BUSINESS LIVE / 04 JUNE 2018 - 05:08 / RONAK GOPALDAS AND RICHARD CALLAND
Nothing illustrates the sharpness of the fork in the road that SA faces more than the land issue.
President Cyril Ramaphosa is caught on the horns of a political dilemma: on the one hand, investor-led growth in the economy is pivotal to the success of his government and vital for the socioeconomic stability of a troubled country, while on the other hand a radical land reform programme is essential to the political viability of his leadership.
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Land reform is also critical for future socioeconomic stability, even though investors are anxious about how it will change SA’s landscape. Both imperatives are therefore key planks of Ramaphosa’s reform programme, but the political risk is that the former undermines the latter. How, then, to square this particular circle?
Since the clamour for land reform will not go away — nor should it — investors must recalibrate their understanding of this issue; they must be educated in the history, context and future implications.
The very mention of the term expropriation without compensation elicits hysteria across the political spectrum. As an emotional issue, it is natural to expect the land debate to be highly charged.
However, the narrative has been hijacked by extreme views that paint every scenario with Armageddon-esque strokes.
The result is a state of paralysis in the discourse rather than considering a nuanced and pragmatic approach. The debate continues to be framed in antagonistic binaries.
What is clear, is that the status quo is untenable. The longer the current policy inertia persists, the more jittery investors will become and the more domestic tension will inflame, which will compromise socioeconomic cohesion. Something has to give.
Yes, this is a delicate issue and has significant economic implications. And yes, there is huge uncertainty around its trajectory. But the risk of inaction has dire consequences. Societies as unequal as SA are unstable and unsustainable, so the land issue should be tackled head-on before the powder keg explodes.
Investors should understand this and should be schooled in appreciating the historical and socioeconomic context of the issue. They should recognise that the risks of trying to preserve the status quo in SA far outweigh the risks of doing something decisive to fundamentally transform the landscape.
It is therefore vital to approach the issue of land reform sensibly, calmly and measuredly to forge a stable path to a more just and equitable society without sinking the economy in the process.
The policy crossroads offers a unique opportunity to deal with the "sins of the past", as Ramaphosa has put it, and to tackle an issue of huge emotive power, but it is also an opportunity to find a win-win socioeconomic development sweet spot. But the focus must now shift to the important questions of when, how and in what form this will be achieved.
The spectre of Zimbabwe is central to the angst around the subject of "the land question". Many conversations on the topic draw immediate parallels to Zimbabwe’s dismal economic decline over the past two decades. The fear that "land grabs" will be replicated in SA spooks many investors and divides public opinion.
While Zimbabwe offers a cautionary tale, there are some very important but salient factors that differentiate SA from that country.
Zimbabwe was a largely rural and agrarian society that was heavily dependent on agriculture for economic growth and jobs when its farms were grabbed. SA is an urbanised and urbanising economy in which reliance on farming and agriculture is diminishing.
This offsets some of the immediate like-for-like comparisons — the economic structures of the two countries are different. However, in SA’s context, land expropriation seeks to reset the socioeconomic injustices of apartheid and should be viewed through the lens of upward mobility and basic human dignity rather than purely subsistence farming.
Most important in the comparison between the two countries is the fact that any changes to land redistribution policies in SA must occur within a constitutional framework in which the rule of law is proving to be notably resilient
Land is merely the "symbol of a new impatience" and demand for it captures a range of factors from black pride and history to symbolism, as veteran commentator Max du Preez has noted.
The threat of military intervention and a loss of power played a huge influence in Zimbabwe’s radical policy shift. Faced with the prospect of an electoral defeat to the late opposition leader Morgan Tsvangirai and being usurped by war veterans who grew impatient at the slow pace of reform, former president Robert Mugabe’s land-grab policy defaulted to populist policies to offset the threats to his rule.
SA’s military is apolitical and does not have any interest in governance, which again points to vastly different political circumstances between the two countries. The ANC’s national electoral dominance is not yet under major threat, though were it to become so, the party might become vulnerable to a similar populist or nationalist shift in political strategy.
Most important in the comparison between the two countries is the fact that any changes to land redistribution policies in SA must occur within a constitutional framework in which the rule of law is proving to be notably resilient. Tellingly, the EFF’s general secretary, Godrich Gardee, points out that "Zimbabwe’s policy wasn’t land reform, it was a land grab", while stressing that SA’s land reform programme would be "subject to laws and the general application of our Constitution".
Nhlanhla Nene must not let this cloud hang over him
Several significant risks should be considered. One is about language and meaning. To some land reform is "just" about righting the wrongs of a colonial past and therefore about restoring dignity, while to others it’s about agrarian land and farming. For some, it’s about urban housing or about property and assets.
Predictably, within this climate of anger, fear and confusion, and in the absence of consensus, South Africans have reacted with alarm and panic.
We were recently involved in a strategic foresight exercise convened by German development agency GIZ. The land issue emerged as a microcosmic driver of change, in both directions. Get it right, and the positive multiplier effect is profound; get it wrong, and the tilt in the opposite direction in terms of economic development, social stability and political risk is powerfully negative.
Thus, the hyperbolic character of the issue is understandable and perhaps even justified.
Inevitably, some political leaders are using the issue as a political football ahead of the 2019 national elections. For the DA, the focus is property and private land ownership, with party leader Mmusi Maimane terming the concept of expropriation without compensation "state-sponsored theft", while the EFF’s definition, according to its leader, Julius Malema, encompasses wholesale nationalisation including "land on which bonded houses have been built".
After a period of internal confusion and contestation, the statement from the ANC’s recent land summit presented a far more nuanced expression of the party’s intent. The statement broadly reflected Ramaphosa’s stated position. He has argued that a radical land reform and redistribution programme must be built on the triple pillars of inclusive economic growth, increased agricultural productivity and reduced food insecurity. But the stark reality is this: for as long as all sides continue to talk past each other, the land reform issue will be highly divisive and dangerous and the opportunity for it to become a driver for the developmental high road will sharply diminish.
This highlights the urgent need for a clearly articulated, coherent and decisive stance on what exactly the land reform process entails and specifically what is practically meant by expropriation without compensation.
It is to be hoped that the work of the constitutional review committee, which Parliament established to consider whether the property clause in the Constitution (section 25) requires amendment, will help.
The sooner this elucidation comes, the better. Strong leadership will be required. The manner in which Ramaphosa’s government straddles the yawning gap between appeasing investor concerns and advancing social justice through equitable land redistribution will be key in shaping the country’s economic fortunes. This will require huge skill and dexterity, but it should not be seen as an albatross around SA’s neck.
• Gopaldas is a political economist and a director at advisory firm Signal Risk and Calland is associate professor in public law at UCT and a partner in political risk advisory The Paternoster Group.
Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER