South African President Cyril Ramaphosa on Tuesday nuked the prospect of significant improvements to his nation’s struggling economy.
He did this by confirming that his ruling African National Congress party would, “through the parliamentary process, finalize the proposed amendment to the constitution that outlines more clearly the conditions under which expropriation of land without compensation can be effected.”
This means that the South African government will be able to seize farms and other large land tracts without paying their owners. The expropriation of white-held land is a populist interest for many in the ANC, but it’s also a longstanding demand of the Marxist Economic Freedom Fighters party, which uses the issue to siphon off support from the ANC’s left.
Whatever the political motivations for Ramaphosa’s decision, it is truly idiotic economic policy. South Africa’s key economic need right now is new foreign investment, which remains far below its potential. By seizing land owned by private interests — by even discussing such a thing — the ANC instantly shatters foreign business confidence in the viability of long-term investment. That’s a problem because South Africa’s top-line unemployment rate is 27.2 percent and increasing. Its youth unemployment rate is an extraordinary 53.7 percent. Its economic growth rate lingers unstably in the low, single digits (it’s projected at less than 2 percent this year), and its inflation rate is 4.2 percent and expected to rise.
What’s also tragic about this lurch into a new economic lunacy is the wasted opportunity. After all, when Ramaphosa’s predecessor Jacob Zuma departed, there was a sense that perhaps Ramaphosa might unleash South Africa’s vast potential. That, for example, the new president might bring a semblance of security amid war-like crime rates and prioritize attracting foreign investment.
The potential for optimism was justified. Ramaphosa had spoken the language of pragmatic reform and South Africa retains a young population, immense mineral reserves, and a great base for tourism. It also sits astride two oceans full of commerce.
Unfortunately, instead of moving toward a stronger economy, Ramaphosa is choosing the path of Robert Mugabe’s Zimbabwe. History tells us where this path leads: Zimbabwe is only now beginning to crawl out from the Louis Vuitton rubble of Mugabe’s land seizures.
