Remgro CEO warns about expropriation without compensation in South Africa

South Africa will face serious consequences if it cannot protect property rights and ensure market-based compensation for land. 

This is feedback from Remgro CEO Jannie Durand, who outlined the potential fallout of expropriation without compensation in South Africa. 

Remgro is a Johann Rupert-owned investment holding company with interests in financial services, packaging, medical services, and food and beverage producers. 

The company is a blue-chip on the JSE, with it being a staple in many portfolios and having a track record of outperformance. 

Speaking to BizNews after Remgro’s latest financial results, Durand warned of serious consequences for South Africa if expropriation without compensation is allowed in the country. 

Durand made a specific reference to the ongoing court case regarding the expropriation of portion 406 of the Farm Driefontein by the City of Ekurhuleni from Business Venture Investments 900 (BVI 900). 

This case tests the limits of Section 25 of the Constitution as the city government refuses to pay any compensation for the land.

Six years after the initial notice of expropriation in February 2019, the matter is now scheduled for court-directed mediation in October and an 18-day trial in February 2026.

At the time of expropriation, the owner was applying for development rights, and the property was valued at no less than R30 million. However, the city expropriated the land with nil compensation. 

“That will be worrying. If they (BVI 900) can’t win the court case, I think it will have highly negative consequences for South Africa if that can happen in that space,” Durand said. 

Durand noted that it is particularly concerning because BVI 900 had development plans for the land, meaning that it was not going to lie vacant and unused for an extended period of time. 

“I am not an expert on this. But, from what I hear, they actually had development plans, and the municipality stopped them or whatever. It was not a useless piece of land lying there,” Durand said. 

“If that productive land that people wanted to develop housing or whatever and then they tried to expropriate it in that manner, I think the consequences will be very, very negative.” 

One court case can break the economy 

The BVI 900 court case was first publicised by Sakeliga, which has been strongly opposed to expropriation without compensation. 

Sakeliga CEO Piet le Roux argued that market-based compensation is in everyone’s interest, with the alternative set to make everyone poorer as it will scare off investment. 

In effect, it might be the final straw that breaks the camel’s back, with South Africa’s economy growing at an annual rate of 0.8% for the past decade.

“The cheapest way to expropriate land is at market value. If you go below market value, that is the most expensive way, as everybody pays a cost,” Le Roux said. 

“It means that everyone will be poorer, there will  be less development, and there will be social and political crises waiting for us.”

As a result, it is important to ensure market-based compensation for expropriation by the state, regardless of the reason or purpose. 

“You have to start somewhere, and you start at market value. The City of Ekurhuleni started at zero and the company had estimations of market value,” Le Roux explained. 

“The City just says zero, so it is a politically-motivated decision. From Sakeliga’s perspective, it is crucial to maintain market value as the basis when the state decides to expropriate.” 

“Anything below market value is very expensive, because all property will then decrease in value and the owners of that property will share in that decrease.” 

Le Roux said this would also have ramifications for future investment, with companies and individuals unwilling to invest if their private property could be taken without the state paying market value.

Efficient Group chief economist Dawie Roodt argued that expropriation without compensation will fail in its aims to reduce inequality, with it likely to have disastrous effects instead. 

Roodt explained that the South African economy has shifted significantly over the past ten years, resulting in it being largely services-based.

“A hundred years ago, around 80% of what we produced in South Africa came from the primary industries of agriculture, mining, and things like that,” Roodt said. 

“Today, these industries are less than 20% of the economy, while the biggest chunk of South African economic activity happens in the services industry.” 

This means calls for land redistribution get the economic equation wrong, with things produced using land becoming relatively cheaper and less lucrative than other industries.

“Today, if you look at economic activity, it is mostly service-oriented. It is driven by people providing services to other people, not products produced from the land,” Roodt said.  

“This is why our politicians are so extremely wrong. It is not about the land, but about what is done with the land that matters.”

“Our President just told us it is a good idea to create small farmers and to redistribute the land. They are so extremely wrong because that is not where the economy is today.”. 

“The ‘economy’ is happening in the cloud and the economies of today are service-oriented.”