November 15, 2018 / 5:27 PM / 25 days ago

UPDATE 1-South Africa should avoid uncertainty in land reform - World Bank executive

(Adds S. Africa parliament team backs land expropriation)

By Chris Mfula

LIVINGSTONE, Zambia, Nov 14 (Reuters) - Investors will want South Africa to avoid creating uncertainty with its proposed land reforms, a senior World Bank group executive said on Wednesday, as the ruling African National Congress considers changing the constitution to allow expropriation of land without compensation.

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 of some aspects of your environment, and land tenure is one of them, that is one aspect that investors will be looking at,” Sérgio Pimenta, the 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 sidelines of a meeting between the World Bank and member countries in Livingstone, a town located in Zambia south of the capital Lusaka.

“The land issue is a complex issue,” he said. “Whatever the solution the government is looking at, creating an environment that is reliable, that is certain, 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 that 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 had invested about $2 billion through the IFC over the last 5-6 years, he said.

Africa’s most industrialised economy is struggling with ballooning debt that risks pushing its sovereign credit ratings deeper into “junk” territory. Other problems include cash-strapped state firms and a stubbornly high unemployment rate.

CONSTITUTIONAL CHANGE

On Thursday, a South African parliamentary team recommended a constitutional amendment to make it possible for the state to expropriate land without compensation, in the public interest.

The Constitutional Review Committee said the amendment would make it explicitly clear that such expropriation could be carried out to accelerate land reform: “South Africans have spoken, loud and clear, and we listened to their cry,” Lewis Nzimande, co-chairman of the review team, said in a statement.

AgriSA, a lobbying group for farmers, criticised the committee’s recommendation, saying it would be diametrically opposed to the protection of property rights and would gravely harm the economy. Dan Kriek, Agri SA president, said his organisation would challenge the recommendation, which it termed “reckless and populist”, through its legal team.

Speaking in Strasbourg on Wednesday, Ramaphosa told the European Parliament that South Africa would enact land reforms in line with its constitution and with respect for the human rights of all its people. (Editing by James Macharia and Peter Graff)

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