For close to two decades, the Institute of Race Relations (IRR) has argued steadily against proposals — invariably in the idiom of land reform — to abridge property rights. In its most recent iteration, this has been phrased as expropriation without compensation (EWC).

Our work around this was in a sense straightforward, since it involved confronting a deeply ideological agenda, overlaid with aggressive populism as well as some none-too-subtle opportunistic venality.

Given Songezo Zibi’s considerable reputation and latterly his entry into active politics, his contribution (No need for land reform panic — it is inevitable but must be orderly, Daily Maverick, 11 March 2024) is a challenge to look at these matters afresh.

Land reform, Zibi contends, is an indispensable part of South Africa’s development path. This is for reasons moral, social and economic. Failed policy, the “criminal negligence on the part of the ANC government”, have been compounded by pointless, polarised debates, such as that around EWC.

Expropriation, in his view, is uncontentious: “The question is not whether the state should expropriate land without compensation. The question is rather whether this expropriation is being done as part of a broader development plan — one that is, in turn, part of a viable plan for social and economic recovery, from the local up to the national level.”

He is correct up to a point. Expropriation powers have always existed and are part of a standard array of governance tools. It would be within the remit of existing law to use expropriation as a tool for land reform, and there are some instances globally of this having been done successfully — along with those where this strategy has proved disastrous.

Perhaps the operative phrase here is “viable plan”. Zibi correctly states that the foundation for this is accurate information, and his thoughts on an evidence-based, future-oriented strategy are well-made and well-taken.

Ownership and statistics

We would suggest, though, that a good deal of evidence has in fact been gathered on this, but, thanks to the dread shadow of ideology falling across the issue, has tended to be largely ignored.

There have, for example, been two studies that attempted to establish land ownership patterns, one under the auspices of the Department of Rural Development and Land Reform and the other by Agri SA. Each had its inherent weaknesses, but neither was properly used to support a constructive conversation.

The official report made it apparent that identifying racial characteristics of ownership was fraught and that these could not be established for around two-thirds of the country’s landholdings, arguably its most important finding.

Yet officials and politicians repeatedly trotted out the statistics for privately owned freehold land — less than a third of the total — as representing the totality of land ownership in South Africa. By this narrative, 72% of the country remained in “white” hands.

That these numbers effectively excluded landholding to which African people had had access (such as the erstwhile homelands), and most of what had been transferred through land reform initiatives (since this was seldom individually titled — being acquired by community associations — or having remained in state hands altogether) were dynamics typically avoided.

As for Agri SA’s study — which tried to establish land ownership in relation to land value, a critical matter if land was to be used as a capital asset — it was often flatly ignored.

The state land audit’s findings (selectively deployed) were intended to provoke outrage, and in some measure they did. They were certainly used as a prime exhibit for EWC.

Whatever value the findings as a whole might have offered was rendered moot by the fact that there was scant interest in understanding what they conveyed, merely in shoring up a policy direction already decided, and decided with a preponderance of deference to political rather than developmental concerns.

Ideology vs economics

Zibi states that the “debate” around land reform has been divisive rather than unifying; he’s right and it was intended by those who drove it to be so.

Was EWC a “red herring”, as Zibi avers? Well, yes, in the sense that EWC would provide a solution to land reform; the reality was that land reform had never been a state priority, as reflected in minuscule budget allocations to land reform.

And what had been done was often poorly put into practice and inadequately supported, as confirmed in a 2017 report produced under the chairpersonship of former President Kgalema Motlanthe.

Brian Pottinger diagnosed the problem in his 2008 book The Mbeki Legacy: “Having misplaced the order of importance on the national agenda, the government then compounded the fault by misunderstanding the nature of the transaction. Defining it as a racial transfer of land in terms of a policy of restitution undercut what the policy really should have been: a rational and modern land-reform programme based on sound economics, properly resourced and realistically targeted”.

However, EWC was also one of a series of measures that sought to constrict property rights. EWC stood to ratchet up the control the state could exercise over property in general. It came on the back of changes to land reform policy that effectively abolished private acquisition for beneficiaries of redistribution projects, proposals for expropriation legislation weighted towards the state, and proposals for the nationalisation of farmland (on the model of what had been done with water and minerals — see how that has turned out).

Indeed, we at the IRR saw in the various strains of the EWC agenda a move towards a custodial seizure by the state of all land in the country. Perhaps not universally assented to in the government, it reflected a powerful strain of statist economic thought. (Those wanting evidence of this could look at protectionist — and poorly administered — trade policy, at the proposed National Health Insurance, and the dogged commitment to South Africa’s ailing SOEs).

