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South Africa To Ban Foreign Land Ownership?

Landowners in South Africa again are focused on a governmental land reform policy that seeks to prohibit foreign ownership of land in the country.  The government has been publicly discussing the policy for over two years but it is back in the spotlight after President Jacob Zuma announced in last week’s State of the Nation Address that a “Regulation of Land Holdings Bill will be submitted to Parliament this year.”  Under the proposed Bill, “foreign nationals and juristic persons […] as well as juristic persons whose dominant shareholder or controller is a foreign controlled enterprise, entity or interest” will be prohibited from owning land and instead only eligible to lease land for periods of between 30 to 50 years.  In addition, the Bill sets a ceiling of land ownership that restricts the amount of land that any individual — regardless of nationality — can own to 12,000 hectares.  Should an individual own land in excess of that amount, the government will purchase and redistribute the land.

The impact that the proposed legislative measure will have on foreigners who currently own land in South Africa is especially unclear.  President Zuma has “recognised that [the Bill] cannot apply retrospectively without constitutional infringements and as such those who have already acquired freehold would not have their tenure changed” should the measure pass.  However, with regards to those landowners, a “Right of First Refusal will apply in favour of another South African citizen in freehold or the state if the land is deemed strategic.”   (Also unclear is if the latter situation is distinct from the government’s already existing constitutional power to expropriate land.)  Another fundamental question that remains unanswered is the types of land to which the foreign land ownership ban will apply.  In the days following the President’s announcement, members of his Cabinet have stated that the ban is aimed at agricultural lands and that they are undecided as to whether it “will apply to all categories of land.”

The proposed measure has been justified on the grounds of a “need to secure [South Africa’s] limited land for food security and address the land injustice of more than 300 years of colonialism and apartheid.”  While section 25 of the South African constitution enshrines various property rights, it expressly does not “impedethe state from taking legislative and other measures to achieve land, water and related reform, in order to redress the results of past racial discrimination.”  However, under section 36 of the constitution, any such limitations still must be “reasonable and justifiable in an open and democratic society based on human dignity, equality and freedom.”  One required factor to consider is “the relation between the limitation and its purpose.”  Some critics of the Bill have claimed that “the area of land owned by non-South Africans is relatively insignificant (approximately 5% to 7%) and not the key reason for the slow transfer of land to black South Africans.”

Although the government has been claiming for months that the Regulation of Land Holdings Bill will be submitted to Parliament, inclusion in the President’s State of the Nation Address is a strong indication that it is a priority once again.  Over twenty years since the end of apartheid, the South African government continues to struggle with unravelling the legacies of a horrendously racist regime characterized by arbitrary deprivation of property.  As the proposed measure moves through Cabinet approval, the public consultation process, and the required Parliamentary procedures, it is critical that the government develops a Bill that adheres to basic principles of a constitutional democracy including due process and recourse for those who are adversely impacted by its provisions.

© 2020 Covington & Burling LLPNational Law Review, Volume V, Number 49

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Covington’s Election and Political Law practice is one of the oldest in the Nation.  In addition to our high-profile election law litigation and Federal Election Commission enforcement practice, we advise numerous Fortune 50 and Fortune 500 corporations, trade associations, financial institutions, political party committees, PACs, candidates, lobbying firms, and high net-worth individuals concerning compliance with the increasingly complex array of laws governing the political process.  These include federal and state campaign finance, lobbying disclosure, and government...

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