Matters of land - April 2018

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Marie Antelme

Marie Antelme

Marie joined Coronation in 2014 as an economist in the Fixed Interest investment unit. She has 21 years' experience as a market economist.

All aspects of land reform are complex and emotive. Peoples’ ties to land throughout history and across geographies are closely linked to their own cultural identity and economic position, and are often fraught with periods of upheaval. In South Africa, this is profoundly complicated by our colonial and apartheid history, legacies that have always loomed large in government’s approach to land reform. In the early 1990s, even the deeply divided negotiating parties recognised the importance of addressing land ownership as a critical condition of economic and social stability. 

Land reform as a policy priority has had some successes, but also abject failures. This partly explains the calls for expropriation without compensation, but it is not the only reason. Years of poor service delivery, falling per capita GDP and widening inequality have all contributed to extreme social frustration, but the failure to distribute land more equitably is an obvious focal point. There is a political explanation, which also needs to be recognised.

The recent focus on expropriation without compensation, while critically important, detracts from the wider issue – the severely unequal distribution of ownership patterns in South Africa is undesirable and unsustainable, and has to change. However, any disorderly or confusing policy directives perceived to contest private property rights could quickly undermine both stability and growth. The enormous challenge for government now is to implement a programme of equitable land reform while containing the manner in which this is achieved.

In this short note, we cannot hope to address all the relevant and complicated issues that form part of the umbrella term ‘land reform’. What we do hope to achieve is a better understanding of the context by which the ANC came to adopt land reform as a resolution after the elective conference at Nasrec in December last year. We look at the history of the ANC’s land reform programme and offer some views on the path ahead for the new resolution.

LAND REFORM HAS ALWAYS BEEN AN ANC POLICY PRIORITY

In the early 1990s, after a number of failed negotiations, the 26 parties of the Multi-Party Negotiating Process agreed the priorities that would ultimately be the framework for the national constitution. The highly unequal distribution of land ownership was widely recognised as a key legacy of the past, and one which directly contributed to wider issues of wealth and power concentration and entrenched rural poverty. Despite this, negotiations were protracted and heated, resulting in intentionally vague wording in the final draft, which was left open to judicial and other interpretation.

The institutional framework for land reform was entrenched in the Bill of Rights in the Constitution in the ‘Property Clause’ (Section 25). This includes three rights to land – equitable access, tenure security and restitution. It provides for the protection of property rights as well as the expropriation of land for both ‘public services’ and in the ‘public interest’ for ‘just and equitable’ compensation. Land reform falls firmly in the ‘public interest’ provision and ‘just and equitable’ compensation takes into consideration the full history and use of the land in question, possibly allowing compensation from zero up to market price. The 1913 Land Act was intentionally included as the starting date against which both the right to restitution and the right to secure tenure are to be measured.

Land reform was identified as a key programme to be adopted by the incoming democratic government, with multiple objectives of delivering restitution for dispossession, driving rural development, creating jobs, raising income, and alleviating poverty and inequality. The potentially positive wider impacts of land reform were thus strongly emphasised from the outset. The ANC government embarked on an ambitious land reform programme early in 1994. It had three component programmes which were intended to be complementary:

  1. The land redistribution programme to broaden the black majority’s access to land. The target was 30% of land in the first five years.
  2. The land restitution programme to restore land to or compensate people dispossessed of land as a result of racial discrimination after the 1913 Land Act.
  3. The tenure reform programme to secure the rights of people living under insecure arrangements on land that they did not own, including land owned by the state (including former homelands) and by private individuals, including farm land.

To deliver redistribution, the Constitution provides for the state to ‘take reasonable measures’ ‘within available resources’. This is an important condition to remember, as it informs the new policy debate.

LAND REFORM UNDER THE ANC: SUCCESS AND FAILURE

Early progress with land reform was slow. From 1994 to 1999, various legislation was passed to build a consensus on land reform, and restitution claims were submitted to a deadline of December 1998. The focus was primarily on helping the poor. A total of 63 455 land claims were lodged, about 88% of which were by individuals or groups in urban areas. An audit showed that some of the claims were ‘bundled’ and this was revised up to 79 696 in 2007. By March 1999, only 650 000 hectares (less than 1% of private farmland) had been transferred under various pilot schemes aimed at funding groups of people to enable commercial operation of transferred farms. Some progress was made with early legislation to ensure security of tenure (mostly halting illegal evictions), but this then stalled and has never recovered.

During Mbeki’s presidency from 1999 to 2009 the pace accelerated. The focus shifted from meeting the land needs of the poor to the transformation of commercial farming. The land redistribution target of 30% was moved to 2014. By the end of 2009, government reported that 3.04 million hectares had been transferred to 185 858 beneficiaries. The restitution programme had settled 
75 787 claims by that time, most of them urban, and most of these saw claimants compensated for property. Some 1.5 million people benefitted.

However, problems dogged all the programmes. Official processes were incredibly slow and there was poor coordination between departments, with Agriculture and Land Affairs often passing regulations in conflict with each other. Some of the provisions in the regulations made both transfer and management of farms problematic. Grants had to be pooled to buy large tracts of land, but subdivision was not allowed. Technical support for emerging farmers was woefully inadequate and many thriving commercial farms failed. Corruption and collusion by both private and public entities were rife.  By 2009, land reform was perceived to be in deep trouble and public opinion plummeted. With the global financial crisis and domestic recession, the state had also started to run out of financial resources to fund it. A number of diagnostic investigations suggested that government had not used ‘reasonable measures’ or ‘available resources’ to their full extent or aggressively enough in delivering bigger transfers or finalising restitution claims.

