Analysis: Valuing land – the next frontier

By Stephen Grootes 20 July 2011

It is typical of an ANC NEC lekgotla to spend a lot of time talking about many things, and not to agree on a whole bunch of them. Managing a group of 80 people with hugely divergent interests, agendas and constituencies is a tough job. But this time they all agreed cabinet must set up a “Land Valuer-General”, their attempt to solve the devilishly difficult problem of land distribution. This step may well create a demon bigger than the problem it is trying to solve. By STEPHEN GROOTES.

The idea of a “land valuer-general” (the term is presumably their own creation) was first publicly floated by President Jacob Zuma at Cosatu’s central committee meeting three weeks ago. Since then we’ve been waiting for some more flesh on the bones of what looks like an intriguing proposal. It was discussed at the NEC lekgotla, but alas and alack, we are still very much in the dark. ANC secretary general Gwede Mantashe says all stakeholders will be consulted on it before the office is actually created. We hope that’s real consultation, and not Youth League-style consultation. Mantashe also confirmed this will only apply, as far as has been decided at this stage, to rural areas with land claims on them.

This is another big admission that the land reform process as stumbled and fallen over. It is not moving. It is, to misquote John Cleese, “a former process, it has expired, passed on”. The implications of this are huge. Pressure is building, Julius Malema is pushing for the populist extreme of land expropriation without consultation, and we all know how that ends, ANC has little or no option but to do something.

The ANC reckons one of the big problems is that some land owners are exploiting the process of land reform and willing buyer-willing seller principle. They know there’s a claim on their land, they find a couple of valuators to push up the price, government has to fork out and they go away happy. Pocketing the latest benefits of the fact their grand-parents paid just a few glittering beads for hundreds, even thousands of hectares. Even Agri-SA, not a great fan of the ANC, will admit publicly that this has happened many times. Hence a “land valuer-general” to step in and sort it all out.

But setting up the Land Valuer-General is the first step down a rather treacherous road that could lead to much wailing and gnashing of teeth.

Land is where every economy starts. You screw it up, you screw up your economy, and everyone goes hungry. The places that have famines tend to have communal land ownership, or no ownership at all. The places that don’t, tend to have private land ownership. Land is value, you live on it, you can sell it, you own it, thus you increase its value through improvements. It is your security for the future.
All of this is because the hidden hand of the market plays its role. Over time, land values go up. It’s the great certainty of life. “Buy land, my son, they’re not making it anymore” is advice many a father will have passed on to his children.

The ANC proposal, with the best of intentions, could completely disrupt that entire process, should land suddenly lose its value. Its worth will not increase with time, it will not be your security for the future. One official, or a group of people at one office, will get to decide how much value you have. Land goes from being a certainty, to being a risk, dependent on the whim of body controlled by politicians.

The scope for corruption is huge. For those engaged in a land transaction, the investment of a small bribe will pay back millions. At the moment, a series of valuators (“valuers” is an archaic term which itself has suddenly been given new life) is involved. Now it could turn out there would be only one who matters. There might be a series of people involved in the entire process, but the one from government will have the final word.

Another problem: Where will the remit of this office start, and where will it end? Will it only apply to land claims in rural areas or not? And if so, what is rural and what is urban? Morningside is presumably urban, Honeydew less so. Muldersdrift? It could depend on where you grew up. And then we have the fact that once a government office is valuing some land, why not all of it? Would there not be a push for government to just get fully involved in all land transactions, after all, it is bits of SA we’re selling here. Presumably whoever gets to head the thing would quite like to expand their own empire and take as much power as they possibly can. That has been the nature of government offices so far. This means an office that starts small to deal with one problem, grows over time. After starting as a little thorn, it easily grows into Beelzebub.

That land reform’s been so impossibly complex is illustrated by the fact that the nation is still waiting for the Green Paper on land reform to see the light of day. We know it includes different types of land ownership, but that’s pretty much it. At the beginning of the year Zuma said there would be three types. On Tuesday Mantashe claimed four categories; though that could just be a difference of interpretation. The ANC is aware of the pressure building on its left. Malema is difficult to ignore. So the fact someone is thinking very hard about this problem is worth applauding. But at the same time, the market for land must not be destroyed, because that destruction could engulf anything.

A final word. Between 1994 and 2004 South African house prices remained roughly the same in real terms. They just didn’t move. In 2004, something shifted, and a housing boom took off. There were several factors at play. But surely one of them was, as Thabo Mbeki put it the day before that year’s elections, the fact that “Whites know we aren’t coming to take their swimming pools anymore”. Land is about certainty. You take that certainty away, you’re effectively taking the value of the entire nation away. No short-term political gains are worth risking it. DM

Grootes is an EWN reporter.

Photo: Reuters.


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