That a mass custodial taking was on the table was confirmed in 2019 at the World Economic Forum at Davos — hardly a left-revolutionary stomping ground — in remarks to attendees by a senior official in the Department of Rural Development and Land Reform.

It is also important to note that our concern was about property rights, and not just land ownership. For historical reasons — Zibi is correct to point to great injustices with which land has been associated — it has been a powerful wedge issue, but we confidently maintain that land was never alone in the government’s sights. The NHI and the commandeering of medical resources would, along with raiding pension funds and other financial assets through prescribed assets, be infinitely more lucrative.

EWC was a genuine threat, and we would suggest, remains so.

Prioritising growth

The question that follows is where land reform should feature in South Africa’s future — how to integrate it with a “viable plan” for the country.

What South Africa needs above all is economic growth. Nothing should be undertaken that compromises this goal, for it is only through an extensively and sustainably enlarged economy that South Africa has any hope of the improved living standards, opportunities, and general societal well-being for which it yearns.

This makes policy around property rights particularly important. In a 1997 paper, economists Klaus Deininger and Lyn Squire commented crisply that “although redistributive policies have the potential to benefit the poor both directly and indirectly, they will do so only if redistribution does not jeopardise investment — this may be one explanation for the observation that, in the past, redistributive policies such as land reform have often failed to help the poor”.

Intentions and historical justification will mean little if the outcomes are counterproductive. Will the measures taken be broadly amicable and legitimate, and well received by the market, or will they be seen as the restatement of a failed dirigiste model with more appeal to ideologues and officials than to its nominal beneficiaries?

It’s unclear from Zibi’s article if he favours expropriation with or without compensation. We would argue that expropriation — as a hard overriding of private property rights through coercive state power — should be a very last resort, in very restricted circumstances, and subject to compensation.

Alternative bill

South Africa would do well to remember that those most vulnerable to the abridgement of their property rights and the confiscation of their assets are precisely those furthest away from public attention and with the most meagre means of contesting it. For these reasons, among others, the IRR has proposed an alternative Expropriation Bill that would govern expropriation in a manner that takes suitable account of the interests of those subject to it.

We agree, incidentally, that if land reform is to be a societal responsibility — a common obligation as Zibi has it — its costs should not fall solely upon those whose assets are targeted.

A viable land reform programme should, as Zibi states, deal with realities. Part of this is to recognise the real scale and nature of demand. There is a wealth of polling evidence that rural land access — call it “agrarian” land reform — is in limited demand.

Contrary to what Zibi claims, agriculture based on land reform is not a plausible or viable solution to poverty and unemployment, not for a rapidly urbanising population with aspirations for participating in a consumer society.

The focus of policy has to shift away from a fixation on racial proportions to providing high-quality support to prospective farmers, with high productivity the ultimate goal.

With comparatively modest investments (at least when ranked alongside the sums poured into SOE bailouts), and a proper professionalisation of the state apparatus — which will take some time — and with partnerships with existing agricultural bodies, it should be possible to provide appropriate assistance to place a new generation of commercial farmers on a solid footing.

A far more challenging prospect relates to urban land, or more accurately, to urban housing. This unfortunately will take considerable managerial skill, which is sorely lacking in most South African municipal administrations. It will also, we imagine, involve increasingly building upward rather than outward, as larger populations will need to be more densely accommodated.

And here, the ultimate success will hinge on whether urban economies are able to provide livelihoods to their growing populations — which they cannot do in the absence of economic growth.

Finally, any land reform measure should have at its core the idea that property — real ownership — is to be made available to those who have previously been excluded and denied it. At present, this is hardly a consideration. Policy is in effect opposed to private ownership, and this position has been restated by numerous government leaders, despite a few high-profile examples of title deed handovers.

Former president Kgalema Motlanthe’s 2017 report into transformation measures has this to say: “It is of great concern to the Panel that recent policy shifts appear to default to some of the key repertoires that were used to justify the denial of political and property rights for black people during colonialism and apartheid”.

This, we at the IRR would argue, needs to change. Land reform can play a constructive role in South Africa’s future — provided, of course, it is suitably designed and executed.

In 2019, commenting on attempts to introduce EWC by means of a constitutional amendment, Mr Motlanthe said: “If property rights are not protected, you destroy value, and if there is no value in property, you cannot have a thriving economy, because people will not invest their resources and efforts into building assets.”

Songezo Zibi would do well to heed these warnings. DM