[Letter] State’s mixed messages

The Expropriation Act, which allows the government to seize property (of all types, including land), undermines SA’s ability to attract private sector investment. The erosion of property rights — through legislation that permits expropriation for the “public purpose” and provides the state with the possibility of “nil compensation” — creates a matrix of uncertainty that will discourage investment.

The Roadmap for the Freight Logistics System and Transnet’s own turnaround strategy make clear that SA needs private investment to improve infrastructure. The state and its entities simply cannot raise the necessary resources alone and a logistics network that is not improved will be a hard brake on SA’s growth prospects.

President Cyril Ramaphosa’s signing of the Expropriation Act exposes a contradiction within the government: on one hand it ostensibly wants to bring in private capital to rebuild critical infrastructure, and on the other it introduces laws that make SA a riskier place to invest.

This mixed messaging not only weakens the government’s (and Transnet’s) ability to secure partnerships, but damages SA’s reputation as a reliable investment destination.

For SA’s freight logistics sector to recover it is not enough to invite private investors — the government must also create a regulatory environment that assures them that their investments are protected.

Letter originally appeared here.