South Africa Land Bill Shock for Foreign Investors

South Africa

South Africa ruling party African National Congress (ANC) president Jacob Zuma tossed another surprise aimed at foreign investors with the new proposed land bill law. Zuma is set to introduce a land bill that would halt foreigners from buying property in South Africa. Zuma and the ANC government want to implement sweeping land reforms across the country.

It is estimated that foreigners own between five and seven percent of the land in South Africa. Foreigners would be allowed to lease land for up to a period of 50 years, although land considered to be strategic would have to be ceded, as the government would exercise a right of first refusal.

There is an urgent need, according to the ANC government to rectify the inequality of land ownership. To end the injustices of colonialism and apartheid and secure the land for food security. Zuma said the land holding bill would be submitted to parliament this year, and the redress of the wrongs of the past is a critical factor.

Individual locals will not be allowed to own more than 12,000 hectares of land, and the government will purchase any surplus land over the set limit for redistribution. The new law will not have a retroactive effect based on the constitution, but the government can invoke the land if it is deemed to be strategic.

The land will be classified into distinct categories, for instance, historical, cultural significance, environmental, security sensitive, and strategic land. Foreign investors or ownership would be discouraged in these areas.

The newly allocated amount of twelve hectares for local farmers is a big blow and is seen as an aim at white farmers who still own much of the best farmland. Farmers would inevitably challenge the ruling, and legal battles will ensue based on the fact that smaller plots will not be commercially viable.

The ANC government is still looking to secure votes and under growing pressure to place more land into the hands of the black majority. There is a wariness of being outmaneuvered by the radical voices calling for land reform in favor of the majority. There is an aim by Zuma to whip the glory from the ANC’s most vocal adversary, Julius Malema, the leader of the Economic Freedom Fighters (EFF) party. Malema advocates expropriation of land without compensation.

The land reform bill will have serious repercussions on investor confidence in South Africa. The foreign ownership in South Africa is already low, and it is the quality of ownership that is needed. Zuma is effectively saying that foreigners are not welcome in South Africa.

During November 2014 German Foreign Minister Frank alter Steinmeier visited South Africa. German is the second largest trading partner of South Africa, and Steinmeier detected a breach of protocol or an act of negligence upon arrival. The courtesy extended to visiting politicians was ignored by the South African Government sending a clear signal that German is not considered a serious trading partner. It is estimated that there are over 600 German firms in South Africa employing more than 90,000 people. The unfriendly climate and disrespect for Germany is indeed a worrying factor.

The political turbulence in South Africa and the economic policies of the Zuma administration appears to be heading in the wrong direction. The unfriendly climate for investors and the safeguarding of investments harbors considerable risks for foreign investors.

The land bill is a double-edged sword, finally giving the majority a chance to own land and on the other hand scaring away foreign investors. The vast majority of black rural people do not have the money to buy land and in all probably this will be gobbled up by the Ingonyama Trust Board. The Zulu trust currently owned 2,8 million hectares of land throughout Kwa-Zulu Natal. The Zulu trust will own the land and rent out to the poor.

Foreigners will buy land in other countries and develop thriving economies that will ultimately hurt South Africa. The ANC government does not create an investor friendly environment for foreign investment. It is already a fact that farmland owned by amateurish black individuals have failed turning once fertile ground to barren land. The land reform bill will cause South African farmers who produce over sixty percent of the country’s food to move on. South Africa is not the land of the free, and the Zuma administration snubs the Constitution that had a shield to protect every South African.

Opinion by Laura Oneale


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