US President Donald Trump waded into South Africa’s racially charged debate about land reform, triggering a selloff in the rand.
Trump said in a tweet that he’s asked US Secretary of State Mike Pompeo to “closely study the South Africa land and farm seizures and expropriations”.
He was intervening in an ongoing debate about whether South Africa should implement a policy of seizing land without paying for it in a bid to address inequalities built up during apartheid and colonial rule.
The comment raised concern that the US could punish South Africa economically, having already sanctioned Turkey. South Africa is the biggest beneficiary of the African Growth & Opportunity Act, which grants many of its products duty-free access to US markets.
The rand weakened 1.9% to R14.43/$ by 09:37 in Johannesburg. By 11:18, the local unit was trading 1.25% weaker at R14.33/$. Yields on benchmark 2026 government bonds rose 4 basis points to 8.97%.
“Emerging-market currencies in general have been under downward pressure since early morning in Asia amid a rebound in the dollar and Trump’s tweet further added pressure on the South African currency,” said Hironori Sannami, an emerging-market currency trader at Mizuho Bank.
President Cyril Ramaphosa - who took office after his predecessor, Jacob Zuma, was forced out amid a whirlwind of corruption investigations and scandals - has embraced land expropriation without compensation as a means to achieve equality and racial justice - and as the ruling ANC faces growing opposition before elections in 2019.
The state hasn’t taken any property yet, and a planned amendment to the Constitution is still work in progress.
The US’s acting ambassador to the country Jessye Lapenn will be summoned to explain Trump’s comments, two people familiar with the situation said on Thursday. The government tweeted that it “totally rejects this narrow perception which only seeks to divide our nation”.
“South Africa will speed up the pace of land reform in a careful and inclusive manner that does not divide our nation,” it said.
White farmers own almost three-quarters of agricultural land, according to an audit by farmers’ lobby group AgriSA published last year. Access to land is one of the symbols of inequality in the nation of about 56 million where wealth and poverty are largely divided along racial lines.
The high crime rate has affected rural areas, with some farmers killed in attacks. Statistics released in May by AgriSA found that farm murders had, however, decreased to 47 over the previous year, less than one-third of the highs in the late-1990s, although other groups argue attacks have recently increased.
In February, members of parliament began a process to change the Constitution to allow for expropriation without compensation.
Ramaphosa told MPs in Cape Town on Wednesday that land reform would be done in an orderly fashion and individual property rights will be strengthened.
The planned constitutional amendments will provide greater certainty to both those who want and own land, and promote growth, stability and food production, he said.