Floyd Shivambu, deputy president of the Economic Freedom Fighters (EFF), is at it again. In March 2020 he hailed the Covid-19 pandemic, saying this would help put an end to ‘the capitalist logic of resource distribution’. It would also provide a pretext for the South African state to ‘build independent wealth’ (apart from tax revenues) by taking ‘strategic ownership and control of key sectors of the economy’.

Now that Parliament has reconstituted the ad hoc committee charged with amending Section 25 of the Constitution to allow expropriation without compensation (EWC), Mr Shivambu has shifted to another long-standing EFF demand.

The pending constitutional amendment, he says, must not only authorise EWC but also make the state the ‘custodian of all South African land’. This, he says, is the only way to speed up land redistribution, as ‘piece by piece repossession’ will take far too long. It is also, he claims, ‘the only mechanism that will guarantee all South Africans equitable access to land’.

But ‘access’ is very different from ownership – and provides little security of tenure to tenants of the state. This is why Limpopo farmer David Rakgase has fought an 18-year-long battle to get the government to honour its 2002 agreement to sell him the land he had long been successfully working.

The state’s agreement with Mr Rakgase was made at a time when the African National Congress (ANC), under President Thabo Mbeki, was willing to transfer title to black farmers. Since 2013, however, the ruling party has insisted that black farmers producing for the market must lease state land for a total of 50 years (30 years first, and then another 20 years) before being allowed to buy.

These supposedly long leases give tenant farmers little security, however, as they can easily be terminated before due date. Once this occurs, fixed improvements made by the tenant are generally transferred to the state without compensation being paid.

Mr Shivambu claims that security of tenure will in future be ‘guaranteed’ for ‘residential land parcels’. But this makes little sense when EFF Commander-in-Chief Julius Malema has warned that all title deed will be ‘meaningless’ once the state takes custodianship of land.

Such a shift will have devastating consequences for the country’s 9.8 million homeowners, some 7.8 million of whom are black. All these individuals will have their ownership rights replaced by 25-year ‘land-use licences’, which will be granted – or terminated – as ministers and officials think fit.

9.8 million homeowners

No compensation will be paid to these 9.8 million homeowners, for that is the whole purpose of the EWC constitutional amendment. However, people who have bought their homes on mortgage will still be expected to keep paying off their loans, which will remain in place. Also payable, no doubt, will be the new ‘rentals’ owing to the state under the land-use licences, which will add to the financial burden on erstwhile owners.

According to Mr Shivambu, there are no downsides in extending the custodianship system to land as it already working well in both mining and the water sector. 

When the Mineral and Petroleum Resources Development Act (MPRDA) of 2002 took effect in 2004, it vested all the mineral resources beneath the ground – two thirds of which had previously been privately owned – in the custodianship of the state.

Mr Shivambu implies that state custodianship in mining has worked well, but this is not so. Once mining companies lost ownership in this way, they became increasingly vulnerable to ever-escalating black economic empowerment (BEE) requirements and other policy shifts. BEE rules, in particular, have helped enrich a small and politically connected elite while greatly damaging the industry.

Major multinational mining companies have increasingly withdrawn from South Africa. Spending on exploration has dropped to some 1% of the global total, despite the country’s massive mineral wealth. Employment has diminished and the prospects for any major expansion are dim.

Permit system

In the water sphere, the National Water Act of 1998 made the government the ‘public trustee’ of all the country’s water resources. Whereas the ownership of land and the water running through or beneath it had previously been linked, now water use was made subject to a permit system and the ANC’s goal of demographic representivity in every sphere.

Mr Shivambu again implies that state custodianship of water has worked well. In practice, the new licensing system is so complex – and the skills required to implement it so lacking – that long delays are common. This deters direct investment, erodes confidence, and encourages illegal water use.

Under the state’s trusteeship, moreover, water quality has deteriorated to the point where much of the country’s scarce water is becoming unusable. ‘Non-revenue’ water – water lost to leaks or not billed for – has also been permitted to spiral out of control.

Mr Shivambu ignores these points while brushing over another key factor. If the state takes custodianship of all land, it will thus acquire not only the land itself but also all the fixed improvements on it. These include all shopping centres, all office blocks, all factories, all other business premises, and some 10 million formal homes.

But these improvements are not natural resources similar in any way to unmined gold beneath the ground or untapped water in deep aquifers. Instead, these structures have been created through the funding, enterprise, energy, and hard work of current or previous owners.

Custodianship of the state

In addition, the land itself is generally worth far less (some 10%, in many instances) than the improvements on it. Hence, even if all land had indeed been ‘stolen’ more than a century ago – which makes little sense – this cannot justify the transfer of both the land and the far more valuable improvements on it from current owners into the custodianship of the state.

Yet this is what both the EFF and the ANC seem to have in mind. Why else has the proposed constitutional amendment bill – now to be finalised by the end of 2020 – been drawn up to provide that ‘nil’ compensation may apply (in circumstances still to be specified) not only to land but also to ‘any improvements thereon’?

Mr Shivambu claims that no ‘confiscation’ will result from his proposal. Instead, he says, the vesting of all land in the custodianship in the state will be nothing more than ‘a morally, economically, and socially justifiable repossession’.

This is simply hogwash. It is particularly damaging hogwash, however, at a time when public debt is spiralling further out of control, millions more face unemployment – and the need to restore investor confidence and stimulate growth could not be more acute.

[Picture: Tom Rumble  on Unsplash]

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Dr Anthea Jeffery holds law degrees from Wits, Cambridge and London universities, and is the Head of Policy Research at the IRR. She has authored 12 books, including Countdown to Socialism - The National Democratic Revolution in South Africa since 1994, People’s War: New Light on the Struggle for South Africa and BEE: Helping or Hurting? She has also written extensively on property rights, land reform, the mining sector, the proposed National Health Insurance (NHI) system, and a growth-focused alternative to BEE.