“They do not seem to be the legislative underpinning of a comprehensive, implementable national economic recovery plan,” the Banking Association of South Africa said in a statement distributed in Johannesburg on Thursday. “Rather they seem ideologically motivated and do little to address the real needs of an economy desperately in need of jobs, effective transformation and empowerment programs, and inclusive growth.”
The comments come as President Cyril Ramaphosa’s ruling African National Congress embraces calls to change the constitution to allow for the expropriation of land without compensation. While the ANC says the change is needed to improve equality 24 years after the end of racial segregation, the opposition say the party is trying to deflect attention from the government’s failure to properly manage earlier land-reform efforts before elections.
“Banks recognize that the present patterns of land ownership in South Africa, which have their origin in apartheid and colonial dispossession, are neither just nor sustainable,” BASA said. Lenders are willing to partner the government and farmers on land reform, which must secure property rights, safeguard financial stability and put in place proper infrastructure to address a shortage of housing that has left 1.2 million families living in informal settlements, it said.
No Land Grabs
White farmers own almost three-quarters of South Africa’s agricultural land, according to an audit by lobby group Agri SA published last year, down from 87 percent during white rule. Loans to commercial farmers rose to 148 billion rand ($10.1 billion) at the end of June from 133 billion rand at the end of December, demonstrating confidence that South Africa can find “practical solutions to the challenges of restitution, redistribution and security of tenure.”
Lenders have invested about 1.6 trillion rand of customer savings, salaries and investments into mortgages, and rely on the properties as security for the loans, according to BASA. Should these property values decrease, banks and the economy won’t be able to absorb the shock, it said. Ramaphosa and his deputy, David Mabuza, have both said that the government is opposed to any land grabs.
State Bank
The opposition Economic Freedom Fighters has also been pushing for the creation of a state-owned bank to challenge commercial lenders, the five biggest of which control more than 90 percent of banking assets, which the ANC adopted as policy at its national conference in December.
An “unintended consequence” of the Banks Amendment Bill is that it will enable all state-owned companies to operate or own a bank, said BASA, which represents 35 local and international lenders.
“Applicants for bank licenses must have the financial means to comply with the requirements of the Banks Act and be able to guarantee depositors’ money without exposing taxpayers to losses or introducing systemic risk,” it said. “Given the state of the South African fiscus, it is not advisable for the state to take on any additional guarantees.”
