To understand why land expropriation without compensation threatens to collapse the South African economy, we need to understand the very basis of our country’s economic value chain. While all major South African banks, the International Monetary Fund, experts on the national construction industry, and agricultural specialists have warned the ANC against land expropriation without compensation, what do their concerns mean to the average South African’s grasp of the economy? The answer lies in a tangible understanding of the financial consequences a constitutional amendment would mean for South Africa.
The only reason land and property are considered assets against which an individual’s worth is measured is that they retain value through a legal framework which upholds the right to property ownership. Much like a country’s currency, land retains value because of the complex legal, financial, and economic institutions which ensure the retention and movement of wealth between generations in an economic system. The reason the land debate has risen to prominence is that historically the apartheid government excluded black South Africans from this wealth by disallowing them to own land. This skewed pattern of land ownership is at the forefront of the South African voter’s concerns, and rightly so.
What land claimants seek is the very same wealth white South Africans have been allowed to accrue over generations under the apartheid government. Yet, paradoxically, the process by which they seek land restitution, by means of a constitutional amendment, will strip land of its value and collapse the very system prospective land recipients wish to benefit from. Understanding this crucial economic relationship with the right to land ownership is key to formulating a land restitution policy which will sustain the economic system, while protecting the value land holds.
In a press statement released in 1994, the ANC stated:
“The ANC has stated on countless occasions that nationalisation of land is not the organisation’s policy. The ANC’s official policy document entitled ‘Ready To Govern’ does not even suggest that nationalisation is an option.”
Fast-forward 24 years and President Cyril Ramaphosa addresses the nation to announce that the ANC will push through with a constitutional amendment to expropriate land without compensation. If the ANC understood the economic implications of nationalisation in 1994, what has changed in the past two and a half decades? The answer lies in the ANC’s track record of service delivery.
In 1994, the ANC promised to redistribute 30% of commercial farmland within five years. By 1999, less than 1% had been redistributed. By 2018, a mere 9.7% of commercial farmland had been redistributed despite a National Department of Rural Development and Land Reform having been in existence since the mid-’90s. This department’s budget allocation from National Treasury has also been dismally low, reflecting a severe lack of political will by the ANC to prioritise land redistribution.
Professor Ruth Hall of the Institute for Poverty, Land and Agrarian Studies has estimated that if government continues to work at this pace, current land claims alone would take 178 years to conclude. This has created a climate of impatience, unrest, and political dissatisfaction among previously disadvantaged South Africans and a perfect opportunity for populist politicians to latch onto the land issue in order to gain prominence and power.
Enter the EFF.
Both Julius Malema and Floyd Shivambu have touted socialist policies as South Africa’s future, using Zimbabwe and Venezuela as examples. Both countries chose to nationalise land and resources, which includes the expropriation of land without compensation.
What has become of them?
Zimbabwe, as we know, suffered a financial crisis and was plunged into a severe famine as farmers fled the country and food security crashed. In Venezuela, the economy has flatlined and the inflation rate has skyrocketed to 1 million percent according to the International Monetary Fund. The unemployment rate has also gone through the roof. Bizarrely, the EFF seems to applaud this as “progress”.
The scary thing is, the rash adoption of a populist policy can quickly collapse an entire economic system beyond repair. The very same legal framework which upholds the right to property ownership in South Africa is currently on a knife edge with the prospect of socialist policies coming into effect in South Africa. It may be fun and games to President Cyril Ramaphosa, but playing with the Constitution to attack individual rights is no joke.
Venezuela is experiencing a mass exodus of citizens fleeing President Nicolás Maduro’s government as jobs have disappeared, food is scarce, and land belongs to no one but the state. This is what land expropriation without compensation will mean for South Africa.
But what is the alternative?
The Constitution in its current form provides the perfect guidelines to successfully redistribute land to deserving claimants while simultaneously growing and protecting the economy. By compensating landowners for their land, you retain the land’s value, and make it possible to share the country’s wealth in the process. After all, it is not necessarily the land that claimants want, but the wealth associated with it.
The Constitution explicitly provides for this process, but it must be effected by a competent and capable government. Furthermore, for land recipients who want to farm their land, the necessary support must also be provided to ensure food security and the success of emerging black farmers as commercial farmers.
Wandile Sihlobo of the Agricultural Business Chamber and Dr Tinashe Kapuya, an agribusiness trade specialist, have both backed post-land transfer support and mentorship to new beneficiaries by means of public-private partnerships. This is precisely what the Western Cape government has done with land reform for agriculture, by providing skills development, expertise, and mentoring to emerging black farmers. As a result, we have a 62% land reform success rate, the highest in the country.
This process transfers land along with skills and experience to foster greater economic growth and job creation, but it must be prioritised and carried out without the threat of corruption and maladministration it has succumbed to under an ANC government.
The land issue is the cornerstone of South Africa’s future. What we need to ask ourselves is the following: do we want each and every South African to be allocated land to rent from the state for eternity, or do we want each and every South African to accrue wealth by owning a piece of their own country to leave for their children? The latter requires not a constitutional amendment, but a dedicated and capable government.
We need to remember that land only equates to wealth when the necessary legal and financial institutions remain in place to protect its value. It is pointless being allocated a piece of land when the economy upon which you rely for a job has all but dried up. Ask the Venezuelan fleeing his country whether a plot of land allocated to him means anything without an economy to sustain it. You probably won’t receive an answer before he disappears over the border. DM
Beverley Schäfer is chairperson of the Standing Committee on Economic Opportunities, Tourism and Agriculture, Western Cape Provincial Parliament.