Since late 2017, the official response to South Africa’s land reform challenges has been to seek more intrusive latitude for the state to act – and a corresponding shrinking of the protections that private property holders have.
Expressed through the so-called Expropriation without Compensation agenda (although it is more than just this concept), it is a chilling thought for the farming economy, and for the business community more broadly.
They are correct to be concerned about the prospective impact of EWC, not only because of the threat to property rights but because it is the same questionable political elites and decrepit state institutions that have caused so much damage that would be managing it.
Yet if we accept that land reform is a worthy goal, it’s important to think about alternatives.
One of these has been offered by Johann Kirsten and Wandile Sihlobo, in a contribution run first on The Conversation and subsequently on FoodforMzansi.
Their plan is based around the mooted Land Reform and Agricultural Development Agency which would preside over a decentralised model of redistribution. The agency itself would have limited, bird’s-eye responsibilities, which the authors describe as ‘national coordination, [reducing] red tape, and [becoming] a one-stop shop for issues related to a decentralised redistribution of agricultural land’.
The real work would happen locally.
‘The central principle,’ they write, ‘is to locate the responsibility of redistributive land reform with district-level land committees. These would design locally based solutions created on the dominant farming enterprises while considering an area’s community and social dynamics.’
So far, so good.
It seems that the kernel of the proposal is that land reform can be done with minimal fiscal impact, since land will be sourced from existing farmers, who will donate it.
‘What’s being proposed,’ they say, ‘is a form of “self-expropriation without compensation” but on the terms of the existing land owner. This implies that there are no legal processes required to get land for free. It is done automatically by the current landowner and will transfer land to the beneficiary of their choice.’
Some merit
How this will be achieved is unclear. To the extent that this is a voluntary system managed by non-governmental local stakeholders, a mechanism for receiving donations of land (and finance) and passing them on to beneficiaries, it has some merit. The question that arises is whether in fact this is how such a system would (or would be allowed to) function.
If one looks at the National Development Plan’s approach – which the authors credit with inspiring their proposals – it’s clear that the land acquisition scheme may not be entirely voluntary. Local committees will be tasked with finding 20% of the land in every district for land reform purposes. It states that this can be identified ‘from the following categories: land already in the market; land where the farmer is under severe financial pressure; land held by an absentee landlord willing to exit; and land in a deceased estate. In this way, land can be found without distorting markets.’
Land thus identified would be purchased at 50% of its market value.
Kirsten and Sihlobo do not specify a proportion of land in any given district, wisely, but do seem to be proposing dispensing with payments on the assumption that sufficient donated land will be forthcoming.
However, Kirsten and Sihlobo’s proposal doesn’t explain why they believe that large amounts of land would be forthcoming on a voluntary basis. Would this be motivated by altruism, for example, or by a sense that conceding a limited portion of a farmer’s landholdings would insulate him or her against future claims? (The latter was included in the NDP’s proposals). There is certainly some anecdotal evidence of a willingness to make voluntary donations; is there something to indicate that this is scalable?
More importantly, will coercion or expropriation play a role? The NDP’s proposal implies that it would, as do the proposals of the Presidential Advisory Committee on Land Reform and Agriculture.
This seems to be an inherent risk in the idea. Having embarked upon the principle of ‘self-expropriation without compensation’, the door might be opened to adding coercive elements, ranging all the way to explicit ‘expropriation without compensation’ in due course.
Successful land reform
A consideration here is just how willing the state would be to allow the non-bureaucratic (and presumably non-governmental) route that the authors propose. The Agency would be a creature of government and, given the evidence of nominally independent bodies in the past, quite possibly a politicised one. It remains to be seen whether it would prioritise the necessary technical and administrative interventions that a successful land reform programme would need – not least because of the outsized political significance that land reform has taken on.
In response it might be argued that this would not be of fatal significance since the real work would be done locally. Their formula for the committee is ten farmers (‘all bona fide farmers: five black and five white’), who will then invite other stakeholders to join (‘agribusinesses, banks, community and so on’).
How these committee members will be selected is not explained. If the government retains some control of the process, it is all but inevitable that political factors will play a significant role. One persistent problem with land reform has been the favouring of the politically connected over the deserving. Add to this the fact that non-farmer stakeholders operate according to their own set of interests – and have not played a sterling role in resisting the move on property rights, save to secure their own interests – and bona fide farming interests might in reality end up in the minority. To their credit, Kirsten and Sihlobo are clearly aware of the dangers of politically-enabled rent seeking, but it is doubtful that this proposal could prevent it.
And this comes back to the question of land acquisition, the ‘self-expropriation without compensation’, or the ‘expropriation without compensation’ that might well follow it – identified and carried out by interests nominally in the agricultural economy, but with incentives that are not aligned with it. Where insufficient land is offered, or where what is offered is deemed unsuitable, would the committee be empowered to demand that other land parcels be acquired?
Farmers should be cautious about going down this path.
Central consideration
The Institute of Race Relations believes that land reform – in this case, in its agrarian manifestation – is something that can bring gains for South Africa. We doubt that Kirsten and Sihlobo would disagree, or that they would reject our view that a central consideration in this should be helping to bring more commercial farmers into the economy. (Indeed, they make the critical point that successful land reform will depend not only on land, but on market access and so on.)
Opening the door to expropriation without compensation would be a grave mistake. If land reform is a national programme, it is one that the country as a whole must take responsibility for.
There is also the not unimportant factor of the extent of demand for land, the geographic distribution of this demand across the country and the uses to which prospective beneficiaries wish to put it. The 20% per district demand put forward by the NDP seems rather arbitrary – and likely to be increased over time.
While land donations may serve a useful purpose, the principle of compensation in acquisition is abandoned at peril. We have proposed that these funds could be raised through reprioritising existing funds (though this would be resisted by the state, and the pandemic has in any event stressed the capacity for this), and by establishing a dedicated empowerment fund, with bonds backed by the Treasury. Tax benefits would be given to people and institutions investing in those bonds, and preferential interest rates extended to emerging farmers.
The imperative – which we are sure we share with Kirsten and Sihlobo – is to keep the farming economy functional. Indeed, to grow it and provide ever-expanding opportunities for existing and new entrants. This, we would submit, will best be done by a robust defence of the principle of property rights.
[Image: Peter Holmes from Pixabay ]
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