South Africans must keep an “open mind” about the debate over land expropriation without compensation, Barclays Africa Group chief executive Maria Ramos said on Thursday.
The land debate has to be approached calmly and responsibly Ramos said, adding that it was critical that the nation dealt with an issue that “sits at the core of so much of the hurt in this country”.
Ramos was answering questions from journalists, following the publication of the bank’s annual results.
Earlier this week, the Economic Freedom Fighters won a motion in parliament, requiring the legislature to review the constitution to allow for expropriation of land without compensation. It has sparked fear over the potential economic consequences of this move.
Not least of these is the impact it will have on the country’s banks, whose lending activities are underpinned, in large part, by property that acts as collateral.
The motion follows a fraught ANC elective conference in December, where the party resolved to seek a change to the constitution to allow for expropriation without compensation. But the ANC said at the time, that it would only be done if it was sustainable and without harming other sectors of the economy.
The treatment of farms will be a key question, given how much debt there is on agricultural land. According to the most recent statistics from the department of agriculture, forestry and fisheries, as of December 31 2016, total farming debt stood at over R145-billion. Around R39.6-billion of this debt was held with the state-owned Land Bank, and a further R89.4-billion was held by commercial banks, and around R10-billion held by agricultural co-operatives.
The banking industry was exposed through bonded property but nothing “is going to be served by hyping this thing up to a frenzy”, Ramos said. “We need to be measured about it, we need to understand what those exposures are.”
The matter has been referred to the constitutional review committee, which now has until August to consider the amendment, including holding public hearings, and then report back to parliament.
The bank would participate in the parliamentary engagements, if invited, Ramos said.
But the constitution already provided for expropriation without compensation Ramos added, and comfort should be taken from the fact that the debate had to consider other consequences such as impacts on food security.
“I would be very surprised, that in that debate, choices are going to be exercised that are going to put an entire sector at risk,” said Ramos.
Given the skills within the financial sector, solutions could be found to address the need for sustainable land reform and land restitution, she continued.
“I…as the chief executive in this organisation, will not add to any headline that says this is going to be a serious problem,” said Ramos. “We have to do our homework”.