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“When legislation is used to derail the economy, it must be viewed as a misuse of power”, this was the view expressed by the employers’ organization, NEASA, during a news conference yesterday.
Economist, Mike Schüssler, who participated in the conference, confirmed that “If implemented, the Expropriation Bill will deter investment and economic activity, leaving millions destitute.”
According to NEASA Chief Executive, Gerhard Papenfus, the Expropriation Bill will have several distinct ways in which it will undermine the South African society and economy.
Firstly, the Bill allows for any asset to be expropriated without compensation. This undermines the property rights of every business owner in the country. Consequently, the Bill is aimed at redistribution of assets and not restitution. The Bill allows the State to target any property based on an ill-defined “public interest” principle. This leaves every citizen’s assets open to attack by the State.
Secondly, Gerhard Papenfus warned that the Bill will cause financial institutions to fail. He stated that “bonded assets, targeted for expropriation will threaten the stability of financial institutions– how will anyone be able to recover the losses incurred on loans if they are defaulted due to expropriation at reduced or nil compensation? Such a scenario will impact business lending risk and increase operational borrowing cost.”
In addition, Papenfus emphasised that the Bill will lead to higher inflation. “For price stability, a stable and predictable environment is required to sustain the economic value chain. Expropriation threatens this and creates an additional risk that will be priced into the ordinary marketplace.”
According to Schüssler, another concern is that the implementation of the Bill will exacerbate job losses and lead to stagnation of the economy. “The Bill represents an increase in uncertainty and consequently the cost of capital will rise, the practical implication being that starting and/or expanding a business will become financially impossible. That will deter anyone from starting a business.”
The fifth concern is the Bill’s attack on the security associated with property rights. Such uncertainty will deter international investment and will lead to further capital flight, locally.
South Africa is in a highly vulnerable position, economically and socially. This Bill will create unmet expectations. The disarray that will ensue will increase social tension and uncertainty, threatening what is left of our post-COVID-19 economy. Nobody will go unaffected by the impact of expropriation without compensation. The government is aware of this, yet they persist.
Schüssler stated that “for investment you need security of rights and ownership. Without security, you will lose investment. Once you lose investment, you lose employment.”
“Today, despite the pure intentions of the Constitution and the fundamental rights contained therein, it is becoming evident that legislation is increasingly being used as a vehicle to implement political ideals that will derail the economy and society”, Papenfus said. Therefore, it is NEASA’s view that the Expropriation Bill is a misuse of legislative authority. The state is using aggressive majoritarianism to apply a devastating policy that will destroy lives and livelihoods.
It is in the interest of the entire business community to join the fight against the Expropriation Bill. NEASA has submitted its comments on the new proposed Expropriation Bill to the Portfolio Committee for Public Works and Infrastructure. NEASA invites employers and employees to support its submission through its website (https://neasa.co.za/campaigns/stop-the-expropriation-bill/).