Land issue and corruption: South Africa’s “original” and current sins have investors on edge

Paul Miller

SOUTH Africa’s explosive land issue and its commitment to rooting out corruption were key concerns for investors who remained wary of a mining sector that faces challenges on a range of other fronts.

That is one of the themes that has emerged at Mining Indaba 2019, the annual Cape Town gathering of the industry.

President Cyril Ramaphosa pointedly addressed both topics in his speech at the Indaba, referring to land dispossession as South Africa’s “original sin”. For many investors, corruption is widely seen as the current sin. Both have left harmful legacies and how these are addressed politically is a major focus of investor attention.

Hulme Scholes, director at Malan Scholes Attorneys, said this point was driven home when he was speaking with investors on a recent road show in Australia. During a panel discussion, he said he had expected conversations to be dominated by concerns around the new mining charter.

“Investors and fund managers there had two questions. One was expropriation without compensation and two, are these people being fingered in the state-capture inquiry ultimately going to be prosecuted … It’s an indicator that a democracy works when corrupt government officials get locked up,” he said.

He was referring to the commission into allegations of “state capture” chaired by deputy chief justice Raymond Zondo, which has heard stunning testimony about the depth of corruption which accumulated under former president, Jacob Zuma.

Ramaphosa is trying to draw a line in the sand between his administration and Zuma’s on this issue and told the Mining Indaba that there would be prosecutions that would see the convicted donning “orange overalls.”

But the policy drive by the African National Congress (ANC) to expropriate land without compensation is still unnerving – not least because of the lack of clarity about how it will proceed.

Assurances that it won’t threaten food security or that “unused” land will be targeted first raise many questions, adding to uncertainty.

“Expropriation without compensation is a problem for Ramaphosa which is why he is raising the issue here,” said one foreign mining executive, sentiment echoed by others.

Outsiders don’t necessarily see the issue through a South African prism.

“Foreigners see expropriation without compensation as a property rights issue while South Africans see it as a land rights issue. Foreigners see it as a general weakening of property rights” said Paul Miller, fund manager with CCP 12J Fund.

“Ultimately, the only measure of investor confidence in your mining industry is when people are putting in exploration money. That means they are comfortable enough to take a speculative 20-year view on your country. And until your regulatory regime is such that you are attracting foreign exploration money, you have not created conditions for investment. And it’s quite plain that we haven’t done that,” Miller said.


  1. The two are inextricably linked, corruption and expropriation without compensation. EWC has NOTHING to do with redressing the land issue and EVERYTHING to do with land (what they really mean is ALL property) being a soft target for the corrupt ANC to continue their looting of the economy. The state coffers are basically now empty, nothing left to steal there… The State Owned Enterprises like Escom, Transnet and Denel which used to be a source of rich pickings for the corrupt ANC, are now basically bankrupt/insolvent… nothing left to steal there either… So now the only remaining area is private property, the so called “poor Black Africans” will not see a single cent… Cry the beloved country….

  2. At times, it makes me wonder :

    The likes of miller seems to be new arrivals in RSA or just plain simply Apartheid denials. To them, RSA is good when blacks get the shortened of the stick anything else is anti-business!


    Lets ask everybody else to forget their history ….May i suggest we start with forgetting the Holocaust? Lets say it never happened !

  3. Dear Paul
    I find it interesting to see you commenting on exploration in SA and the risks that SA ofer to investors. You never miss the opportunity to highlight the risks and that SA is a no go zone.
    What I want to know is who gave you the mandate to offer your opinion on exploration projects especially given the fact that your company only concentrate on brown field projects.
    You are not representing exploration companies nor do you compete in that field.

    I may be naive in my thinking but surely there are way more riskier places to invest than SA. Take DRC for instance,but still investors invest there.

    Maybe its time for SA to stand together. You have the audience. Invest in exploration yourself and highlight the positives. We have much to give, but as long as South Africans badmouthing their own country foreign investors will stay away.

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