/ 3 February 2025

Agriculture: No need to panic over the Expropriation Act

A field of dead corn sits next to the Lincolnland Agri-Energy ethanol plant in Palestine
The South African agricultural sector is on solid ground for now and we shouldn't be worried — but we should be vigilant.

I am on a mini roadshow in the central regions of the country. During the long drives, I have listened to many radio talk shows. 

When one crosses from one region to another, the radio stations change but the one theme I have heard consistently is the Expropriation Bill, which President Cyril Ramaphosa recently signed into law. 

The commentary is interesting but confusion is emerging where some view this Act as for a new direction for land reform. This is not the case; the land reform policy in South Africa hasn’t changed and still comes under the three pillars of restitution, redistribution and tenure. 

The government is still buying on the open market for land reform, among other things. This is unlikely to change because expropriation is no shortcut, it is a long and cumbersome process, and the law provides the safeguard that it can be only used when attempts to purchase the property on reasonable grounds have failed. 

The other important thing to underscore is that South Africa is not unique in having an Expropriation Act; most countries have one. And the Expropriation Act is not new; what we have is an update of the 1975 Act.

So, what is all the fuss about, if that is the case?

Drawing on my work with my colleague at Agbiz, Annelize Crosby, the first thing to highlight is that the Act’s provisions are subject to the provisions of section 25 of the Constitution, which has not been amended. This section requires that compensation be just and equitable, striking a balance between the public interest and the rights of those affected, with regard to all relevant circumstances.

Although the new Expropriation Act explicitly refers to the possibility of nil compensation, the result must be just and equitable. The term “nil compensation” implies a calculation that considers all relevant factors, including those listed in the Act and the Constitution. The application of relevant factors would have to be justified.

Also important to note is that while section 12(3) of the Act states that it can be just and equitable to award nil compensation, it makes it clear that it is only a possibility where the balance of circumstances justify it. It is by no means a foregone conclusion that compensation will amount to nil and the courts will have the final say on compensation where an offer is disputed. 

A calculation would have to be done considering all relevant factors. Awarding little or no compensation would have to be justifiable in an open and democratic society and the state would have to show precisely how and why it arrived at an offer of nil rand compensation. 

There will probably be a lot of litigation over the nil compensation clauses and jurisprudence will develop over time regarding what is just and equitable in this regard and what is not.

The new Act contains many checks and balances, including a provision that an agreement must be attempted before the state decides to expropriate and an opportunity to object to the intention to expropriate. 

The Act guarantees that expropriation can only be used as a last resort after all other attempts to buy the property have failed. It also provides for the possibility of mediation in the case of disputes over compensation.

With that said, I must agree that the definition of expropriation remains a concern and we will need to watch how it is applied and interpreted by the courts. This definition could exclude all instances where the state does not acquire the property but nevertheless limits the owners’ rights to such an extent that it becomes of no value. 

It opens up the possibility of all sorts of regulatory limitations on a property, with no compensation, where the state does not acquire the property but rather limits the use and enjoyment of it by the owner or any other party with a right to the land — a lessee, mortgager or occupier, for example.

Another crucial point often missed in this conversation is that the state’s right to expropriate still exists, even without this Act. The state’s power to expropriate land for a public purpose or in the public interest is derived from the Constitution itself. More than 200 other pieces of legislation provide details on the type of property that can be expropriated, the conditions under which it can be expropriated and the state entity vested with this right.

The Expropriation Act is merely procedural. It grants no expropriation powers to anyone other than the minister of public works and infrastructure and only for purposes connected to the minister’s mandate. In all other instances, the powers to expropriate already exist in other legislation, such as the Restitution Act, Labour Tenants Act and the Redistribution Bill.

People’s concerns are understandable, as South Africa recently had a robust conversation about section 25 of the Constitution. But this is not that discussion and the Expropriation Act is not unique to South Africa. In the coming months and years, we will have to keep a close watch on the developments and how the Act is applied, as all that will offer valuable lessons.

The South African agricultural sector is on solid ground for now and we shouldn’t be worried — but we should be vigilant.

Wandile Sihlobo is the chief economist of the Agricultural Business Chamber of South Africa (Agbiz) and senior fellow at Stellenbosch University’s Department of Agricultural Economics.