Expropriation warning for investors

While South Africa’s new Expropriation Act may have been met with outsized fears, it is still important for investors to keep a diversified portfolio and consult a professional to ensure that their assets are protected, even if they are planning to emigrate.

This is according to Warren Wilkinson, franchise principal and financial adviser at Consult by Momentum.

“Last month’s signing of the new Expropriation Act catalysed the current discourse, which has ruffled feathers even in places as far afield as the United States,” he said.

“Despite the heightened tensions, President Cyril Ramaphosa doubled down on South Africa’s position in his 2025 State of the Nation Address, citing the country’s core values as peace and justice; equality and solidarity; and non-racialism and democracy, among others.”

The very next day, the US announced that it would be halting foreign aid to South Africa, cutting off a vital lifeline to many vulnerable people in the country, Wilkinson said.

“Whether the fears surrounding the Act are unfounded or not (and I believe they are), what is true is that we’ve seen concerns surface from our clients around property rights, investment stability and a potential rise in wealth emigration.”

“When these concerns are raised by our clients, I explain that it’s important to cut through the noise and understand exactly what the new Expropriation Act entails.”

Wilkinson explained that, firstly, expropriation is not a new thing or in any way unique to South Africa. In fact, there are several countries with similar frameworks in place.

“For example, Namibia has legal provisions for expropriation with compensation via a ‘willing buyer, willing seller’ approach. At the same time, Brazil’s constitution allows for the expropriation of unproductive land, with compensation paid in government bonds.”

Even the US has its own version of the law, referred to as “eminent domain”, which refers to the power of the government to take private property and convert it into public use, although the Fifth Amendment prohibits taking land without “just compensation”.

“In essence, South Africa’s new Expropriation Act refines existing regulations rather than introducing new far-reaching expropriation powers, with several key updates,” Wilkinson said.

Although the “willing buyer, willing seller” approach was commonly used in South Africa’s land reform policy after 1994, Section 25 of the 1996 Constitution permits expropriation compensation based on principles that are just and equitable.

“The new Expropriation Act does not overhaul these compensation rules but provides for nil compensation in specific cases, such as abandoned properties or land held for speculation.”

“At the same time, the Act strengthens protections for landowners by enforcing a structured process, greater judicial oversight and placing the burden of proving fair compensation on the state.”

“Landowners also now have more rights to object, mediate and challenge expropriation in court.”

He explained that land can also only be expropriated for two reasons.

The first is a public purpose, which includes infrastructural developments like the Gautrain, for example.

The second is for public interest, which includes land for redress and restitution, for example.

“In short, the Act is mostly procedural, ensuring a controlled and legally governed process – rather than serving as a fully-fledged Land Reform Act.”

However, the Act still has several implications for investors and their finances, Wilkinson explained.

“While fears around property rights and asset security appear to be largely unfounded, uncertainty – in general – does have real-time investment implications and is linked to heightened market volatility.”

“Investor sentiment plays a pivotal role in asset pricing, and when confidence wavers, we often see increased market fluctuations.”

“In times like these, a well-diversified portfolio – paired with expert financial advice – is one of the best tools to manage risk.”

Wilkinson advised spreading investments across asset classes, industries and even geographic regions can help mitigate the impact of short-term market swings.

In addition, having someone like a financial advisor guide you can help you avoid reactive or emotional investment decisions and will ensure long-term financial resilience.

“Anecdotally, we have seen an increase in citizens exploring offshore investment options and external wealth diversification over the past few years, but this was in motion long before the new Expropriation Act was signed,” Wilkinson said.

“However, the Act has further amplified discussions around wealth diversification.”

“This growing appetite is fuelled by a combination of economic and regulatory factors, alongside personal motivations like wealth preservation and long-term financial security.”

For example, the NHI Act has, similarly, caused a number of South Africans, particularly in the healthcare field, to say that they are considering going abroad to avoid its effect.

“Moreover, as the Baby Boomer and X generations enter retirement, we’re seeing a transfer of wealth, with the children of these retirees having more opportunity to travel and become global citizens.”

Wilkinson urged anyone considering going abroad, especially those with families who may be staying behind in South Africa, to seek out financial advice first.

A professional can help create frameworks and commercially sound asset structures that will allow for the transfer of wealth while empowering and supporting the next generation to continue to grow their wealth, reducing the risk of waste or mismanagement.

“It can take two to three generations to build wealth – yet half a generation to wipe it out,” Wilkinson said.

“Ultimately, while fears around the Expropriation Act may be baseless, the reality is that financial markets are influenced by perception as much as policy.”

“Good financial planning is essential all the time, but it is especially vital in times of economic and regulatory shifts. We encourage consumers to take control of their own futures by seeking the right advice to help them build and protect their financial dreams.”