South Africa Slips Into A Recession As Land Seizure Discussions Heat Up
South Africa’s economy is suffering its first recession in nearly 10 years as the country’s president and lawmakers consider restructuring the constitution to seize land from white farmers.
The economy contracted 0.7 percent in the second quarter from the previous three months, while South Africa’s currency, the rand, extended declines after reports showed the economy’s poor health. One of the main drivers of the contraction is a slack in farming output and soft consumer spending, which strain other aspects of the country’s industrialized economy.
South African President Cyril Ramaphosa’s rise to power since December initially boosted economic sentiment, but that optimism was short-lived. A mixture of global trade wars, turmoil in emerging markets such as Argentina and Turkey have helped sour people’s economic outlook.
“This economy remains in the doldrums, that we are in desperate need for policy certainty and structural reform to get us onto a growth path,” Elize Kruger, an economist at Paarl, South Africa-based NKC African Economics, told Bloomberg Monday. “This type of environment is difficult for job creation. We’ll get stuck in our low-growth term if we can’t get out of this.”
South Africa’s economic plight comes after the lawmakers temporarily withdrew an expropriations bill in August enabling the country to make compulsory land purchases from white farmers to redress racial disparities rampant during the apartheid. (RELATED: South Africa Withdraws Bill To Seize Land From White Farmers — For Now)
The bill was withdrawn to pave the way for a potential constitutional amendment allowing the government to expropriate land without compensation. The Marxist Economic Freedom Fighters (EFF) party crafted the bill, which was never signed, as part of a so-called “land reform” program to even the disparity in property ownership between the black majority and white minority.
Ramaphosa and his party, African National Congress (ANC), reassured lawmakers in March that any redistribution program would be done in a way that does not disrupt normal farming operations. ANC widely supports an amendment authorizing expropriation.
Some lawmakers in the Democratic Alliance (DA) party, along with agricultural economists, worry the program could suffer the same fate as one Zimbabwe created in the early 2000s, which effectively seized land from white farmers. Zimbabwe, under the direction of former dictator Robert Mugabe, seized and redistributed land from about 4,000 white farmers to landless black people to compensate them for years of colonial rule.
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