The Land Debate in South Africa

Expropriation without Compensation in South Africa 827751

6/19/18

ARPL 7063 : Municipal Planning Final Take Home Exam 2018

CONTENTS Question 1: What is the Constitutional and Legal mandate for Land Expropriation in the Republic of South Africa? ..................................................................................................................................................................... 2 Question 2: Identify some relevant procedural considerations for government to expropriate land without compensation. ........................................................................................................................................................ 3 Question 3: Discuss how the outcomes of land expropriation could positively contribute to key spatial policy themes in South Africa?.......................................................................................................................................... 5 Question 4: Develop and argument for or against land expropriation without expropriation in South Africa 2018 ........................................................................................................................................................................ 6 Works Cited ............................................................................................................................................................ 8

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QUESTION 1: WHAT IS THE CONSTITUTIONAL AND LEGAL MANDATE FOR LAND EXPROPRIATION IN THE REPUBLIC OF SOUTH AFRICA?

Answer The historical denial of access to land to the majority of South Africans is well documented and has thus manifested in the lack of access to productive land, homelessness; and high levels of insecure tenure (Luwaya, 2017). This can be remedied through a process called land expropriation. It is however important to firstly define land expropriation. It is a process through which the government or state takes privately owned property, supposedly to be used for purposes designed to benefit the overall public (Henning, 2010). In South Africa’s context land expropriation is one way of rectifying the historical imbalances in power brought about by colonialism and apartheid. There was a strong emphasis on racially-based separate development and market and opportunity exclusion which contributed to a unique manipulation of space and place to keep the power base with the white minority. Land expropriation is therefore a process through which some dignity, and economic benefit can be afforded to the previously marginalised people in the country whom constitute the majority of the population. To this end the post-apartheid government drafted the 1996 Constitution which helps govern the Republic of South Africa. In short the government through land expropriation was hoping to afford people land rights which they had previously been denied under apartheid (Luwaya, 2017).

According to the Constitution there are sections which deal with how these land rights are to be afforded to the previously marginalised people. On this point section 25 of the Constitution provides for the right of access to land and is further subdivided into 4 subsections. The first subsection 25(5) deals with equitable access to land, s 25(6) addresses restitution; s 25(7) concerns security of tenure; and s 25(8) identifies land, water and related reforms. Section 25(5) of the Constitution states that the “state must take reasonable legislative and other measures, within its available resources, to foster conditions which enable citizens to gain access to land on an equitable basis”. What could be of concern under this section is how the courts may review legislative and other measures to test their reasonableness. The courts would also need to establish whether measures exist to enable conditions for equitable access to land (Gerber, 2016 Land Use). Section 25(6) of the constitution specifically addresses the issue of security of tenure and states that a person whose tenure is insecure as a result of past discriminatory laws or practices, is entitled, to an extent provided by an Act of Parliament, to tenure that is legally secure or to comparable redress. In this instance people who have been forcibly removed by the apartheid forced removals and placed into group areas by the 1950s group areas act would fall under this category and would need secure tenure. According to the Ehrenberg (2006), tenure security is a tool important in fighting poverty by enabling the poor to use their rights to homes or land in this instance as collateral for bank loans. This was not previously possible under apartheid as the land which was given to the Africans was usually unproductive and difficult to leverage for bank loans or sell for profit (Ehrenberg, 2006) Section 25(7) of the constitution is with regards to restitution, and uses the word ‘property’ rather than the narrower concept of ‘land.’ This section states that a person or community dispossessed of property after 19 June 1913 as a result of past discriminatory laws or 2

practices, is entitled, to an extent provided by an Act of Parliament, either to restitution of that property, or to comparable redress. Lastly section 25(8) specifically provides that no provision of s 25 may prevent the state from taking measures to achieve land, water and related reform in order to redress past racial discrimination. There are two perspectives however when it comes to land rights in South Africa, the first is whether to preserve the rights of the existing land owners or to outright take all the land and give it to the formerly marginalised through a guarded rail process naturally of course. To this end the land rights in the South African Constitution are an attempt to find a middle ground between the two perspectives mentioned above. The implementation of these measures continues to highlight the tension involved in protecting existing property rights, while attempting to bring about equity and justice in access to land on the other.

