The urgency of land reform finalisation

Persistent uncertainty around government’s land reform policy debate could derail the entire project and prolong an investment strike into South Africa.

South Africa’s land reform policy debate is so chaotic even experts on the topic appear to be confused, unsure where this merry-go-round circus is going. The Covid-19 pandemic has given us a small reprieve, but the show will no doubt continue in the not too distant future.

Seasoned investors use the word “uncertainty” to describe chaos and confusion that threaten market stability. In this case, large-scale, capital-intensive agriculture could be in the firing line if a drawn-out land debate leads to persistent uncertainty as investors struggle to decipher the future. Uncertainty is dangerous because it kills investor confidence and eventually the economy.

During chaotic times, the wise thing to do is to defer to history as the best teacher.

After placing its faith in the “willing buyer, willing seller” (WBWS) land reform policy since 1994, SA’s government dumped the policy after it failed to meet the target of redistributing 30% of land to black people by 2014, returning only 6.78% of land to its original owners.

The policy was intended to reverse historical injustices committed during the colonial era in which blacks were dispossessed of their land by early European settlers and later by descendants of the settlers during the apartheid era.

The reason the WBWS policy failed is two-pronged. Firstly, its impact was slowed down by white farmers inflating prices on land bought by government and transferred to black beneficiary farmers. Secondly, many of the farms redistributed to blacks became unproductive as a majority of the beneficiaries had no experience in commercial farming.

The failure has come at a huge cost. According to agricultural economist Nick Vink, government has spent close to R69bn on land reform since 1994.

The ditching of the WBWS policy marked the end of implementation of the first phase of land reform policy. A second phase is yet to kick in, but it will take the form of expropriation of land, either with compensation or without.

From 2017, the ruling ANC started debating land expropriation to replace the failed WBWS policy. Two strands of expropriation policy proposals began to emerge within the party, with one camp favouring expropriation without compensation (EWoC) and another supporting expropriation with compensation.

The key difference between the two schools of thought is that EWoC will require amending Section 25 of the Constitution while supporters of expropriation with compensation initially envisaged introduction of a valuer-general, who would determine the value (or compensation) of land earmarked for expropriation to counter government acquiring land at inflated prices.

Recently, a third strand of expropriation emerged, whereby the ANC proposes that the minister of land reform must be the sole arbiter on whether the state pays for expropriated land or not. In such a regulatory set-up, courts will have no role to play. As things stand now, Section 25 makes provision for land to only be expropriated after compensation is agreed by affected parties and approved by a court of law.

As the land reform debate rages on, the question that needs to be posed is how feasible it is to expropriate land? To answer this question, I have explored two case studies of England and Zimbabwe to understand how the land ownership took shape in those countries after a colonial conquest.

Before England became a global colonial power, it too was invaded and colonised. The invasion that had a lasting impact was in the 11th century when the Normans, French-speaking descendants of the Vikings, invaded England in 1066 from Normandy, France, and defeated the native Anglo-Saxons. More than 1 000 years on, Norman descendants hold the bulk of English lands to this day. According to an article published by The Guardian in 2012, 66.6% of England’s land remains in the hands of Norman descendants, who make up about 0.3% of England’s population.

Since 1980, Zimbabwe’s land reform has undergone two distinct phases. The first was initially based on the WBWS policy, which was partially funded by the British government to acquire land from white farmers for black resettlement.

Between 1980 and 1987, 20% of land initially owned by white farmers was transferred to black agricultural labourers. However, in the early 1990s, the Zimbabwean government announced new plans to quicken land reform through expropriating land with compensation, marking the beginning of a second phase of land reform to fast-track the process. In 1998, Zimbabwe began a process of amending its constitution to allow EWoC, abandoning expropriation with compensation. In 2000, liberation war veterans evicted between 2 000 and 3 500 white farmers, mostly British descendants, from their farms. This collapsed Zimbabwe’s economy as investment capital left the country.

As SA transitions into the second phase of its land reform, it should avoid falling into the trap that Zimbabwe fell into. This can be done by transferring land to skilled black farmers instead of politically connected people with no skills.

I suspect government will use expropriation policies to find land for urban housing development to ease housing backlogs in major cities and will tread carefully not to threaten food security by expropriating productive commercial farms. ■

By Andile Ntingi

editorial@finweek.co.za

Andile Ntingi is the chief executive and co-founder of GetBiz, an e-procurement and tender notification service.