(Ecofin Agency) - After more than five years of heated debates and public consultations, South African President Cyril Ramaphosa officially signed the Land Expropriation Without Compensation Act into law on January 23. This legislation, championed by Ramaphosa since his reelection in June, aims to address inequalities rooted in the apartheid era.

The new law replaces the 1975 Expropriation Act, which the government deemed incompatible with Section 25 of the Constitution. This constitutional clause allows the state to expropriate property in the public interest, provided it offers fair and equitable compensation.

Under the newly signed legislation, state institutions at local, provincial, and national levels can expropriate land for public interest purposes, including promoting inclusion and improving access to natural resources.

The law outlines strict guidelines for how expropriation can occur. Authorities are required to attempt negotiations with property owners or rights holders under reasonable terms before moving forward. The government emphasized that expropriation cannot be arbitrary and must be tied to clear public or social benefits.

Despite these safeguards, critics worry that the law could undermine investor confidence in sectors like commercial agriculture and weaken the banking sector’s trust in agricultural financing.

This reform is the latest chapter in South Africa’s ongoing efforts to address its stark land ownership disparities. Previous attempts, including a land redistribution policy introduced during Nelson Mandela’s presidency in 1994, failed to meet their ambitious goals. That policy sought to transfer 30% of agricultural land within five years and restructure land ownership to support rural development.

However, those efforts did little to reverse the effects of the 1913 Natives Land Act, which restricted land ownership for the Black majority and allocated most farmland to white settlers. Today, over 30 years after the end of apartheid, the imbalance remains stark: Black South Africans, who make up 81% of the population, own just 4% of the land, while the white minority, comprising 8% of the population, holds 72%.

The African National Congress (ANC) government hopes the new law will begin to redress these inequalities. However, it has faced opposition from across the political spectrum. Julius Malema’s Economic Freedom Fighters (EFF) have criticized the law as too timid, while the Democratic Alliance (DA) warns it could threaten land title security.

Meanwhile, Action SA, a political party led by former Johannesburg mayor Herman Mashaba, has already announced plans to challenge the law in court.

As South Africa moves forward with this contentious reform, its success—or failure—could reshape the country’s land ownership dynamics and have far-reaching economic and political implications.