The EFF is about to blow up the land debate: why we should be worried
NEWS24 / 27 FEBRUARY 2018 - 11.36 / TERENCE CORRIGAN
A reported motion in the National Assembly of Parliament this week seeking to begin the process of introducing expropriation without compensation represents a profound danger for South Africa's immediate and long-term economic future. According to weekend reports, the EFF has resolved to table a motion blaming Section 25 of the Constitution (the 'property clause') for the failure of land reform; seeking to establish a parliamentary committee whose remit would be to amend the Constitution to permit expropriation of property without the obligation to pay compensation; and to recommend a new land tenure system – which would include the 'necessity of the state being a custodian of all South African land'.
Economic Freedom Fighters leader Julius Malema during a media conference regarding
state capture. Picture: Leon Sadiki
This resolution, if passed, will only compound the problems that already exist. There is a deep irony here. The resolution is quite correct to refer to South Africa's history and the abuse of black people's property rights. The Institute of Race Relations believes that the success of land reform policy should be measured by the extent to which it improves the lives of its beneficiaries, and enhances the economy as whole. This resolution will do neither. It rests on a flawed diagnosis of the problems facing South Africa's land reform efforts, and proposes reckless and counterproductive responses. First, its evidence is questionable. While there is consensus that the land reform programme is not performing well, the figures it purports to draw from the land audit – 'black people own less than 2% of rural land, and less that 7% of urban land' ('black' refers to African) – are incorrect. These numbers refer only to registered and titled properties held by individual owners. The audit was unable to assign racial identity to around two thirds of the country's land. This was held by companies and trusts, and a large portion belonged to the state or was 'state trust land'. Much state land is in fact land in the former homelands, or land acquired for 'beneficiaries', but whose title has not been transferred to them. Current land redistribution policy is to retain state ownership of land and to lease it to tenants. Small wonder that 'black' ownership of land remains modest. AgriSA's study of the country's farmland suggested a more positive picture. It argued against a focus on hectarage as a measure of success, and suggested agricultural potential as a better one.
It found that some 46% of agricultural potential – land with fertile soil and good water sources, for example, mostly in the eastern parts of the country – were in the hands of government and historically disadvantaged individuals. Second, while the failings of land reform have been extensively studied, there is little credible evidence that the obligation to pay compensation has been a significant obstacle. The claim that it is an obstacle was rejected by government's own commission into the impact of transformative legislation, chaired by former president Kgalema Motlanthe. It noted that "other constraints, including increasing evidence of corruption by officials, the diversion of the land reform budget to elites, lack of political will, and lack of training and capacity have proved more serious stumbling blocks to land reform". Third, far from hindering South Africa's land reform efforts, the Constitution in fact affords the state considerable latitude in achieving such goals. As the eminent agricultural economist, the late Dr Hans Binswanger-Mkhize, once wrote: "This constitutional and policy framework is one of the most favourable in the world for successfully and rapidly implementing land reform." The cheapening of South Africa's founding law for populist political ends should greatly concern the country's constitutionalists. Fourth, attacking Section 25 would undermine the very concept of property rights – not just those in land. It would render all property, or all people, vulnerable to an intrusive state and its officials: mines, factories, houses, artworks. It should be borne in mind that the poor could be especially hard hit – there are numerous examples across the world of poor people with weak property rights being deprived of their property (land, livestock, houses and so on) by their governments in the name of development. Fifth, beyond enabling the state to seize property without compensation, it suggests what amounts to wholesale nationalisation of South Africa's land resources. For the state to take 'custodianship' of all land would effectively be to end private ownership in land. It should be understood that no one – land baron or smallholder, black or white – would really own anything. All would be at the mercy of the state. This opens the sixth, and probably most important, problem with this resolution. It avoids any reference to economic considerations. Even President Cyril Ramaphosa's assurances that expropriation without compensation will not compromise agricultural output and food security are absent. Expropriation without compensation – as officials in the banking industry have warned – will undermine the capital base of agriculture. The risks associated with large volumes of credit to enable production are likely to make financial institutions exit the sector. Government cannot match these financing requirements (farm debt stands at over R160 billion at present). This implies a predictable decline in production. The damage would not be limited to job losses, declining taxes and export receipts, and the disruption of value chains. It would likely prove destabilising to the country as shortages become the norm and food price inflation takes off.
Venezuela and Sudan have recently provided vivid illustrations of the dire consequences of compromised food security. It would also be a demonstration that the promises of probity and improved economic management that have won Ramaphosa so much applause are mere rhetoric. It is unlikely that South Africa would be able to avoid further downgrades or be able to attract much investment. Our own interactions with businesspeople – foreign and domestic – has shown a deep concern about the possibility of this becoming official policy. To reiterate: that the success of land reform policy should be measured by the extent to which it improves the lives of its beneficiaries, and enhances the economy as whole. Policy that does so is the surest means of truly transforming the country. South Africa needs a rejuvenated land reform programme that incentivises investment, encourages the entrepreneurial spirit and gives new entrants the keys to success – support, financing and title to their land. This would be a decisive turn away from the abuses of our past. The EFF's reported resolution would do the opposite. The words of Motlanthe's panel should resonate as we contemplate the future of land policy: "It is of great concern to the Panel that recent policy shifts appear to default to some of the key repertoires that were used to justify the denial of political and property rights for black people during colonialism and apartheid." - Terence Corrigan is Project Manager at the SA Institute of Race Relations (IRR).
Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER