How much compensation for expropriation?


The current national debate about land reform and expropriation without compensation has for me highlighted the vast, destructive prevalence of ignorance in our society. People are so quick to form strong yet uninformed opinions and then wholly align themselves with some or other political interest group which purports to champion those opinions, ignoring any and all valid arguments to the contrary.

When did people suddenly forget that our people experienced some of the worst forced evictions in history? That houses were demolished, families displaced and shipped off to segregated communities with disparate infrastructure, resources, incomes and education. Those who remained on farms were inevitably forced to become labourers on land once belonging to their ancestors, for low wages and with no rights in the land they worked.

Now suddenly people claim market value compensation is the only fair way to expropriate land. Despite the fact that section 25 of the Constitution of the Republic of South Africa makes reference to Market Value as merely one of several factors to be considered in expropriation, one of which is the history of the acquisition and use of the property. It must also be noted that section 25(8) provides that no provision of section 25 may impede the state from taking legislative and other measures to achieve land, water and related reform, in order to redress the results of past racial discrimination, holding the limitations clause in section 36 in mind.

But it seems that for many white land-owners, financial fairness is the only fairness that matters, right? Well let’s examine that.

If you were to take the total present value of all the intergenerational, state enforced/facilitated benefits gained by individuals and their families from ill-gotten land, including exclusive access to land banks and financing, a cheap, black labour force forbidden from owning competing farming ventures, state subsidised equipment and seed, asset-collateral backed loans, tax breaks, favourable rates, etc you would see that there was a financial gain like no other. Albeit financial gain already received.

Currently we sit with a situation where the majority of land remains owned by a specific group of individuals, with their already obtained ill-gotten gains, now demanding further compensation for relinquishing that which they never had a fair claim to in the first instance. Financial benefits on top of financial benefits.

How does that sound fair to anyone?

In fact, if we wanted to play everything according to that logic then such individuals should be paid a fair market value for their land, but from that we should quantify and deduct all the aforementioned financial benefits personally gained from possession of such ill-gotten land. I can pretty much guarantee that will result in amounts owing to the people of South Africa rather than any form of monetary compensation.

I’ll draw example from tax law to illustrate my point. Did you know that if you obtain an interest free loan, you have obtained a taxable benefit equivalent to the amount of interest ordinarily charged on loans? This is because you have had access to something which nobody else gets in the ordinary course of business. A benefit, recognised and taxed.

So too could we treat the vast ill-gotten benefits accrued to landowners who obtained land by the nefarious mechanism of apartheid. Benefits recognised, and claimed back in full or to a total cap equivalent to the current market value of that land.

As we think of solutions to the problems we face, let us not forget that when the status quo is unfair, treating everyone exactly the same doesn’t necessarily realise equality within society. We have to take into account that different levels of inequality require different levels of intervention, and it is the State that we must hold responsible to make those interventions. Yes, the ANC government should have pursued the expropriation agenda with more haste since 1994, however where we are in the process should not detract from the fact that our Constitution in its preamble recognises the injustices of our past, with its purpose as our supreme law being to inter alia  heal the divisions of the past, improve the quality of life of all citizens, free the potential of each person and establish a society based on democratic values, social justice and fundamental human rights. 

What is clear to me is that we have not yet achieved these stated goals. We live in a fractured society still suffering from the wounds of the past which have been left to fester rather than dealt with in the appropriate manner. Twenty-four years after democracy and we still have one of the highest income disparities in the world. The ownership of arable land remains swayed in favour of the minority who benefited and continue to benefit from the apartheid government’s approach to land use and ownership. 

If we are to truly move forward, without the incipient threat of violence, we need to come together to address the issues that strengthen and perpetuate the divide between South Africans. Our government doesn’t intend to evict all white farm owners into homelessness, nor does it intend to ruin the economic viability of our natural resources. But it does need to address the issue of land ownership in a manner that is fair and in so doing, make good on its Constitutional mandate. We are at a cross-roads as a country, but just as we overcame the tyranny of the apartheid government, so too must we work together to eliminate the massive socio-economic injustices it left in its wake. 

So the options are as follows, (a) we let people keep accruing unfair benefits, allowing an ever-increasing intergenerational wealth and thereby reinforcing income-based societal divides inevitably drawn along racial lines, (b) We pay those who have gotten land in an unjust and unfair manner, the fair market value they claim they are owed, but at the same time claim back the fair value of all the benefits they received as a result of their unfair and unjust ownership and (c) We engage in a case-by-case analysis of ill-gotten gains, expropriate the land without compensation and call it even.

You tell me which option is the most logical and fair going forward?

Shaad Vayej is a Bcom LLB graduate of Stellenbosch university with an undergraduate major in Economics and post-graduate majors in both Constitutional and Company Law.