South Africa’s slow economic growth, compared with other African countries, and its high poverty rate could be attributed to its lacking individual property rights, Free Market Foundation executive director Leon Louw said Thursday.

“South Africa is moving in the opposite direction to other countries in Africa, which are strengthening their land ownership rights,” he stated.

Louw was referring to the yearly International Property Rights Index, which illustrates that countries with high property rights indexes also boast higher growth rates, compared with those countries that had lower property rights indexes.

Although South Africa’s redrafted Expropriation Bill was an improvement on the 2008 version, which was withdrawn at the last minute, it was still a long haul from being Constitutionally correct, he said.

The Bill seeks to replace the Expropriation Act of 1975, as well as its predecessor, the draft Expropriation Bill of 2008.

“The problem with the new Bill is that government first threatened with an extreme law, then compensated with a less extreme version. Although we are somewhat thankful, the new draft is still bad,” Louw said at a breakfast hosted by Afrikaans business organisation AfriSake, in Sandton.

The Bill, which the Department of Public Works published for comment in March, aimed to give effect to Section 25 of the Constitution, which dealt with the protection of property. While the arbitrary deprivation of property was prohibited in terms of section 25, the Minister could, as per the draft, expropriate property if it was deemed to be in the public interest or for a public purpose.

However, critics have put forward that the Bill’s definition of ‘public interest’ is too broad and that it provides no additional criteria to assist in the assessment of what would be in the ‘public interest’.

Louw stated that the broad and unclear definition of the term ‘public interest’ was problematic as this rendered it vulnerable to exploitation, which could create scope for widespread corruption.

Louw also referred to a paper by Dr Anthea Jeffery, head of special research at the South African Institute of Race Relations, in which she highlights various shortcomings of the new draft, stating that it still allowed an expropriating authority to take ownership and possession of property simply by notice and before the owner received compensation.

In her paper – ‘No need for new Expropriation Bill’ – Jeffery also stated that compensation for landowners would only become payable when the State or the courts agreed on an amount.

The proposed legislation placed pressure on the expropriated owner to agree to the amount of compensation offered by the State, rather than remain without the benefit of either the property or its value in money.

Louw proposed that the Constitutional requirement of reasonable administrative treatment must be worked into the proposed legislation so that the State could only expropriate property if all other reasonable alternatives had been exhausted.

He noted that South Africa’s 1913 Land Act, which was still in use, was preventing blacks from owning the land they live on and trading it freely. He suggested that the new Bill should aim to award black South Africans with full title deeds, free of charge, to enable them to trade their land.

“This will allow government to upgrade the tenure of blacks to that which whites enjoy and bring on extreme empowerment,” Louw stated, while also proposing that an accurate land distribution and ownership audit be carried out in South Africa.

“To make a change we need to know our current destination,” he added.

Meanwhile, AfriSake chairperson Steve Booysen, however, stated that the issue of lacking individual property rights was a continent-wide problem, resulting in Africa failing to build a proper middleclass.

“Without property rights, citizens cannot promote and develop themselves,” he noted.

Looking at the Bill, Booysen  warned that, as with the 2008 Expropriation Bill, the new draft legislation would increase uncertainty among potential investors and banks, which, depending on how the Bill was executed, could lead to downgrading of the country’s credit rating.

He highlighted that the extension of the cut-off date for land reclaim applications from December 1998 to December 2018, under the Restitution of Land Rights Amendment Bill, added to the uncertainty.

Booysen stated that AfriSake was also concerned about the levels at which expropriation could take place as per the new Bill. The proposed legislation stated that expropriation could be carried out at local-, provincial- and national government level, which allowed for over 500 State entities to expropriate property of all types, including farms, houses and shares, among others.

“We would like to see this only being carried out at national government level,” he told Engineering News Online.

Booysen said AfriSake had been involved in the public hearings and consultation process regarding the Bill, adding that the organisation would continue to participate in the process, while also take a proactive approach by creating awareness regarding individual property rights in the business and public sectors.

Following the initial public comments, the draft Bill will again have to be approved by the Cabinet before it will be formally introduced to Parliament. Government had reportedly targeted the final approval and implementation of the new Act before South Africa’s general elections next year.