This is all fair and fine at national level but what does section 25 mean at the municipal level. To this point from a land use planning (LUP) perspective some of the interventions flowing from the Constitution include the reorganisation of the relationships and the legal framework within government and the movement away from the hierarchical and vertical tiers of government system to a more horizontal, interrelated and interdependent three spheres of government (Gerber, 2016 Land Use). This was supported by the white paper on local government and more recently the SPLUMA ACT of 2013. The white paper on local government is considered as a mini constitution for local government. It is premised on the idea that the democratic state of South Africa has the obligation of meeting developmental objectives in a manner that enhances community participation and accountability (Henning, 2010). Spluma clarifies the roles of government in land use management. And is an important step towards redressing the apartheid legacy of spatial injustice. The act introduces four principles of spatial justice, spatial sustainability, spatial resilience, and efficient and good administration to guide land use governance. The white paper also detailed that the government at the local level was to ensure the provision of services to communities in a sustainable manner; to promote social and economic development; to promote a safe and healthy environment; and to encourage the involvement of communities and community organisations in the matters of local to ensure government (South Africa (RSA) 1996:78)

QUESTION 2: IDENTIFY SOME RELEVANT PROCEDURAL CONSIDERATIONS FOR GOVERNMENT TO EXPROPRIATE LAND WITHOUT COMPENSATION.

Answer The recent motion for land expropriation without compensation in the National Assembly was introduced by the Economic Freedom Fighters (EFF) and supported with an amendment by the African National Congress (ANC).

It was overwhelmingly adopted. This comes after years of supporting a market-led land reform programme and not heeding criticisms of this policy. The ANC leadership has now suddenly changed its stance on the land reform model and adopted a radical approach with the advent of the expropriation of land without compensation amidst political pressure from its political opponents. I will explore some of the procedural and economic considerations that the government has to adhere to in order to expropriate land without compensation.

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When one speaks of expropriation one also has to consider property rights as these are fundamental for economic development; one of the cornerstones of capitalism. Expropriation without compensation threatens these rights and has profound impact on foreign investment, which South Africa is very reliant on for most of its economic growth. This proposed legislation is not conducive to creating an atmosphere in which foreigners would want to invest (Agri SA, 2018). Investors would not invest on land now as they would be afraid that it might be expropriated without any compensation (Henning, 2010). This fear is exacerbated to all sectors of the economy through the fact that Article 25 of the Constitution of South Africa is to be that amended and currently it protects all private property, not just farmlands(Agri SA, 2018).If the government does fulfil its promise of expropriation without compensation there are some economic considerations to be made in order to ensure the process is constructive and not counter-productive to the rights afforded to people by the Constitution, as well as the economy of the country(Agri SA, 2018).

The first consideration that needs to be addressed with respect to the economy is that of foreign direct investment FDI. The lack of detail as to how the proposed expropriation without compensation legislation will work threatens investor confidence. The loss of foreign investment has the potential to cause dire consequences for South Africa’s economic growth and employment prospects. The second consideration is with regards to the banking sector. The banking sector distributes loans and mortgages to white commercial farmers and hold land as collateral (News24, 2018). That means the white commercial farmers do not actually own the land but rather rent it from the banks.

