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The myth of private titling of land

Lubabalo Ntsholo works as a Researcher for the EFF in the National Assembly. He previously worked as a strategist and project coordinator in both the land reform and biodiversity conservation sectors. He holds a masters degree in development studies from UCT, and a second masters in land and agrarian studies from UWC.

The discourse about the land in its multifarious manifestations is not merely about land as a physical solum; it is about the reconstruction of society, about rethinking power and how power is held, by whom and for whom, for what purposes.

The parliamentary process by the Joint Constitutional Review Committee on the possible amendment of Section 25 of the Constitution is close to climaxing, with public hearings across the provinces completed, including oral presentations by a select group of practitioners, activists, academics and land owners. The Committee must then synthesise these inputs and make recommendations to the National Assembly about whether or not to amend Section 25 of the Constitution, and if so, recommend the exact wording of the amendments.

This article is not concerned about this parliamentary process per se, or whether or not the Constitution will be amended, but rather with the missed opportunity by most thought leaders on the land question to utilise this process to engender, at the basic minimum, a discussion about what is necessary to bring about deeper level transformation in South Africa.

I argue this because the discourse about the land in its multifarious manifestations is not merely about land as a physical solum; it is, or at least ought to be, a discourse about the reconstruction of society, about rethinking power and how power is held, by whom and for whom, for what purposes.

This ought to have been an opportunity for society to take a careful look at itself, its assumptions and its aspirations, and stretch the limits of our imagination beyond those already prescribed for us by the architects and beneficiaries of the status quo, which has ensured that a few have power, property and resources, while the majority have none.

This requires a much more rigorous thought process than what parties with vested interests, including renowned academics and the so-called civil society movements and policy institutes, have reduced the public hearings of this constitutional review process to be, a stale process concerned with technicalities around meaning of legal words, and technical possibilities such words grant to society.

The joint parliamentary committee listened to approximately 41 presentations from various stakeholders from 4 to 7 September, ranging from churches to academics, sectional interest groups such as Institute for Race Relations and the Helen Suzman Foundation. With the exception of a few who supported expropriation without compensation, most notably, the National Association of Democratic Lawyers (NADEL), the Black Lawyers Association (BLA), the National African Farmers Union (NAFU); most of the oral presentations were against amending Section 25 of the Constitution.

This is in contrast to the overwhelming support for amending the Constitution that was demonstrated during the nationwide public hearings. Most of the opposition to the amendment was premised on a number of reasons, but all of them emphasised the need to preserve title deeds, because without them, the economy would collapse. It is this argument that this article is focused on.

They argued that private titling of land is the cornerstone of democracies and the principle of constitutionalism, and that amendments that seek to undermine private ownership of land would violate the very principle of constitutionalism. We must dismiss this nonsensical claim out of hand. The idea of private titling of land is an ideological one, not a constitutional principle. Tenure to land can be secured, and even be transferable, through a proper system of recordable land use rights and registration. This does not have to be in the form of title deeds.

The idea that a freehold system of land tenure is a necessary requisite for development and investment is not new. In South Africa at least, it began with the proclamation by the then Governor of the Cape, John Cradock, in 1813, which discontinued the system of loan farms in place since settlers started annexing land from Africans, and converted these into freehold titles. The belief at the time was that farmers did not invest as much as they should on the land because they did not own it.

This idea has proved incredibly resilient over the years, and has been the holy grail of modern capitalist thinking and accumulation strategies. Eighteen years ago, a Peruvian economist, Hernando de Soto, in his 2000 book The Mystery of Capital, argued that capitalism can be made to work for everyone, particularly those at the margins of economic activity, by formalising their rights to land, housing and businesses through formal titling, which then can be used to leverage credit to catalyse further development. He called the undocumented resources that the poor held, be it in the form of land, houses or businesses, “dead capital”, because these could not be used to leverage credit for development.

The ANC took de Soto’s arguments to heart. In their discussion document for the 2005 National General Council titled Development and Underdevelopment: Learning from experience to overcome the two-economy divide, the ANC argued that “the failure to provide title deeds to land and houses sterilises the enormous value of these existing assets, which could so easily be turned into collateral to secure access to capital” (ANC, 2005).

The Democratic Alliance has also recently argued that their solution to the land question is to give black people title to the land. What is not clear is which land black people will be granted title over, and how will this land be acquired.

These ideas have persisted, and gained mainstream traction even from people who ought to know better. These ideas ignore what the late Kenyan scholar on land, Prof Hastings Okoth-Ogendo, termed the necessity to understand “the structures and processes through which communities gain access to, exercise control over and exploit particular resource, and how these change in the course of interaction with other social, economic, political and scientific processes over time”. (Okoth-Ogendo, 1989).

To make this clear for our South African context, Ben Cousins writes that “in 2011 some 60% of South Africans occupied land or housing without their rights being recorded in official systems such as the Deeds Registry. This includes 17 million people in communal areas, 2 million on commercial farms, 3.3 million in informal settlements, 1.9 million in backyard 10 shacks, 5 million in RDP houses without title deeds, and 1.5 million in RDP houses with inaccurate title deeds”.

