We can’t imagine this one has gone down well in the farming industry. But the Institute of Race Relations (IRR) are fearing the worst for the upcoming programme of land expropriation. They’ve consulted with the Banking Association of South Africa (Basa), and both have shared a very gloomy outlook for the redistribution bill.
Although the IRR aren’t exactly the ANC’s biggest fans, they do maintain that land reform could work in South Africa if poorer farmers gain access to technical training and preferential loans. But on Thursday, Campaign Manager Hermann Pretorius claimed expropriation would only sabotage our economy and agricultural balance.
Land expropriation “could cost SA R1.6 trillion”
The analyst suggests that trillions of rand could be wiped from the economy, given the high stakes involved in such a move. The non-compensatory model of expropriation – backed by the government and heading for ratification this year – would take land from current farm-owners and give it to displaced black citizens who were moved by the cruel regime of apartheid. For the IRR, this is not the way to right history’s wrongs:
“They (banks) know that if LEWC is passed, it would blow a R1.6 trillion hole in their books. They know the risk, they know the stakes, but if they are not going to play the game they might hope ordinary South Africans won’t hold them accountable.”
“Rather than take land from successful farmers, the government should support poor farmers with preferential loans and upskilling. Instead of taking the property of ordinary people the government should sell state land and give poor South Africans access to proper secure title which will give them access to finance.”Hermann Pretorius
How LWEC could leave some landowners severely out of pocket
The think-tank is now desperately seeking consultations with Outsurance, Sanlam and other insurance firms to ask them what preperations they have put in place to deal with a major shift in land ownership and property rights. Furthermore, they are concerned about what may happen to outstanding bonds on affected stretches of land.
The IRR has sent open-letters to @sanlam and Coronation asking what steps they are taking to manage #EWC risks and keep clients advised.South Africans deserve reassurance on their financial security.Join the fight against EWC, visit https://t.co/9C4aAEPhgU. pic.twitter.com/LtmAu3dqYU— Institute of Race Relations (@IRR_SouthAfrica) February 13, 2020
Basa have estimated that over R150 million is owed to banks in bond payments alone from farmers. If they are kicked off their land, Basa say, then banks could react by classing their loans as “defaulted”.
This could leave some landowners in a terribly precarious position, and it’s one of the biggest concers raised yet about the government expropriation programme.