Creeping land nationalisation no poverty solution – BizNews, 1 March 2016

The day before finance minister Pravin Gordhan delivered a budget speech that was supposed to show how South Africa’s economy is being turned around, the National Assembly quietly adopted the Expropriation Bill of 2015, which is sure to damage investment and further constrain economic growth.

Land is a hugely emotive subject in South Africa and last week the country’s main House of Parliament took the necessary steps in order to enable the state to make compulsory purchases of land to redress racial disparities in land ownership. The bill, which still needs to be passed by South Africa’s other house of parliament and signed into law by President Jacob Zuma, effectively scraps the willing-buyer, willing-seller approach to land reform. And while this may speed up the process, which sees the ruling party lagging its own targets, there are huge concerns that such a bill will only deter future investment, which is a hugely sensitive subject given Barclays wants to sell its R120 billion stake in Barclays Africa. Below the Institute of Race Relations’ Anthea Jeffery questions such a move and says it’s not the easy answer to the poverty question while the state can also use such a law to bring more land under its own control. Once again a fascinating read. – Stuart Lowman

By Anthea Jeffery 

The day before finance minister Pravin Gordhan delivered a budget speech that was supposed to show how South Africa’s economy is being turned around, the National Assembly quietly adopted the Expropriation Bill of 2015, which is sure to damage investment and further constrain economic growth.

The office of the ANC chief whip applauded the passage of the Bill, describing it as ‘the key to our transformation trajectory’ and claiming it will ‘bring the long-awaited justice to the dispossessed majority’.

The implication is that the Government will use the Bill to acquire land from white farmers so that it can transfer ownership of it to black farmers and so provide redress for apartheid laws that long barred black people from buying land in ‘white’ areas.

However, this is not at all what the ANC has in mind. Far from helping to build a new class of black commercial farmers who own their own farms, the ANC is intent on using the apartheid land injustice to bring ever more land into the State’s ownership or control. This is a recipe for creeping land nationalisation.

It also means that the ANC’s land reform programme is essentially a fraud. It plays on black unemployment and resulting poverty, exaggerates the extent of land hunger, and seeks to build up anger and racial polarisation around the land issue. At the same time, it denies ownership of redistributed land to black farmers, including those who very much want to operate on a commercial scale.

The government’s refusal to transfer ownership of the land acquired by it for redistribution goes back to 2010.  In October that year the Department of Rural Development and Land Reform unilaterally removed the ‘option to buy’ previously included in its leases of such land to black farmers. In 2011, in the Green Paper on Land Reform, it stressed that land belonging to the State would no longer be made available for sale and that new black farmers would in future be confined to leasehold tenure.

Despite the repeated objections of black farmers, the State Land Lease and Disposal Policy adopted in 2013 reaffirms that land acquired for redistribution will be leased, not sold, to black farmers. Small black farmers will never gain ownership, while medium and large-scale farmers will have to be content with leasehold tenure for 50 years before they may (perhaps) be given the chance to buy.

This insistence on leases over redistributed land points to the ANC’s real objectives. Its aims are not to redress apartheid wrongs or counter poverty, but rather to turn all emergent farmers – and in time all commercial ones too – into tenants of the State. This will vastly empower the Government, while crippling the rural economy and putting an end to the private ownership of some 86 million hectares of commercial farmland.

Two bills are already in the pipeline to help secure this outcome. One is the Preservation and Development of Agricultural Land Framework Bill of 2014, which seeks to vest the ‘custodianship’ of all farming land in the State. All farmers, both black and white, will then be subject to ministerial regulation in exercising their ‘right to farm’. Such regulations could, of course, require them to enter into leases with the State on such shifting conditions as the minister may decide.

The second key measure is the Expropriation Bill, which is now that much closer to being enacted into law. This bill seeks to define ‘expropriation’ in a way that would exclude the taking of custodianship (rather than ownership) by the State. Where a taking by the Government does not count as an expropriation, then no compensation is payable under the Constitution.

If these two bills are enacted in their current forms, the Government could acquire custodianship of all agricultural land without having to pay any compensation. It would then control all farming land and would be able to lease it out to farmers, whether emergent or commercial, on such conditions as it thinks fit.

This is essentially what the Economic Freedom Fighters (EFF) demand: that the State should take custodianship of farm land without compensation and then lease it out (or take it back) on the terms that it decides. Black farmers would then again be barred, albeit on a different basis, from buying their own farms. There will be little effective redress in this situation.

The ANC is now also putting great emphasis on ‘land hunger’ as the key reason for widespread poverty and unemployment. This makes little economic sense. The agricultural sector contributes only about 2.4% to GDP and roughly 5% to employment. It is far smaller than other sectors; and is a particularly challenging sphere in which to prosper, as the current drought reinforces. In addition, South Africa is already 65% urbanised and most people want jobs and homes in towns and cities, not land to farm.

The ANC is trying to dupe South Africans with false promises of the importance of having ‘access’ to farmland (it is careful not to promise ownership). What it is really trying to do, via the Expropriation Bill and other measures, is to curtail the property rights that underpin both economic prosperity and political autonomy. Its underlying aim is to deepen dependency on the State, hobble the market economy, and advance the national democratic revolution with its ultimate socialist objectives.

No wonder Gordhan had so little to say in his budget speech about the fundamental reforms that are so vitally required to dig the country out of the economic hole that current laws have already created – and which new laws like the Expropriation Bill are sure to make worse.

Dr Anthea Jeffery, Head of Policy Research at the IRR and author, among other things, of BEE: Helping or Hurting?

Read the column on BizNews here