JOHANNESBURG - South Africa's white farmers
on Wednesday criticised the ruling African National Congress'
(ANC) decision to endorse constitutional changes to allow the
state to seize land without compensation, saying the move would
be "catastrophic".
On Tuesday night, President Cyril Ramaphosa announced the
decision by the ANC's top decision-making organ to push ahead
with plans to amend the constitution to allow for the
expropriation of land without compensation.
More than two decades after the end of apartheid, whites
still own most of South Africa's land and ownership remains a
highly emotive subject.
Investors said Ramaphosa's speech was aimed at winning
political points ahead of an election in mid-2019.
AfriForum, an organisation that mostly represents white
South Africans on issues like affirmative action, said in a
statement land expropriation without compensation would have
"catastrophic results ... like in Venezuela and Zimbabwe".
"History teaches us that international investors, regardless
of what AfriForum or anyone else says, are unwilling to invest
in a country where property rights are not protected,"
AfriForum's Chief Executive Kallie Kriel said.
Analysts at investment giant Old Mutual said the president
was aiming to control the narrative around land reform, which
has so far been dominated by the opposition Economic Freedom
Fighters (EFF) party, before the election.
"It could be a very clever chess move," Old Mutual
Investment Group's managing director Khaya Gobodo said at a
media briefing, adding that Ramaphosa was trying to reduce the
possibility of negative outcome from the land expropriation
exercise by clearly staking out ANC's plan on the matter.
MARKETS FRET
Market reaction to the speech was initially negative, with
rand falling as much as 2 percent, but recovered almost
half of those losses on Wednesday.
The 2044 bond chalked up the steepest
losses, falling nearly 1.4 cents to its lowest level in nearly
four weeks, according to Tradeweb data.
The cost of insuring exposure to South Africa's sovereign
debt also rose with five year credit default swaps
climbing as high as 188 basis points, an 8 bps
jump from Tuesday's close and a near-three week high, according
to data provider IHS Markit.
South Africa's parliament in February passed a motion
brought by the radical left party, the EFF, to carry out land
expropriation without compensation.
A team of lawmakers was then given the task of canvassing
public opinion on whether section 25 of the Constitution needs
amending to allow for the expropriation of land without
compensation. The process is still ongoing, and analysts said
Ramaphosa's speech had pre-empted the lawmakers' work.
Some analysts said it was not all doom and gloom and that
eventually Ramaphosa will propose relatively limited amendments.
"Land will not be nationalised, there will be no
Zimbabwe-style land seizures and the constitution will only
allow expropriation without compensation in a narrow set of
circumstances," Ben Payton, Head of Africa at Verisk Maplecroft,
said.
(Additional reporting by Alexander Winning in Johannesburg and
Karin Strohecker in London
Editing by James Macharia and Angus MacSwan)