Online Reporter
THE concerns surrounding the recently signed Expropriation Act have been overstated, says Wandile Sihlobo, chief economist at the Agricultural Business Chamber of South Africa (Agbiz).
He made these remarks during a webinar hosted by Old Mutual last week.
He stressed that the Expropriation Act, which was signed into law by President Cyril Ramaphosa on January 24, will be used as a last resort.
“But it is certainly not a form of government policy to drive land reform.
“The noise around the Act is exaggerated,” he added. Our reading is that it’s an update from the 1975 Act. The only critical addition is the possibility of nil compensation.
“But people forget that such a determination will be made by the courts, which need to consider whether it is just and equitable.”
The signing of the Act has caused an uproar in South Africa, especially from Afrikaner grouping AfriForum and its trade union Solidarity.
Over the past two weeks, United States President Donald Trump has weighed in on the issue and pronounced on February 7 that he would cut off aid to South Africa, claiming falsely that land is being expropriated and that Afrikaner minorities are being persecuted.
Moneyweb reported earlier that Johann Kotzé, CEO of AgriSA, stated that Trump’s utterances have caused divisions within the farming community.
He stressed though that AgriSA does also have concerns about the Act, such as when land can be taken without compensation — and may take legal action to have it clarified.
On Monday, the Democratic Alliance, which is one of the partners in the government of national unity (GNU), filed papers in the Constitutional Court to challenge this piece of legislation, which it calls “irrational and “unconstitutional”.
“Not a form of land reform”
Sihlobo, however, said the Act will be used as a last resort and has to conform with a plethora of regulations.
“A mistake is being made in that people conflate the Expropriation Act with land reform.
“Land reform runs on three legs — land redistribution, land restitution and land tenure,” he said.
The South African government has so far bought 2,5 million hectares of land, which falls under the Agricultural Land Holding Account and which can be transferred to beneficiaries with title deeds.
This will be positive for the agriculture sector, Sihlobo noted.
“With blended finance and private sector collaboration, we think it could provide a 30 percent improvement in cross-value added in agriculture. More jobs could come from the agricultural value chain.”
Sihlobo noted that agriculture had a challenging 2024, including mid-summer droughts and biosecurity threats, but said there will be recovery for the sector in 2025.
“There may also be revisions to the output numbers for last year. We think a lot was delivered by farmers in the last quarter of 2024 as opposed to the third quarter (due to the late summer rains).”
Despite a challenging year, export numbers reached record highs.
“When you look at the export figures, agriculture will have exceeded US$14 billion (around R260 billion) for the first time last year, in part because of the higher volumes that come out of the fruit sector.”
Sihlobo cautioned that South African farmers face potential challenges going forward.
The need for new markets
“We export between 50 percent and 60 percent of what we produce in value terms. And yes, the areas to which we export are nicely diverse.”
Approximately 40 percent is exported to Africa, around 20 percent to the European Union, 25 percent to Asia and 6 percent to the Americas and the rest of the world, he noted.
“But the point is, we need to grow as many (new) markets as we can — to the Brics (countries) and other areas, while at the same time working to retain our current markets.”
During question time, Sihlobo was asked to weigh in on the potential fallout if South Africa loses its duty-free access to the US market under the African Growth and Opportunity Act (Agoa), which includes farm products such as wine and citrus fruit.
“The roof won’t fall in if we’re out, but I want to underscore that the tariffs we are to face in the US are on average 3 percent if we’re out of Agoa,” he says.
“For this reason, South Africa must try to transition from Agoa to a free trade agreement.” — Moneyweb
