Tuesday, 27 May 2014

South Africa following the Mugabe route to Africanisation

 The Second Phase in Overview
Anthea Jeffery
Head of Policy Research, IRR,
Solidarity National Council, 26 May 2014

Key NDR goals/strategies
        Eliminate ‘apartheid’ [I.E. existing] property relations
        Apply affirmative action until ‘all centres of power and influence became broadly representative of the country’s demographics’
        Use cadre deployment to bring all ‘centres of power’ under the control of the ANC, including the Judiciary, the media, and civil society

Erosion of property rights
        1993 Constitution
        Expropriation for public purposes
        Compensation as agreed or decided by courts
        in terms of listed criteria (value of investments)
        1996 Constitution
        Expropriation also in ‘the public interest’
        Different criteria for compensation
        ‘public interest includes nation’s commitment to land reform’ and other reforms

Land reform
        Restitution, redistribution, tenure reform
        Shifts in 30% goal
        Restitution process to date
       slow, inefficient, ‘more damaging to commercial agriculture than the Anglo-Boer war’
       ineffective in providing redress
       91% of claimants have chosen cash instead
       90% of transferred farms have failed

Changes now being made
        Green paper on land reform
        Leasehold title, not freehold, for beneficiaries
        Freehold title with limited extent
       Strategic Plan for 2014-2019, identifies
       bills or policy documents to be taken further:
       ‘Agricultural Land Holdings Policy Framework’, which will introduce ‘upper and lower limits’ on the size of agricultural land holdings.
        Restrictions on foreign ownership of land
       ‘Acquisition and Disposal of Land by Foreign Persons Bill’
       limits on land sizes for foreign nationals’
       ‘long-term leases’ for foreigners
        ‘Institutionalised use rights’ for land in traditional communal tenure
       More powers for chiefs, key to rural vote

Re-opening of restitution claims
        Bill is with President Zuma for his assent
        Claims re-opened till June 2019
        379 000 new claims, could cost R179bn to settle
        EFF wants State to take land as custodian, and lease it to users for 25-year periods
        This could also be the ANC/SACP objective (state ownership will break power of white capital)

Promotion and Protection of Investment Bill of 2013
        Two key clauses:
        Expropriation must take place in accordance with the Constitution
        ie for public purposes, or in the public interest
        against ‘just and equitable’ compensation
        paid in ‘a timely manner’
        But there’s another vital clause as well

Some acts are NOT expropriation
        The Bill has an open list of acts by the State which ‘do not amount to acts of expropriation’. These include:
        ‘any measure which results in the deprivation of property but where the State does not acquire ownership of such property,…
        provided there is no permanent destruction of the economic value of the investment’

Implications of Investment Bill
        Under the Investment Bill, the Government could use its rules to take further measures to
        vest farming land under claim, plus farm equipment and other assets, in the State as the custodian of the nation’s  land resources, while
        simultaneously inviting claimants to apply to the State for a licence or lease to use portions of these farms for a specified period.

Implications of the Investment Bill
        Farmers would be deprived of their property, but
        the State would acquire it as custodian rather than as owner, and
        there would be ‘no permanent destruction of the economic value’ of their farms, which would continue to be used by others. Hence,
        there would be no ‘act of expropriation’, and
        no compensation would be payable.
        Provided the State takes land under claim as a ‘custodian’ for land claimants, no compensation will be payable.
        State likely to become the ‘custodian’ of more and more land
        Together with other policies in the Green Paper, this will give rise to creeping land nationalisation
        Ironically, black South Africans will again be barred from freehold title

Investment Bill based on
key ConCourt ruling
        Majority ruling by Chief Justice Mogoeng Mogoeng in Agri SA v Minister of Minerals and Energy
        Sebenza (Pty) Ltd had bought unused coal mining right in 2001 for R1m, and could not afford to convert it to new order mining right, after MPRDA came into effect in 2004
        Its unused right ‘ceased to exist’ a year later

Judge Mogoeng’s ruling
        A claimant must first show a ‘deprivation of property at the hands of the State’
        He must also show that ‘the State has acquired the substance or core content’ of what he has lost
        Here, Sebenza had suffered a ‘compulsory deprivation’ of its coal right
        The ‘custodianship’ of this right was now ‘vested in the State’ on behalf of the people
        Had this assumption of custodianship given the State ownership?
        ‘The answer is no.’
        The State, as custodian, is simply a ‘conduit through which broader and equitable access to mineral…resources can be realised’
        Ie, there had been a deprivation of ownership, but no matching acquisition of ownership by the State
        This meant there had been no expropriation
        This meant no compensation was payable
        Edwin Cameron: ‘Acquisition by the State is not… inevitably…a necessary feature of expropriation’
        Two other ConCourt judges warned of the implications of Judge Mogoeng’s ruling, saying:
        It could lead to ‘the abolition of the private ownership of…all property’ without the payment of any compensation.

