South Africa faces potential economic calamity if it moves ahead with the seizure of largely white-owned farmland, analysts warned this week, as global investors reacted to a plan that government leaders say is necessary to correct decades-old wrongs of apartheid that left deep, systemic wealth inequalities and land ownership disparities along racial lines.
South African economic analysts and U.S. observers say the country risks inviting the kind of devastation that left neighboring Zimbabwe’s economy in ruins after a similar forced expropriation scheme targeting some of the country’s most productive farmland.
Officials with South Africa’s state-owned Land Bank reportedly warned Tuesday that the plan could cost the government as much as $2.8 billion in payouts because of a specific clause on expropriation of land.
Amid growing media coverage of the land grab program, the Trump administration faced growing pressure to speak and immediately suspend South Africa’s status in the African Growth and Opportunity Act, which gives the country vital access to U.S. markets.
The looming economic storm stands in stark contrast with the pro-market promises of South African President Cyril Ramaphosa as he came to power in February and has repeated throughout his tenure. He vowed that the country’s economy would grow and that he would bring newfound credibility to the South African government, even while calling the sharp inequality over land ownership a “festering wound” from the apartheid era.
“The landowners must not be afraid to embrace this process,” Mr. Ramaphosa told critics in a parliamentary session Wednesday. “You say the landowners want certainty. I can tell you the people who are hungry for land also want certainty.”