Expropriation Of Land Without Compensation

Expropriation Of Land Without Compensation

Land Expropriation Without Compensation,

Land Expropriation Without Compensation,The Effects It Will Have On the Economy;

Land Expropriation

The Effects It Will Have On the Economy.

1) How It Will Affect The Unemployment in South Africa

Land Expropriation Without Compensation,The Effects It Will Have On the Economy;

Unemployment rate to increase to 46.4%

Statistics South Africa (StatsSA) announced the unemployment figures for the second quarter of 2017 on Monday, which showed that the unemployment rate remained stagnant at a worrying 27.7%.

“This means that South Africa’s official unemployment rate has remained at its highest level since the data series started. The previous record high was 27.1% recorded in the third quarter of 2016,” Lings says.”Statistics on agricultural employment differ according to definition and sources, but it is safe to say that the sector employs around 700 000 workers. This makes the sector one of the biggest employers in the economy.It is also important to note that the sector is labour-intensive compared to other sectors, because it employs about 4,6% of the total labour force. The mining and manufacturing sectors, in comparison, represent 8,5% and 12,5% of the economy whilst employing only 2,3% and 11,8% of the labour force respectively. The agricultural sector therefore uses two units of labour per unit of value added, whilst the ratio is 0,3 and 0,94 for the mining and manufacturing sectors.”

Therefore should the government go ahead with Land Expropriation Without Compensation,The Effects It Will Have On the Economy, It could lead to an additional 2.100,000 job loses. Increasing the unemployment rate to 46.4%.The South African agricultural sector continues to play an important role in the economy regardless of its declining share in GDP. Contrary to popular belief, the country is not self-sufficient in its food supply, but does not operate as a net importer of agricultural products due to the exports of high value items such as fruit and wine.The sector also ranks high in terms of its backward linkages with the manufacturing sector, and acts as a major labour-intensive employer in the economy. Continued investment in extension, research and infrastructure (particularly transport and irrigation) will have a significant impact on a large number of households and the greater economy due to its employment and food security effects. This would also ensure that the sector maintains its international competitiveness and resulting positive trade balance.

2) How it will affect the banks In South Africa?

“Whatever the final decision, the amount of debt at stake is likely to run into hundreds of billions of rand,” she said. Analysts have pegged the banks’ potential exposure at between R160 billion and R180 billion.The majority of this debt (70%) is held by commercial banks, with the rest shared between the Land Bank (25%) and development finance institutions and agribusinesses.The banks, when asked about the risks they faced if the new bill was passed, were circumspect, emphasising that they would continue to engage government constructively on land reform.ABSA said at this stage the nature of the envisaged amendments to the property clause as well as other clauses are not clear, but added it would participate in public consultation to discuss the impact.  Standard Bank merely said it would work with government to drive transformation in the agricultural sector while promoting food security and social prosperity.

3) What Challenges Will South Africa Face After Land Expropriation?

The core issue facing upcoming black farmers currently is their lack of access to capital. If they owned their land, they would be able to put it up as collateral for a loan to fund a harvest, but they merely rent the land they are staying on, and therefore has no access to collateral or loans. This has been forwarded as the main reason for the high failure rate among new black farmers. They tend to resort to subsistence farming, due to their lack of capital. This is bad for the country’s food security, and doesn’t improve the lot of new land owners, although it does significantly deteriorate the living conditions of the previous land owners.In conclusion, the proposed expropriation without compensation will have a disastrous effect on the South African economy. South Africa might experience Zimbabwe-like economic conditions with an inflation increase of 50%+, see a massive flight of foreign capital due to the weak protection of private property, and see subsistence farming crop up where commercial farms with access to capital had once provided food security and export markets.

Therefore, economic pragmatism needs to take precedence over early campaign rhetoric and populist politics.

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