The topic of land ownership in South Africa has always been one of emotion and controversy. Our history of land dispossession from the periods of colonisation and imperialism to that of the enactment of the Natives Land Act of 1913 has contributed towards the vast intergenerational wealth inequality we see today. As such, since South Africa’s democratic dispensation, the government has embarked on a land reform programme that rightfully attempts to bring about justice to those who were and are affected.
However, in an effort to expedite the failures of its own initiatives, the ANC has introduced its solution: expropriation without compensation (EWC). Not only does this legislation threaten to destroy the economy, but it will not address the issue it is meant to solve: instituting effective land reform.
In order to understand why, one has to understand the importance of having private property in the first place. And no, the reasons for private property are not enforcement of Western-centric ideologies; it’s far more economic than that. The first and rather simple reason for the existence of private property is that it reduces contestation over resources. What’s mine is mine and what’s yours is yours, essentially. Secondly, a conducive environment is formed for trade and economic activities. But more importantly, land is a means of wealth creation.
The concept of wealth creation is central to the intentions of land reform, for it also tackles socioeconomic imbalances. If a person owns a piece of land, he or she can use it for productive purposes or to gain credit by using the land as collateral with a bank. Together, these are powerful tools that incentivise investment and further boost economic growth. It is this logic that is used for land reform.
In South Africa specifically, a misconception has grown that farming is a lucrative and profitable enterprise, and thus a further justification for EWC. This is unfortunately not the case. A report from the Centre for Development and Enterprise (CDE) shows that the average return on investment for farmers is 5%, which applies to those who average turnover of R5-million or more. High operating costs and the recent nationwide drought has led to national farm debt of R160-billion, of which 27% is credited to the Land Bank and 62% to collective commercial banks.
And this is one of the many problems with the current EWC legislation: if land or property is going to be expropriated without compensating the owner, upon whom would the onus fall to cover the credit attached to the asset? With the debt of farms almost equating to 10% of government expenditure and there being no security for financial organisations under the current amendment, South Africa is very likely to see its credit markets freeze or its citizens being pushed beyond their means. Such a policy implementation would result in massive unemployment and a surge in capital flight which our country cannot afford.
Even if EWC were to be successful, a strong institutional environment that protects property rights needs to ensue. However, under current land reform protocol, we have witnessed concerning events that cast doubts upon the government’s abilities.
Just over a month ago, revelations were made regarding individual officials within the Department of Agriculture and Rural Development unlawfully evicting black farmers from their respective operations, despite the fact that they were successful. Farmer Ivan Cloete, whose eviction from Colenso farm near Darling in the Western Cape was revoked following an internal investigation, is still waiting for his lease agreement more than three months after the incident. In addition, owing to the raised concerns in relation to land tenure, Business Day reported that a farmer lost out on a profitable contract to supply slaughtered pigs to a Western Cape butchery.
Moreover, land transfers have now been suspended after the minister was presented with prima facie evidence with no bureaucratic processes having been followed for that decision. Not only does this warrant serious doubt over the competency of the minister and her department, who would receive more power under EWC, but it also projects the realities which South Africa will face under a Constitution that permits such actions. The agricultural sector supports one million citizens and contributes 3% of our GDP. An industry that grew 13% during the pressures of an economic recession cannot have its promising prospects threatened.
If the government were serious about land reform, according to the CDE, then it wouldn’t have meant that only 21% of 82.759 million hectares of farmland has been redistributed since 1994. If the ANC were truly wanting to empower the agricultural sector, it wouldn’t have meant that only 10% (approximately 4,000) of all farms which have been redistributed by the Land Bank have resulted in productive usage. The evictions also stand in contradiction to the recent commitment to release 700,000 hectares of land to black farmers. This is the land that has been in possession of the national government since 1994.
Our Constitution is the bedrock of our democracy. Under no circumstance can it be used as a means to benefit rogue public officials and their comrades. It is there to protect our citizens from any foreseen dangers, even if it were to be from their very own elected leaders. DM