According to press reports, South Africa’s government has begun expropriating privately-owned farmland without financial compensation, thereby ignoring the post-apartheid political settlement, which allows for land redistribution in the country on a “willing buyer, willing seller” basis.
Eighteen years ago, Zimbabwe embraced a similar policy. As a consequence, South Africa’s northern neighbor’s economy collapsed and the country descended into penury and political violence. This scenario is likely to repeat itself in South Africa. An attack on property rights will result in the destruction of South Africa’s farming community, dramatic reduction in agricultural productivity, and mass unemployment. It could also lead to a collapse of the banking sector (which depends on land as collateral for loan-making) and the local currency, hyperinflation, and even bloodshed.
In the early 1990s, the United States was heavily involved in negotiating the transfer of power from the ruling National Party to the current government, which is composed of the African National Congress and the South African Communist Party. As such, the United States bears some responsibility for ensuring that South Africa’s post-apartheid political settlement, including protection of minorities and private property, endures. President Trump should warn the South African government that if South Africa’s Constitution is amended to allow for expropriation without compensation, South Africa will be suspended from the African Growth and Opportunity Act, as Zimbabwe had been. Moreover, the U.S. Congress should hold hearings on the situation in South Africa, if the government of South Africa continues its destructive economic policies.
Section 104 of AGOA states that a sub-Saharan African country is eligible for membership of AGOA if it “protects private property rights, incorporates an open rules-based trading system, and minimizes government interference in the economy through measures such as price controls, subsidies, and government ownership of economic assets; (b) [respects] the rule of law, political pluralism, and the right to due process, a fair trial, and equal protection under the law.” Furthermore, the text of AGOA states that “If the President determines that an eligible Sub-Saharan African country is not making continual progress in meeting the requirements described in … [Section 104] the President shall terminate the designation of the country [as being eligible for membership of AGOA].” Considering that South Africa is in breach or is about to breach a number of requirements for membership of AGOA, the president should act by issuing a preemptive warning to the South African government.