Implications of ConCourt ruling
        This is “pure logic chopping”, says Martin Brassey SC.
        The ConCourt has also “endorsed a regime in which a private person can be licensed enter property against the owner’s will, build access roads and set up a rig, explore for minerals and then, using the water and other materials on the property, win the minerals for his own benefit and account.
        “The owner will not be compensated, but the State can impose taxes and demand royalties on the mining company in exchange for the permit”.

Erosion of Mining Rights
        Private ‘old-order’ mining rights abolished under MPRDA of 2002
        Replaced (not always) by 30-year licences, revocable by minister for failure to implement social and labour plans or mining charter
        Charter requirements tightened up in 2010
        Many new restrictions under MPRDA Amendment Bill of 2013

More ministerial powers
        Set percentages of designated mineral products to be made available for local beneficiation in ‘prescribed quantities, qualities and timelines’, at ‘mine-gate’ or ‘agreed’ prices.
        Impose export controls on designated minerals
        Probably impose both export and price controls on ‘strategic’ minerals
        Bill also increases risks of ‘gazumping’, and makes for permanent environmental liability
New penalties
        Fines of up to 10% of annual turnover, plus 10% of value of previous year’s exports, or prison terms for up to four years, or both, for:
        infringing export or price controls
        failing to expand opportunities for blacks or promote ‘optimal economic growth’
        failing to implement social and labour plans
        failing to comply with mining charter

Erosion of Oil Production Rights
        MPRDA Amendment Bill ‘entitles’ the State to
        20% free carried interest, plus
        ‘a further participation interest’, of an unspecified percentage, to be acquired ‘at an agreed price’
        Previous proposed ceiling of ‘50% per petroleum operation’ has fallen away: 100% now possible
        State also entitled to ‘a corresponding percentage of voting rights’

Changes to BEE rules
        BEE Amendment Act, gazetted, not operative
        Penalises ‘fronting’ as very broadly defined
        Ie ‘directly’ or ‘indirectly’ (unintentionally) ‘undermining’ BEE objectives
        Punishable by fine of up to 10% of turnover, plus jail for up to 10 years, plus ban on state contracts for 10 years

New BEE generic codes
        Need 40% of ownership points, via 40% discount on market value, for all but exempt micro enteprises (annual turnover below 10m)
        Unrealistic EE targets eg 60% black representation for senior managers, when economically active Africans aged 35 to 64 make up only 36% of overall economically active population
        Unrealistic procurement obligations   
        80% of annual spending
        Much of it from 51% black-owned firms who are also ‘empowering suppliers’
        ‘Supplier and enterprise development’: (3% of NPAT) must also go to 51% black-owned firms
        5 points only for socio-economic development, even for qualifying small enterprises (25 points now)

Employment Equity Amendment Act
        Gazetted, not yet operative
        Removes defences (eg size of ‘pool of suitably qualified people’, economic factors)
        Shifts onus from DoL to employer
        More than triples penalties
        Failure to fulfil racial targets: R1,5m or 2% of annual turnover for first ‘offence’; R2.7m or 10% of annual turnover for fifth in three years

EE Draft regulations
        Larger employers (150 or more) must use
       national demographics for top and senior managers, plus professional staff (11% v 51% for coloured people in Western Cape)   
       average of national and regional for all other staff, including unskilled (31% v 51%)
        Other designated employers (50 to 149)
       National demographics at top and senior levels, regional ones elsewhere

Women Empowerment etc Bill
        All employers of 150 people or more designated by minister
        At least 50% representation of women in ‘decision-making structures’ and boards
        Plans and implementation measures to minister, who can ‘recommend’ improvements
        Fine of up 10% of annual turnover, plus 5 years in jail, for failing to supply information or comply with recommendations

Other worrying measures
        Property Valuation Bill (to president for assent)
        Infrastructure Development Bill (to president for assent)
        Expropriation Bill of 2013 (now to Parliament?)
        ‘Final policy proposals’ on farm redistribution
       50% to farm workers, proceeds paid by State to ‘investment and development fund’
       precedent for other types of businesses?
        Land Tenure Security Bill of 2010
        Security Industry Bill (to president for assent)
        Legal Practice Bill (ditto)
        Protection of State Information Bill (ditto)
        Labour Relations Amendment Bill (ditto ?)
        Employment Services Bill, gazetted
        December 2014 deadline for compliance with revised mining charter (realisation principle)
        Increase in strikes and violent protests

        Mr Zuma post election: time for NDP
        Mr Zuma pre election: time for ‘a radical new phase’ of ‘socio-economic transformation’
        Also pre-election: Now we have achieved political freedom, ‘we must achieve economic freedom and ensure ownership, management, and control of the economy is further deracialised’ 

When everyone runs from the bigots who accuse Englishmen of Racism, they ought to look at once beautiful countries with leaders like Mugabe and Zuma for what will happen to Britain in the future.  Not that British politicians are much better!  Their reaction to being found with their soiled hands in the Cookie Jar was to get rid of a capable administrator - Elizabeth Filkin - and replacing her with an organisation that looks and sound like bottom feeders.
Unless the country opens its eyes soon, the damage done will leave the indigenous races in the same plight as the Boere, the Rhodesian, the Portuguese Angolan and Mocambiquan.