Letter: Land issue will inflict pain - Business Day

Ayabonga Cawe is correct in noting that land and agrarian reform is complex, and not reducible to ownership and title deeds (Misplaced fixation on title deeds is a convenient diversion, May 21). But he is equally incorrect to suggest that the nationalisation of land would not be a "disincentive to investment". He argues there has "surely not" been a fall-off in mining investment as a result of the state taking "custodianship" of mineral rights.

This is highly questionable. SA’s mining industry has taken a battering in recent years. The National Development Plan noted that mining output shrank between 2001 and 2008 — during the commodity boom — citing, among other things, "uncertainty in the regulatory framework and property rights".

 While concerns about ownership are not the only brakes on mining, they are significant ones. Moreover, as Cawe acknowledges, the ability to use land as collateral for credit is essential for "large or medium-scale agriculture", a part of the economy whose contribution to food production and security should not be underestimated.

Commercial farmers owe banks as much as R180bn, secured largely against the value of their landholdings. It is doubtful banks would continue extending credit if the land is no longer available.

Since there is no way the state could provide the sums required, it’s difficult to conclude that abolishing private land ownership would do anything but inflict great damage on the sector.

Cawe concludes that "what’s good for the goose should be good for the gander". In fact, what is being proposed has not been good for the former and will probably be worse for the latter.

Terence Corrigan
Institute of Race Relations