The period from 2009 to date was characterised by a considerable slowing in delivery as well as a substantial increase in rhetoric and associated legislation about the importance of land reform, not least with the emergence of the Economic Freedom Fighters (EFF) in the 2014 elections. The raft of new regulations passed during this time has complicated the land reform programme enormously. Importantly, a new Expropriation Bill was introduced in 2015 and approved in 2016. It aims to bring legislation governing expropriation, currently dating back to 1975, and applicable only for ‘public use’, in line with the Constitution. It also gives clarity to the ‘just and equitable’ provision in the Constitution, which may be an elegant way of circumventing any debate about needing to change the Constitution. The Bill has not yet been enacted.

Within this context, the ANC formally adopted land reform without compensation as a resolution at its elective conference in December 2017. It is very clear that 24 years after the initial programme started, the slow pace of progress on all three programmes has been an increasing source of frustration for many people who are still landless, impoverished and extremely vulnerable. The situation is exacerbated by mounting discontent with very weak general service delivery, the very low level of economic growth prevailing over the past 10 years, falling real per capita GDP seen over the last five years and associated rising inequality.

Prioritising this more populist approach to a long-held policy also has a political aspect. First, the ANC has captured the radical rhetoric of EFF leader Julius Malema, providing the opportunity to both deliver on this priority and manage the way in which the programme is implemented. Secondly, expropriation was championed within the ANC by the losing presidential candidate, Nkosazana Dlamini-Zuma. By formally adopting this resolution, her backers have leverage over the president in terms of delivering on this policy. What we do know, however, is that this issue is combustible, and if it is not contained in a rigid policy framework, it could have severely damaging socioeconomic consequences.

WHAT IS THE LIKELY PATH FROM HERE?

Time is of the essence. Government needs to put a framework in place that can deliver effectively and transparently both land and/or title to landless people on some scale, before the process becomes disorderly. It also urgently needs to manage the parameters of how a new programme is communicated.

There is little concrete by which to assess a new approach to land reform, but there are a few things we do know. The first issue to clarify relates to the resolution passed by Parliament: in February, the National Assembly passed a motion to review the Constitutional provision for the expropriation of property (land) without compensation. This was not the original, more extreme, motion brought by the EFF, which called for an amendment of the Constitution, but rather a commitment to review the provision. This was approved by 241 votes to 83. The Constitutional Review Committee has until 30 August to report its findings and make a recommendation to Parliament. There is considerable legal debate about whether or not ‘just and equitable’ compensation could already be interpreted to include zero, but it is necessary for this to be decided once and for all.  Even a recommendation to change the Constitution may not guarantee it passes, because an amendment needs a two-thirds majority in the National Assembly, which means the ANC will need the EFF’s backing. At this stage it is clear that the two parties have very different views of how a policy of expropriation of property should look.  

Next, it is clear that any new policy will also not just be about agricultural land, it will be about all land, public and private. The state, and state-owned entities, hold vast amounts of land that can be utilised. Throughout the land redistribution programme, the state has been accumulating farms (estimates suggest 4 500 to 5 000 farms are owned by the government) in addition to urban and peri-urban land. President Ramaphosa has called for an audit to accurately identify government land which could be used to establish a precedent. In addition, inner-city absentee landlord properties and private land on which there are established informal settlements could be opportunities to invest, improve the quality of infrastructure and establish ownership.  

Government needs to strengthen the legal framework within which a new programme will operate. There are few judicial precedents of challenges to compensation policies for land transfer. Thus amending and expediting the Expropriation Bill (2017) may provide clarity and help establish some jurisprudence.

Lastly, the process needs buy-in. Both president Ramaphosa and ANC veteran Jeremy Cronin have committed to extensive consultation. It is clear that many people are angry, or frightened by the proposals, but also that the current situation is unsustainable. Clearly stating the conditions under which expropriation without compensation may be used, possibly on a case-by-case basis, could help rationalise the debate. Focusing attention on assisting the very poor and vulnerable linked to other efforts to reduce poverty might strengthen social commitment.

CONCLUSION

The critical and sensitive nature of land reform in South Africa demands strong leadership, clear principles to follow and efficient, consistent implementation with visible lines of accountability.  Should South Africa fail in this undertaking, it would leave us vulnerable to the kinds of populism that can lead to chaos.

Land restoration in practice is unlikely to be possible in all cases and it will take competent leadership, which has been sorely missing, to communicate that appropriately to communities. It is important that a moral purpose is instilled in the process as the implementation requires sensitivity and respect between South Africans of different backgrounds. In many circumstances, financial settlements are the only way to compensate people. This compensation can only come from the government given that land ownership may have changed hands numerous times over the years.

For a lasting solution, we need to recognise the different spiritual and cultural needs of South Africans to reach mutual understanding.  While the concept of land ownership is complex, speaking not only to material needs but also spiritual significances of specific land, at its heart is restoring dignity and cultural rights to our people.