Jumping to give title deeds to all these people, without understanding the “structures and processes” through which they are where they are now, will be a futile exercise. They are products of a systematic process of dispossession, of forced proletarianisation of black people, and imprudent accumulation of property and power by the white minority.

Giving title deeds without understanding these causes, and the constellation of power these have cemented in South Africa over the past few centuries, will be superficial. How would one give title deeds to the 2 million people on commercial farms, whose tenure remains precarious without taking the land from somewhere? And how would titling the 17 million people in the former Bantustans help improve their lot?

Rosalie Kingwill, together with Ben Cousins and others in 2006, wrote about the practical impossibility of applying de Soto’s ideas in South Africa. They identified at least eight reasons why the idea of titling for capital generation is bad for South Africa. For the purposes of this article, I highlight just the first three. They argued that:

  • Titling does not necessarily promote increased tenure security or certainty, and in many cases does the opposite.”

  • Formalisation of property rights does not promote lending to the poor: banks do not lend to the poor because of the high risk of non-repayment, the low value of their assets, and relatively high transaction costs. Households earning less than around R3 500 per month are unlikely to get access to formal credit using land or housing as collateral, whether or not they hold title deeds to their homes and land.”

  • Rather than turning their property into ‘capital’, formalisation could increase the rate of homelessness: if banks were persuaded to lend to the poor using their assets as collateral, foreclosure of loans would result in repossession. Poor households understand this.”

This is not rocket science, Okoth-Ogendo and many others had long warned about the alienating nature of private ownership of land. Citing studies done across the continent, Okoth-Ogendo suggests that:

  • Exposing agrarian communities to freehold tenure facilitates their disintegration by loosening the bonds that define collective rights and duties and which provide a matrix within which livelihood can be achieved by all.

  • Land litigation will quickly emerge as an indication that economic is disequilibrating social relations and that “traditional land rights are being redefined”.

  • The third is that the redefinition of rights will consolidate them in fewer and fewer members of society. This third premise suggests that freehold tenure not only welds together and consolidates a large variety of rights over land, it does so at the expense of an equally large number of active claimants.

In South Africa, privatisation of land has long achieved its inevitable consequences. More land is in the hands of a few, social relations have been thoroughly disequilibrated, and access to and control of property is subject to litigation processes.

To further demonstrate this point, an EFF Member of Parliament asked the Minister of Agriculture a question about the number of commercial farms the country had in 1994, and the number of farms to date, and the reasons for the decline of the numbers, if there was any.

The ministry responded that in 1993 there were about 58,000 farmers in the country, and this been reduced to 45,800 in 2002, and 39,000 by 2007. The department attributed this decline to a number of reasons, chief among them being the buying off of smaller farms by larger, more capitalised farms.

In a seminar presented at the PLAAS at the University of the Western Cape in July 2014, Stephanie Swanepoel noted a similar trend. She argued that the reduction in the number of farms was not as a result of loss of farmland, but was due to consolidation of many smaller farms into bigger farming units, increasingly owned by corporations. She argued that established commercial farms enjoy an unfair advantage over newcomers because “even through economic liberalisation removed subsidies for white commercial farmers, they still enjoy the entrenched benefits of support, along with access to quality infrastructure and markets and accumulated commercial knowledge”.

It does not take much to make the link between an unbridled system of capital accumulation, and the monopolisation of key resources in the hands of a few, to the exclusion of many. Unrepentant privatisation of land in this country, powered racism, is the reason why we are the most unequal society in the world.

None of anti-expropriation brigade spoke about how equitable redistribution of land would be attained through a market-led land reform programme that protects the sanctity of private ownership of land. Rather, these protagonists of freehold titling of land have strong convictions that the market, left on its own, can correct this unacceptable concentration of land in the hands of a few.

The late Prof Sampie Terreblanche dismissed this as vulgarisation of the ideas of Adam Smith, whose ideas the free marketers claim to uphold. Terreblanche in 2002 argued that Adam Smith understood that co-ordinated actions of individuals pursuing their self-interest would be beneficial to all in society if these three institutional and behavioural requirements were in place, namely:

  • An open and civilised society in which all individuals will be disciplined and educated to pursue their self-interest with circumspection, with due regard for the interests of others, and with the necessary prudence;

  • A sound judicial system for protecting property and contract rights and preventing all forms of fraud and corruption; and

  • The existence of competitive markets in which nobody has monopolistic power to influence market prices and wages.

None of these institutional and behavioural factors exist in South Africa, so in essence, the protagonists of freehold titling of land are not even liberal protagonists, they are defenders of racism and racial accumulation of power, property and resources who want nothing but to retain the poverty, inequality and unemployment status quo.

The Constitutional Review Committee would demonstrate intellectual lethargy and cowardice were it not to pay special attention to the second part of the EFF motion, which asked the committee to “propose the necessary constitutional amendments with regards to the kind of future land tenure regime needed, taking into account the necessity of the State being a custodian of all South African land”. DM

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