If this land is expropriated the risk is passed back onto the banks. Currently the commercial banks in South Africa have collectively loaned out 13 billion dollars to white commercial farmers (News24, 2018). This is a substantially big figure and the banking sector would not be able to recover if this debt is not paid back. The land bank of South Africa is also included in this debate on how the finance system will be affected by the proposed legislation of expropriating land without compensation. This institution is state owned however 95% off the loans it dispenses come from white commercial farmers; ’whom are not to be compensated’ which becomes tricky as they can claim their money which could undermine the mortgage market (Boshoff, 2018). The other percentage of loans it receives come from the EU, Germany and the World Bank, which is a sign of investor confidence which the government needs to also consider as this has an impact on the economy. The third consideration regards the previous model of the willing buyer and willing seller, specifically why it failed. This approach was too market friendly which Griffin et al, (2002: 321) mentions is a non-starter especially when land redistribution is based on free market prices. One of the reasons being the buyers are willing but the prices of land were too high considering the economic disempowerment of the marginalised during the apartheid era. In the literature critics of the market based approach often argue that it does not lead to substantial change in land redistribution due to its slow nature (News24, 2018). Reflecting on the international experience of countries such as Mexico, Brazil, Zimbabwe and Columbia, it is evident that markets on its own are unable to alter the pattern of ownership effectively in favour of equity for the targeted beneficiaries of land reform. These are also some of the triggers which urged the EFF to propose a motion to do away with the ineffective, slow and anti-poor models of land redistribution like the willing buyer willing seller. Their argument was that 24 years after independence the marginalised still do not have rights to land and this is unacceptable, hence their call for expropriation without compensation. However there need to be mechanisms which provide support and assistance to black formerly marginalised emerging farmers who become beneficiaries of expropriation without compensation process

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according to the constitution (News24, 2018). This proposed legislation needs to be clear so that investors and property owners do not have reservations on investing in the country.

Procedurally the government needs to carry out five steps in order to successfully implement this proposed policy of expropriation without compensation. The first step is to identify all the land to be expropriated which can be done by carrying out land audits on urban land. The end result of the land audit system should produce a geographical information system (GIS) database that contains a wide variety of information required for spatial planning and land use management purposes. The information documented will be useful in determining who owns land and where and what it is being used for. Secondly the government would need to carry out a broad based consultative process in which they engage all the stakeholders in order to draft the policy initiatives which support the expropriation without compensation legislation. Initiatives such as developing skills based centres for emerging farmers, courses in financial management as well as financial systems that help provide capital to start their enterprises. Thirdly the state would need to establish a legal framework one which enables the possibility of adopting further laws to accelerate land reform which is currently not being used. This can be done through Section 25(8) of the Constitution specifically. The legal frame work should also make it possible to repeal existing legislation which is not consistent with land reform. Lastly one of the main concerns of the banking sector is the risk of multibillion dollar loans being defaulted on when white farmers lose their land, which is collateral for the banks. One effective way of doing this is for the state to take all the land through a process of nationalisation with special considerations to the economy and the finance sector of course. The state must be careful not to disturb land which can cause dire effects on the economy and affect foreign investment. The land is expropriated and in this way ownership of land becomes vested in the state similar to the system in Mozambique where the state leases out land The land will be leased out to the marginalised through equitable and just allocation process. The issue is who is more marginalised than who and the state would need to carry out a process of registering people through processing past and current land claims.

QUESTION 3: DISCUSS HOW THE OUTCOMES OF LAND EXPROPRIATION COULD POSITIVELY CONTRIBUTE TO KEY SPATIAL POLICY THEMES IN SOUTH AFRICA ?

Answer SPLUMA development principles are intended to guide the preparation, adoption and implementation of any spatial development framework, policy or by-law concerning spatial planning and development or use of land.

There are 5 key spatial policy themes according to the spatial land use management act (SPLUMA) which will be discussed in relation to how they are positively impacted by the outcomes of land expropriation without compensation. These themes are spatial justice, spatial sustainability, efficiency, spatial resilience and good administration.

The principle of spatial justice mentions that past spatial and other development imbalances must be redressed through improving access to and use of land by disadvantaged communities and persons. This principle is supportive of expropriation in that it can be used to identify land to be used for social housing projects closer to economic centres such as Sandton, Rosebank and the like. This addresses the previous injustices and allows people

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to benefit from staying closer to jobs and also saving on travelling expenses (Luwaya, 2017). The act would also reinforce appropriate management of disadvantaged areas, informal settlements and former homeland areas.

