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SOUTH AFRICAN FARMERS FACE RACIAL REQUIREMENTS FOR WATER USE LICENCES, POSING EXISTENTIAL THREAT

Terrence Corrigan | 20 June 2023


President Cyril Ramaphosa’s push for Expropriation without Compensation (EWC) has caused economic concerns, leading his government to deny the potential damage. However, new regulations under the National Water Act impose racial requirements for water use licences, demanding shares to be allocated to black people. The scale of ownership varies based on water extraction, effectively creating a barrier for larger-scale white farmers. This bureaucratic pursuit of racial transformation disregards practicality and consequences, jeopardising the livelihoods of farmers and further hindering economic development, agricultural production, and food security. The regulations hint at a prioritisation of state control and echo concerns regarding EWC’s potential impact on land ownership.


President Cyril Ramaphosa invested enormous political capital over the first three years of his presidency in pushing Expropriation without Compensation (EWC). Inevitably, he ran into difficulty trying to explain away the economic damage this would cause. His response (and that of his government and party) was simply to deny it.


Not only would EWC be implemented with the care and aplomb characteristic of the South African state and its politics. The policy would be a positive good: it would ‘promote redress, advance economic development, increase agricultural production and food security,’ he declared in late July 2018.


This was never convincing. It’s difficult to think of anything more detrimental to a business environment than undermining property rights. One possible exception to this – something worse – is the deprivation of property along with access to its use.


The proposed regulations under the National Water Act seem designed to meet the latter description.


Published in the Government Gazette on 19 May, these seek to impose racial requirements for water use licences. ‘Specifically,’ it demands, ‘the enterprise in respect of the application must allocate shares to black people in the proportions specified.’

These are quite extraordinary.


Those drawing up to 250 000m3 per annum, or up to 100 ha (for what the act defines as streamflow reduction activities, largely forestry) are exempt from empowerment requirements. Those drawing between 250 000m3 and 500 000m3, or 100 ha to 500 ha, are required to have a minimum of 25% in the hands of black people (in the prosaic words used by the Regulations ‘% shares allocated to blacks’). Users drawing between 500 000m3 and 1 000 000m3, or 500 ha to 1 000 ha, are required to be at least 50% black owned. Those drawing more than 1 000 000m3, or above 1 000 ha, will need to meet a minimum 75% black ownership.


The regulations go on to state that applications from ‘mining and related industries (regulated by means of MPRDA), state- and state-owned entities, 100% black owned’ are exempt.


Exactly how much water a given farm will need to extract is of course dependent on the crops its produces, the area of the country it is located, the quality of the soil and so on. But it is clear that the import of this will be to institute an absolute barrier to particular farmers – white farmers – operating at larger scales.


The rejoinder would be that it does not exclude anyone, merely that it requires partnerships with black people. The regulations also target new licences, so would not have an immediate impact. In a sense this may be true, in that an established farmer could continue operating until the expiry of the licence – a feature built into all water licences. After that, presumably he or she would be required to relinquished control or ownership of a farming enterprise. It also ignores the fact that faming tends to be a field in which operations are undertaken by families, rather than in partnership with others. Taking on a partner – irrespective of race – is difficult.


None of this seemingly means much to a bureaucracy that typically evinces scant understanding of the realities of operating a business. Rather this seems to reflect an officious mindset in which the imperatives of racial ‘transformation’ are to be pursued as ends in themselves, irrespective of their practicability or consequences.


It has parallels elsewhere, and equally under President Ramaphosa’s incumbency. If the minister of employment and labour pledged to be ‘very harsh’ on employers failing to ensure that the state’s racial vision is reflected in workplaces, one can only conclude that his counterpart for water and sanitation has the same approach to the country’s farmers.


Indeed, just as the recently amended Employment Equity Act is looking at fines sufficient to cripple ‘non-compliant’ firms, so will the regulatory architecture be erected to destroy demographically unacceptable farming enterprises.


It’s a chilling indication of the state’s priorities and provides a revealing insight into its mindset. Actual farmers and their enterprises represent mere percentages on a spreadsheet for the convenience of officials, and ideas in the imagination of politicians. Certainly not repositories of expertise whom a successful country might wish to retain.


The consequences will be dire indeed if this is enacted. It will, to adapt the President’s comments, retard economic development, undermine agricultural production and food security, and by placing additional stress on an already struggling economy, set back meaningful redress.


It’s also important to understand that this is not an entirely separate issue from EWC. State control of water resources – custodianship on behalf of the people of South Africa – was introduced with the National Water Act in 1998.


Similarly, the Institute warned repeatedly that the endgame for the EWC drive was less likely to be seen in the state confiscating one piece of land after another, still less taking from one owner and passing it on to another, than delivering all land unto itself, on precisely the model of water and later minerals. There was certainly much sympathy within the ruling party for this (admittedly some rejection too), though it was hardly a popular option among South Africa’s people. It was, notably, achieved without the need to amend the Constitution.


Not only has the state over time failed to act as a good steward (or custodian) of the country’s water resources, but it is now able to use its arrogated position as a political bludgeon. The risk of ‘revisiting’ a custodial taking of land remains very much alive.


In the meantime, South Africa’s farmers must contend with yet another existential threat hanging over them.


*Terence Corrigan is the Project Manager at the Institute, where he specialises in work on property rights, as well as land and mining policy. A native of KwaZulu-Natal, he is a graduate of the University of KwaZulu-Natal (Pietermaritzburg). He has held various positions at the IRR, South African Institute of International Affairs, SBP (formerly the Small Business Project) and the Gauteng Legislature – as well as having taught English in Taiwan. He is a regular commentator in the South African media and his interests include African governance, land and agrarian issues, political culture and political thought, corporate governance, enterprise and business policy.


‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’.




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