South Africa goes from bull to bust in a week: [an extract from the DAILY INVESTOR – 24 January 2025]
President Cyril Ramaphosa told investors at Davos that South Africa was open for business and touted the country’s stability and inclusive governance.
However, within days, he signed the controversial Expropriation Bill into law, which sets out how organs of state can expropriate land in the public interest.
“Local, provincial and national authorities will use this legislation to expropriate land in the public interest,” the government said.
“In terms of this law, an expropriating authority may not expropriate property arbitrarily or for a purpose other than a public purpose or in the public interest.”
Property rights are crucial to an economy and society because they provide individuals with the security and incentive to invest in their assets.
When property rights are not fully protected, individuals and companies lack the security to invest in innovation, trade, and capital accumulation.
Social stability is at risk without secure property rights, as individuals are not ensured control over their possessions and cannot freely participate in the market.
Strong property rights create a foundation for a functioning market system where people can confidently exchange goods and services.
The economy of countries like Venezuela and Zimbabwe, where property rights were attacked, collapsed quickly.
Unsurprisingly, Ramaphosa’s decision to sign the Expropriation Bill spoke much loader than his calls to invest in South Africa.
No investor would put their money in a country where they are not guaranteed that their investment is safe.
The government’s intention with the bill is irrelevant. All investors hear is that their property can be taken from them in South Africa.
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