EWC and land nationalisation are broken tools - Biznews

31 October 2018 - The warning this month against the perils of nationalisation by two visiting Venezuelan MPs serves to highlight the almost perverse attachment to the idea of state control of economic assets among some influential South Africans.

 Terence Corrigan

The warning this month against the perils of nationalisation by two visiting Venezuelan MPs serves to highlight the almost perverse attachment to the idea of state control of economic assets among some influential South Africans.

Miguel Pizarro and José Manuel Olivares of the embattled South American state’s Justice First party pointed to the impoverishment that has befallen Venezuelans as a warning to South Africa in its drive to use expropriation without compensation (EWC) as a land reform instrument.

This cautionary advice coincided more or less with an argument advanced by the National African Farmers Union (NAFU) that while EWC is not a viable option for South Africa, the solution would be to nationalise all land.

It’s hard to imagine why the latter option would be any better, either for its own constituency or for the country as a whole.

At its core, EWC is about expanding the discretion of the state. Specifically, it would empower the state to interfere in the property ownership of private individuals and businesses, by relieving the state of the duty to compensate those from whom it seized property. Exactly how this would play out is unclear, but NAFU is right to be concerned.

If nothing else, the past decade should have underlined the dangers of the misuse of government power – and the more extensive the power government has to wield, the greater the damage it can inflict.

Corruption has featured prominently – not least in the Report of the High Level Panel on the Assessment of Key Legislation and the Acceleration of Fundamental Change, under former president Kgalema Motlanthe – as a major stumbling block in the land reform process. ‘Elite capture’ of the land reform process has seen resources steered away from supposed beneficiaries.

The losers here are invariably those who would be intended to benefit the most. We at the Institute of Race Relations have investigated a number of cases where landholders – black landholders – have been deprived of their property by corrupt power brokers. Earlier this year, the appropriation of money from the Estina dairy farm project in the Free State – linked to the controversial Gupta empire – garnered headlines. Just last month, a land reform official in KwaZulu-Natal was sentenced to 10 years in prison after fraudulently benefiting from a land claim at the expense of the legitimate claimants.

A state empowered to take property without payment would be a particularly sinister weapon in the hands of corrupt officials and those whose interests they serve.

In the report ‘Black farmers want land nationalised, blast expropriation without compensation’, NAFU President Motsepe Matlala argues: ‘Expropriation of land without compensation is not practical, is not feasible, it can never be implemented and it is not going to work.’

But it’s difficult to see how nationalising South Africa’s land would offer a more attractive path.

For a start, bringing all land under state control would probably have to begin by a thunderous act of EWC. To take all 89,523,044ha that is currently in private hands into state ownership would be an expensive undertaking, and anything beyond token compensation would be unlikely. A more likely course of action would be to declare land a national asset, and take it into state ‘custodianship’, following the examples of water and mineral resources – possibly with a constitutional amendment to remove such an act from constitutional challenge.

Moreover, while concerns about corruption and the abuse of power are real, nationalisation would raise an equally – if not more – serious problem, the severe lack of state administrative capacity to manage the full extent of the country’s landholdings.

The assumption is that with the state in control, land can be apportioned fairly and rationally, in accordance with a national plan. In some quarters, this aligns with the conception of South Africa as a ‘developmental state’ – a forceful driver of economic growth and upliftment.

But this is hard to square with the realities of state intervention thus far in the farming economy – or in large parts of the economy as a whole. The state has struggled to make a success of the limited land reform it has so far undertaken. This is in no small measure the consequence of the administrative and technical incapacity within South Africa’s land reform bureaucracies.

Indeed, for a glimpse of what a nationalised land system would look like, consider land held in terms of the state’s Land Lease and Disposal Policy. Introduced to provide a framework for land acquired for redistribution, its central thrust is that such land will remain a state asset, to be leased to beneficiaries. Ownership is only possible for those having shown they can successfully farm on a large scale, and then, only after having continuously worked it for five decades.

The reality of this was laid bare by Professors Ruth Hall and Thembela Kepe in an analysis of land reform projects in the Eastern Cape. This showed that beneficiaries lacked rights (they typically lacked leases), that they received little production support and had no means to access it, that government departments failed to cooperate and that there was evidence of ‘elite capture’ and collusion between the state and powerful interests – ‘while poor families and communities who have accessed state land are left with insecure tenure and livelihoods’.

Meanwhile, once nationalised, farmers – established, emerging and aspirant, black, white, coloured and Indian, men and women – would lose the prime asset against which they raise the billions upon which investment in and operation of the country’s farming economy depends: their land. With current debt at over R160 billion, it is difficult to see where financing on this scale could be found. Government, certainly, does not have it.

Ultimately, nationalisation would represent not an alternative to the risks of EWC, but their fulfilment. Each of these would attempt to deal with the failings of land and agrarian policy by extending the reach and latitude of the state – even though the failure of the state to use its existing powers competently has contributed so much to the current land reform malaise. Neither EWC nor nationalisation offers a solution. Rather, successful land reform policy lies in choices that empower farmers, that provide them with relevant advice and financial support, and that enable them to pursue their own dreams.

Terence Corrigan is a project manager at the Institute of Race Relations. Readers are invited to join the Institute of Race Relations sending an SMS to 32823 (SMSes cost R1, Ts and Cs apply).