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From the Inside: The dire consequences of expropriation without compensation

Helen Zille is Premier of the Western Cape. See her Wikipedia profile.

In a few years’ time, we will probably regard the events of Tuesday 31 July as mere foreshocks of the seismic shift that lies ahead.

Two announcements on the same day last week sent a tremor through our economy. In a few years’ time, we will probably regard the events of Tuesday 31 July as mere foreshocks of the seismic shift that lies ahead.

The two announcements were unrelated, and their occurrence a few hours apart, coincidental. Yet each had a profound compounding effect on the other.

In government it is essential to analyse events in this way – to look at the collective impact and mutual “aggravation effect” of seemingly unrelated developments. This is sometimes complex. This week it was obvious.

First, came the quarterly labour force survey results.  For the first time the number of unemployed South Africans almost touched 10-million.  According to economist Mike Schussler, there are now more unemployed than employed people in five out of nine provinces.  Without Gauteng and the Western Cape, South Africa’s unemployment rate would be higher than the employment rate.

With the country still trying to digest the implications of this news came the second shock: the late-night announcement by President Cyril Ramaphosa that government would amend the Constitution to “clarify” the conditions under which land can be expropriated without compensation. This was widely interpreted as a “green light” for expropriation without compensation.

To anyone with even a rudimentary understanding of how jobs are created, the second announcement will dramatically worsen the conditions that gave rise to the first. President Ramaphosa knows this. So why did he do it?

Most commentators speculate that Ramaphosa is driven by the need to hold the ANC’s factions together rather than advance the country’s interest, which requires us to align every policy and action with the over-riding goal of bringing down unemployment.

But land is a highly emotive and symbolic issue that seems to defy rational analysis. It nevertheless beggars belief that Robert Mugabe’s battle-cry, “the land is the economy and the economy is the land”, is gaining so much traction in South Africa, even as Zimbabwe tries to reverse the disaster this caused.

Instead of heralding an era of prosperity for the masses, land grabs destroyed the country’s economy, ended decades of food self-sufficiency, and turned millions into refugees to secure their survival.

It is frustrating enough that we disregard the bitter lessons of our close neighbour. But it is infuriating that we ignore the information provided by Statistics SA, our own national statistics service, whose mandate is to produce relevant and accurate statistical information to advance economic growth and development.

The Annual Labour Force Survey, in particular, is meant to do this, which is why we pay special attention to its lessons in the Western Cape.

The bottom line is clear for this province: The drought has decimated 65,000 rural jobs (mostly linked to agriculture). Yet, despite this, employment in the province grew by 77,000 jobs year-on-year, mainly in Cape Town, which registered an astounding 5% increase in employment despite the adverse economic conditions.

Although we hope the end of the drought will enable us to claw back as many rural jobs as possible, the medium-term future of growth and jobs lies in our towns and cities. This is the same worldwide, because urban areas link people to national economies, and national economies provide a bridge to the global economy.

All the trends in the Western Cape point to escalating urbanisation, both from the province’s drought-decimated rural hinterland, as well as further afield, particularly the Eastern Cape.

And this puts the “land reform” spotlight firmly on access to urban land and housing, particularly in Cape Town. What’s more, it will be impossible to meet the growing challenge without rapid economic growth that generates the jobs people need to contribute something to the cost of their own dwellings. Free housing for everyone on the waiting list is unaffordable, and with growing urbanisation, entirely unsustainable.

What’s more, in the Western Cape – especially Cape Town – most of the 356,000 families on the housing database (waiting list) do not qualify for a free house because their household income exceeds the threshold of R3,500 per month.

It therefore makes no sense that our housing policy continues to focus on the goal of providing families with a free house (often on a separate erf). The consequence of this policy is deep dissatisfaction, even conflict, which often takes on a racial dimension. This is because recent migrants and young people are more likely to meet the criteria for free houses than others, who have been on the waiting list for decades.

If we focus on the core problem – the 200,000-plus families in Cape Town who can afford to pay something towards their own housing (as well as many thousands in the same position in other towns and cities) – a sustainable solution is obvious. It is aligning our policy instruments to produce more affordable, rather than primarily free, accommodation.

To do so, the major requirement is the availability of large tracts of well-located land that can enable both government and private sector cross-subsidies to bring down the cost of formal dwelling units targeting the “affordable” housing market.

As it happens, Cape Town is particularly well-endowed with such land. There are five large tracts, all owned by national government (the Department of Defence and Transnet). Combined, these could yield close to half the number of affordable units required to meet the need on the City’s current database.

Our calculations indicate that, combined, the sites known as Culemborg, Ysterplaat, Youngsfield, Wingfield and Denel could yield 93,817 affordable housing units (assuming 80 subsidised units per hectare, including public amenities and market opportunities for cross-subsidisation).

Ever since I was mayor of Cape Town between 2006 and 2009, I have been trying to secure the release of these sites for this purpose. We are currently using a provincial piece of land – the 22-hectare site of the old Conradie hospital – as a demonstration project. This is rightly called a game changer, because it is pioneering sustainable land reform where it is most needed. We just need to dramatically escalate the numbers involved, and for this we need large tracts of land owned by national government in Cape Town.

The release of this land would facilitate the kind of land reform that will build, rather than break, South Africa’s economy.

This solution is inescapable with even a cursory analysis of the statistics at our disposal.

Yet instead our government continues to pursue the sterile and divisive expropriation without compensation debate that will destroy economic growth – the very precondition for successful land reform where it is really needed: in our cities and towns. DM


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