The principle of sustainability outlines that land development that is within the fiscal, institutional and administrative means of the country must be promoted (Hall, 2006). Spatial planning and land use management systems must promote the principles of socio-economic and environmental sustainability through encouraging the protection of prime and unique agricultural land for food security. Ecological systems should be protected and replenished. This should include the development and planning of human settlements in such a manner that they are more resilient to climate change impacts (anon, 2016 ). Under this theme we would be asking questions of cost effective development for example can the Municipality and the people afford to build such settlements.

The principle of spatial sustainability deals with issues of urban decay in the cities and how the state aims to revitalise CBDs by using CIDs and order initiatives which enable land owners to redevelop their land (Gerber, 2016 Land Use).

The principle of efficiency applies when land is redistributed and used to densify settlements by building walkup flats which optimise the use of the land. Expropriating the land makes land available for this and makes the land affordable also especially close to economic centres. The SPLUMA by-laws time line could be used to determine the success of the process of expropriation.

Lastly the principle of good governance means that all spheres of government must ensure an integrated approach to land use and land development. This principle is the fulcrum of a municipal land use management framework because implementing the spatial planning vision and objectives is not only dependent upon a strong coordinating role of central government, but is also predicated upon good governance mechanisms of local and provincial government. If expropriation without compensation is to occur it offers formerly marginalised people citizenship through the land rights afforded to them by the Constitution of South Africa under section 25. People can then register to vote, receive basic services as well as access services that they could not before. It is also argued that good government corresponds to good planning and spatial planning is centrally important for the government to function, directly affecting the lives of all people. It particularly important that planning decisions are made with legitimate authority by bodies that are accountable through democratic processes. The process needs to have good governance so that the policies designed are clear and transparent and equitable in order to redistribute land

(United Nations, 2008, p. 11).

QUESTION 4: DEVELOP AND ARGUMENT FOR OR AGAINST LAND EXPROPRIATION WITHOUT EXPROPRIATION IN SOUTH AFRICA 2018

Answer The land question is both a political issue and an economic issue and should be assessed from a critical yet objective perspective to this end. The idea of land expropriation without compensation in my view would not work without certain parameters and guard rails and I will substantiate this argument with current debates and with examples from countries which have carried out land expropriation before.

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Firstly I do recognise that in South Africa the imbalances in power and wealth caused by apartheid need to be rectified in order to achieve spatial justice and social justice objectives set out in the Constitution. One way the government has tried to achieve this is through the land reform program under which land expropriation, land redistribution and land restitution all fall under. The land reform program has had difficulties as a process which have caused it to be too slow and inefficient. However one of the issues of the current policy frameworks is that they are muddled and that land reform has been captured by the elites which constitutes a small number of ‘emerging’ black capitalist farmers and traditional leaders, but also commercial farmers, consultants and agribusiness corporates. These group are far from what would normally be defined as the marginalised or poor people whom the constitution under section 25 aims to offer land rights to. This raises questions as to who gets the land and on what basis do they get this land if not under the conditions specified under the constitution. If we give the land to capitalists who already have wealth are we not just replicating the apartheid system but on socioeconomic and neo-liberal lines as opposed to racial lines. In short the marginalised will continue to get poor while the elites gain from the process of expropriation without compensation. Also how feasible is it from a financial perspective.

In the same breath the banking sector does not seem to be fully behind this idea of expropriating land without compensation as they use land as collateral on debts to commercial farmers who currently occupy the land at present. If for example a white commercial farmers has a 10 year debt and the government decides to expropriate their land without compensation this could potentially hurt the economy and the mortgage market, because the recipient will not have the money to pay the debt off. According to the Ceo of Nedbank, Mike Brown (2016) the idea of expropriating land without compensation needs to be an engaging consultative process with the public, business sector and the government. He states that “this helps develop a social fabric from which the country can grow but importantly which does not endanger the economy and the food security of the country” From his perspective it can be understood that land can be used to change the structure of the country and have positive impacts on the livelihoods of the marginalised.

Looking at expropriation without compensation from a political perspective there is the danger that the state is using this rhetoric to serve their own interests with regards to the 2019 elections. Since the emergence of the EFF on the 26th of July 2013 the ruling party has been challenged to adhere to the constitutional mandate which calls for land reform without compensation, which the ANC reacts to by issuing radical-sounding policy statements.

