institutional liability.

Major South African banks admit that the issue of land reform is a contentious one, adding that uncertainty regarding the matter has done little to allay speculation regarding major financial discrepancies.

Yet, in an effort to maintain calm, Absa, Standard Bank and FNB have all stuck to the same story: It’s business as usual.

Nedbank against amending the Constitution

Nedbank has issued a more in-depth statement, which has been reported on by Business Tech. The bank maintains that any alteration to current laws regarding land security would need to include consultation with financial institutions, saying:

“Any proposed changes of Section 25 of the Constitution will still need to be fully debated and will have to pass constitutional and legal muster on multiple fronts. The actual wording of any proposed changes will be absolutely vital and would need to be assessed before any economic and credit assessment impacts can be determined.”

Nedbank adds that it is already involved in the parliamentary process and has submitted proposals on land reform, saying:

“Nedbank is participating in the current Parliamentary process and debate and has made a submission.

We emphasised in our submission that we did not support a change to Section 25 of the Constitution, as this already provides for expropriation without compensation in cases where a court holds this to be just and equitable or it is in the national interest.”

And while the bank notes the uneasiness caused by the land debate, it maintains that it has not been directly affected, yet, saying:

“The land debate itself has already had a negative impact on overall investor sentiment and, therefore, economic activity and job creation. But, so far, it has not yet directly affected Nedbank or the way we assess credit for our clients.”