What Ramaphosa really thinks about EWC - BizNews

23 May 2018 - What Mr Ramaphosa said at the ANC’s land summit held this last weekend should put paid to any lingering hopes that the president is trying to defeat the EWC idea.

Dr Anthea Jeffery*

Many people have been hoping that President Cyril Ramaphosa is ‘playing a long game’ on expropriation without compensation (EWC). They believe that he opposes it, but has to move slowly in isolating the radicals within the ANC so that he can ultimately neutralise the organisation’s decision, taken at its Nasrec national conference in December 2017, to endorse EWC.

However, what Mr Ramaphosa said at the ANC’s land summit held this last weekend should put paid to any lingering hopes that the president is trying to defeat the EWC idea.

As Mr Ramaphosa put it, there was earlier some division within the ANC on the EWC proposal, but the organisation has now put these disputes behind it: ‘We are all at one in agreeing that, yes, the land will be expropriated without compensation. We may be divided on a number of other things, but not on this one.’

All that party members have yet to agree is whether Section 25 of the Constitution should be amended (when EWC can be achieved under ordinary legislation) and ‘whether all land should be nationalised’.

A belief in the president’s supposed long game has persisted up to now, despite the statements that Mr Ramaphosa has made from time to time in support of EWC. At one point, for example, he claimed that EWC would help usher in a ‘garden of Eden’. At another time, he suggested that EWC was urgently required because black South Africans own only 4% of agricultural land (as supposedly confirmed by the state’s most recent land audit).

In addressing the land summit, Mr Ramaphosa made a number of equally fallacious claims. These have no foundation in fact, but are clearly intended to blow smoke in people’s eyes and hoodwink them into believing that EWC will be good for the country and its people.

The president began by resuscitating the land ownership figures that applied for much of the apartheid era, and then implying that little has changed since then. Mr Ramaphosa spoke of 87% of land having been reserved for the white minority, while only 13% had been made available to the black majority under the Land Acts of 1913 and 1936.

The EFF are still threatening to colonise farms. More brilliant cartoon work available at jerm.co.za.
This land injustice is real, but to suggest that the 87:13 ratio still applies is to ignore the land long held in state ownership, the additional land bought by it for land reform purposes, and the private land purchases made by black South Africans since the Land Acts were repealed in 1991. It also overlooks a comprehensive land audit recently conducted by Agri SA and published in November 2017. This audit put the total amount of land owned in 2016 by the government and ‘previously disadvantaged individuals’ (PDIs) at 43 million hectares or 35% of the country’s land area.

The audit also puts the total quantity of farm land owned by the state and ‘PDIs’ as 25 million hectares or 26.7% of the total. Taking land potential into account, it puts the proportion of agricultural land owned by the government and PDIs at 46.5%. (This is largely because the land long held by black people in customary tenure is clustered in the fertile, well-watered eastern areas of South Africa.)

Mr Ramaphosa then went on to say that ‘when you return land to those who were forcibly disposed, you unlock its real economic value’. This overlooks the fact that that land is only one out of a host of factors needed for success in farming. No less important are experience and entrepreneurship, along with working capital, know-how, machinery, labour, fuel, electricity, seed, chemicals, feed for livestock, security, and water.

This list helps explain why so many land reform projects have failed. As former land reform minister Gugile Nkwinti has himself acknowledged, at least 73% of restored land has fallen out of production. In all these instances, the return of land has neither ‘unlocked its real value’ nor done much to benefit its recipients.

Mr Ramaphosa then went on to say: ‘To our people, indeed to all people, land is about dignity, it’s about identity, it is about security’. However, there are many small and prosperous countries where land is limited and most people cannot rely on it to get ahead. Singapore, for one, is a tiny city state, but its average annual income per capita – from enterprises generally unrelated to land – far exceeds that of many land-rich countries.

In South Africa, moreover, people will not have their ‘dignity’ enhanced if EWC results, as is likely, in increased poverty, joblessness, and hunger. There will also be little ‘security’ for ordinary citizens under EWC, for land will then be vested in the state and will be used by it as a patronage tool.

Mr Ramaphosa also stressed that the country’s assets, including its land, have always been owned and controlled in a way that has ‘prevented the extraction of their full value and potential’. EWC, he suggests, will reverse this for the benefit of all.

Apartheid was, of course, a massive brake on the economy. So too, however, is the ‘national democratic revolution’ (NDR) which the ANC and its communist allies have been steadily implementing since 1994.

The aim of the NDR is to take South Africa, by gradual and implemental steps, from a predominantly free market economy to a socialist and then communist one. The ANC thus has little interest in the success of the free market. Since it came to power, it has been intent on hobbling the market economy and preventing it from delivering the inclusive prosperity that Singapore and other economically free countries have been able to achieve.

The current EWC proposal is integral to the ANC’s long-term NDR goals. EWC is not about providing redress to black South Africans for past land injustices. Nor is it aimed at transferring ownership and control from white to black South Africans, as ANC propaganda constantly suggests. Rather, the real goal is to transfer the ownership of land and other key assets from private holdings to the state.

Once land and other assets are vested in the state, they are hardly likely to become more productive than they are at present. Far from (magically) starting to deliver on their ‘full value and potential’ (as Mr Ramaphosa says), they are likely to prove as inefficient, corrupt, and cash-strapped as Eskom and other state-owned enterprises.

Will either ‘Ramaphoria’, or the widespread belief in the president’s long game against EWC, still persist, despite the president’s weekend statement that ‘we are going to take land and we are going to take it without compensation’?

Perhaps it will, for some commentators seem to assume that Mr Ramaphosa has now convincingly demonstrated the economic gains to be made from EWC. The rand reacted badly, however, dropping from R12.50 to R12.80 to the dollar in response to Mr Ramaphosa’s comments. Many South Africans might still want to cling to Ramaphoria, but the markets are not so easily convinced.

Dr Anthea Jeffery is Head of Policy Research at the IRR, a think tank promoting political and economic freedom.