The property clause 63 of 1975 which requires compensation to be paid for land acquired by the state, is not the fundamental constraint to the process of expropriation without compensation. Cousins (2017) acquiring farms at prices below market value is quite possible, since compensation must be ‘just and equitable’. Insufficient political will by the ANC is more constraining than the constitution.

There are debates around the land issue which make it very political in terms of a conflict in rationalities and a social class historical perspective (Cousins, 2017). One such argument is ‘whether the property rights of the white land-owning elite be protected, and does this not severely constrain redistributive land reform?’ This is a delicate issue in my view as this elite social class controls the capital in the country and antagonising them could have disastrous consequences for the economy (Cousins, 2017). The government has very close examples including neighbours Zimbabwe which embarked on a similar process of expropriation without compensation during the early 2000. This came out of the need for land by the majority of the people and also the great disparity between 7

blacks and whites in terms of land ownership has pushed property from the allegedly inaccessible realm of the ‘law’ into the public arena of ‘politics’. After independence the government had like the ANC also promised the people through a land redistribution process based on a willing buyer willing seller arrangement but when the British pulled funding of this it turned into a fast track expropriation without compensation process with violent outcomes. It is unlikely that South Africa would resort to the same ends due to constraints of the constitution. It is a warning to the government and a clear example of when the process does not involve a process of continuous public engagement. According to Dlamini (2006) the land reform process in Zimbabwe was highly politicized since the process of allocating plots to those who want land frequently discriminated against those who are believed to support opposition parties (Luwaya, 2017). This sounds very familiar to what happens in terms of service delivery in South Africa. To this end I do not think land expropriation without compensation would work as there are too many stake holders, financial feasibility issues and constitutional constraints which need to be considered before any decision can be made (Ranwedzi, 2013). It would not be very sustainable if the land expropriation process is done and it does not follow a comprehensive consultative process with all stake holders including the white farmers, banking sector, communities and the state.

WORKS CITED anon. (2016 ). Diagnostic Report on Land Reform in South Africa. Capetown : Institute for Poverty, Land and Agrarian Studies University of the Western Cape.

Agri SA (2018). [Online] Agrisa.co.za. Available at: https://www.agrisa.co.za/wpcontent/uploads/2017/11/AgriSA_Land-Audit_November-2017.pdf [Accessed 18 Jun. 2018] Boshoff, T. (2018). Expropriation without compensation:Much uncertainty, but context still required.

Cousins, B. (2017). Land reform in South Africa is in trouble. Can it be saved?

Corrigan, T. (2018). Land expropriation without compensation could hit the middle classes hardest BizNews.com. [online] BizNews.com. Available at: https://www.biznews.com/thought-leaders/2018/06/08/irrland-expropriation-middle-class/ [Accessed 18 Jun. 2018].

Gerber, A. B. (2016 Land Use). Land Use Planning Law Reform in the Western Cape the road to Transformation . Cape Town: Western Cape Government.

Hall, R. (2006). Land reform how,and for whom?Land demand, targeting and acquisition.

Henning, I. (2010). Implications of land reform on spatial planning and development in the Tzaneen Local Municipality. North-West University .

Luwaya, M. C. (2017). Communal Land Tenure 1994-2017:Commissioned Report for High Level Panel on the Assessment of Key Legislation and the Acceleration of Fundamental Change, an initiative of the Parliament of South Africa. Land and Accountability Research Centre (LARC).

Naga, K. y. (1999). Land Reform Policy Committee . Department of Land Affairs.

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News24 (2018). Expropriation without compensation spells economic disaster. [Online] News24. Available at: https://www.news24.com/MyNews24/expropriation-without-compensation-spells-economic-disaster20180301 [Accessed 18 Jun. 2018].

Ranwedzi, E. (2013). The Potential and Limits of the Proactive Land Aquisition Strategy: Land Reform Implementation in Gauteng . Cape Town: University of the Western Cape.

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