Plans by South Africa’s ruling African National Congress (ANC) to change the constitution to allow expropriation of land without compensation unnerved investors, a senior World Bank group executive said.
President Cyril Ramaphosa’s party made the acceleration of land redistribution a key issue ahead of 2019 elections, while pledging to carry out land reform in a way that does not threaten food security.
Most private land remains in the hands of the white minority more than two decades after the end of apartheid, making it a vivid symbol of wider disparities.
“If you create uncertainty in some aspects of your environment and land tenure is one of them, that is an aspect investors will look at,” Sérgio Pimenta, vice president for the Middle East and Africa at the International Finance Corporation (IFC), the World Bank’s private investment arm, told Reuters.
“What investors are looking for is certainty,” he said on the side lines of a meeting between the World Bank and member countries in Livingstone in Zambia.
“The land issue is a complex issue,” he said. “Whatever solution the government is looking at, creating an environment that is reliable is important.”
Public hearings on land redistribution were held earlier this year across South Africa, attracting large crowds and often emotional testimony.
A parliamentary committee will consider testimony and other contributions before recommending whether or not to change the constitution to allow land to be expropriated without compensation.
Pimenta said South Africa’s long-term economic outlook was positive. The Bank invested about $2 billion through the IFC over the last five to six years, he said.
Africa’s most industrialised economy is struggling with ballooning debt that risks pushing sovereign credit ratings deeper into “junk” territory. Other problems include cash-strapped state firms and a high unemployment rate.