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Zuma lost GPS signal on land ownership - business

Feb 13 2015 12:57
Carin Smith

Cape Town - South Africa's cause is not helped in any way by the country having sent a delegation to Davos with a message that the country is open for investment and business, but then President Jacob Zuma follows it by saying in his State of the Nation address that foreigners cannot own land, according to AJ Jansen van Nieuwenhuizen, a tax expert at Grant Thornton Johannesburg.
“It was very surprising to hear that the president announced the conversion of freehold property rights of foreigners to leasehold. It begs the question whether this will unintentionally discourage direct foreign investment into South Africa. We urgently need foreign funds to grow our economy,” cautioned Andrew Hannington, CEO of Grant Thornton Johannesburg.

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For Martin Jansen van Vuuren, director of advisory services at Grant Thornton, the president’s announcement that foreigners cannot own land immediately raises concerns about how this will impact on foreign land ownership of game farms as well as foreign investments in hotels in South Africa.

Afribusiness, a network of South African business leaders, said it will actively oppose any attempt to limit land ownership.

This is in reaction to the announcement by President Jacob Zuma in his State of the Nation address on Thursday evening that land ownership will be limited to South African citizens and that foreigners will not be able to own land in the country any more.

READ: Foreigners won't be allowed to own SA land

According to Cornelius Jansen van Rensburg, CEO of Afribusiness, the organisation will campaign via legal actions, the mobilisation of the local and international business sector and by encouraging financial and other pressure on government.

"Economically speaking, the Zuma government has lost its GPS signal. Breaking down property rights is sending the country in the wrong economic direction and reduces investor confidence in general," said Afribusiness.

"All government's other plans, policy suggestions and good intentions are actually being declared null and void against the backdrop of property rights being actively undermined. If citizens cannot enjoy complete property rights to their assets and income, no economic development will succeed."

For Afribusiness Zuma's announcement on the limitation of property rights was the real low point of Zuma's speech.

The Nelson Mandela Bay Business Chamber in Port Elizabeth also expressed its concern regarding the implementation of new foreign land ownership laws alluded to in the State of the Nation address.

"We raise a question regarding how this will be implemented against existing foreign ownership, and how this will impact future foreign investment," said the chamber.

"We also request further insight into the possible impact the maximum land ownership law will have on commercial farming. This is a concern for the agricultural economy, and we believe that the possible detrimental effects on foreign direct investment should be carefully considered."

READ: Zuma: Govt knows how to handle power challenge

Farming challenges

Christo van der Rheede, CEO of the AHi business chamber also said "contradictory statements" by Zuma about foreigners and land ownership and that state entities are going to play increasingly larger roles in the economy "discourages foreign investment on the one hand and promotes monopolising on the part of the state on the other hand".

"Existing farmers are ideally positioned to expand the value chain for agricultural products, but they are confronted by contradictory statements about land policies, unsafe circumstances, crime and increasing input costs which discourages them even more," said Van der Rheede.

"Farms transferred to people without knowledge of farming deteriorate, stop producing and do not create jobs."

Contradicting statements by die president could lead to the outflow of capital instead of an inflow.

Carl Opperman, CEO of Agri Western Cape said local and international investor confidence will not be assured by the statements in the State of the Nation address.

"Agriculture is used as a social tool, while it is a source of job creation and stability in rural areas and contributes to the gross domestic product (GDP)," said Opperman.

"The uncertainty for farmers regarding land is not only an agricultural problem. People are leaving rural areas because of a lack of employment and this is a catastrophe which puts pressure on cities and Treasury."

READ: ANC calls for faster land reform

He said organised agriculture is dedicated to land reform, but on the basis that the land and its people must have a future and not face hunger.

The Chamber of Mines said it noted the statement on agricultural land use and will continue its engagement with the departments of agriculture and environmental affairs on various strategies to ensure that mining co-exists with food security initiatives.

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