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It’s not just about soil, it’s about our economy

We must tackle this thing as a nation before we get an all-or-nothing zero-sum policy, says political analyst Ralph Mathekga.

RYK VAN NIEKERK:  Over the past few years Moneyweb and Brenthurst Wealth have presented the ‘SA Quo Vadis?’ series of seminars around the country. These seminars analyse the key challenges facing South Africa and their impact on your money, investments and retirement. This year’s series kicks off on June 18 in Pretoria. The core theme is Land Expropriation Without Compensation – Your Money, Your Business, Your Property.

Political analyst Ralph Mathekga is on the line. He is also one of the keynote speakers at this event. Ralph, welcome to the show. What are your broad views on this new policy and how it affects the perception of our economy in South Africa and abroad?

RALPH MATTHEKGA:  Thank you so much for inviting me. I think if you look at the language that is being used to express different positions about this policy of land expropriation without compensation, it is not the language of concession, it is not the language of the consensus. People have already taken a position and I think that what this says is that we seem to be shifting south from consensus as we try to find policy solutions to some of the problems that we have in our society.

What makes things even more difficult is that the ANC has already taken a position on this, and the party is trying to consult after taking a position. That has actually muddied the waters in a manner that people are no longer feeling that whatever contribution they make to this will actually contribute towards the final policy.

So it has not been handled very well, and unfortunately it’s an indication of tensions that we see in our policy environment. My fear is that we seem to be moving in this direction of all-or-nothing, a zero-sum approach to policy, instead of finding concessions and being practical and finding things that can actually work for this country.

RYK VAN NIEKERK:  Is it not just purely politics. There seem to be some divergent views within the ANC, and this could have been a concession made by Cyril Ramaphosa during the policy conference in December last year, where he was elected ANC president. That also muddies the water if it is perceived as being mere inter-party politics.

RALPH MATTHEKGA:  It is politics, but unfortunately it has substantive implications. When the ANC went to the Nasrec conference they took this position, and what actually escalated things is when the ANC in parliament after the Nasrec conference used their majority to pass this motion, which was an EFF motion. So one could say that it is actually politics, it’s all about talks going into the election.

But I think that would be naïve in the sense that we know that there is one political party that is actually implementing this as you and I are speaking. We know the EFF has been encouraging people to occupy some land. We do have protests that have engulfed the country and quite often they seem to result also in land occupation.

So this has a negative [effect] on investor confidence in the country. What investors usually ask when they come to the country is: “Who is in charge?” – and at this point one cannot say the ANC is in charge here when it comes to this issue. The party has lost the narrative altogether, and I think if there is anyone who is in charge on this, it seems to be the EFF, the party that has less than 10% of the electoral vote, and I think it is holding the ANC with 62% of electoral vote to ransom. This is very, very strange.

RYK VAN NIEKERK:  But what do you think the outcome will be? Surely if that scenario is true, it is not sustainable?

RALPH MATTHEKGA:  It is not sustainable, and I think what needs to happen is that the ANC needs to try to get the EFF back to the table, and talk to the EFF about various methods that maybe could be used through the formal processes of implementing this. I mean, the resolution that was taken by the ANC also says that this should not be at the expense of food security or the economy. That is a very powerful disclaimer that the ANC needs to make the EFF aware of.

But the problem is that there is a growing mistrust between the ANC and the EFF on this. The EFF does no longer trust that the ANC actually wants to do this. They have stated that the ANC is making an about-turn on this; we have had the EFF MPs speaking about this, the expression they’ve used in parliament about this. We need to retain the nuances and I think it is the responsibility of the ANC to get the EFF back to the table about this so that we can avoid what we are seeing – this land occupation.

RYK VAN NIEKERK:  What do you think is the role of the private sector? Do you think they are vocal enough?

RALPH MATTHEKGA:  I think that the private sector should have a role to play because this is not just about land as 24 hectares or 2 000 hectares, but it is about private property as a medium of exchange, as collateral to some of the financial transactions that have taken place in the country. And the private sector knows exactly how much land is being held as collateral to some of the finances and instruments they’ve had to issue out.

So from that point of view it’s not just a question about 10 hectares, it’s not about 20 hectares, it is about the importance of how this is going to affect property as a medium of exchange, and I think the private sector should have a say when it comes to this. And indeed no doubt I’m quite critical of the private sector where I think criticism is due – that they may have not taken a strong position under Mr Zuma’s past administration. But I think this is the issue – that they to take a moral position. They cannot just say yes or no. We don’t need a referent among this, but we need actual nuances. The private sector should actually be part of this debate and tell us the implications of this policy on the economy and on the importance of property as collateral, as a medium of exchange in a market economy.

And we also need innovation. I believe that there should be a space for innovation regarding how to go about this without necessarily hurting the economy. We have achieved a lot as a nation. We defeated apartheid. I think we can get a sober conversation on this and allow innovation and tackle this thing as a nation.

RYK VAN NIEKERK:  I agree with you, you know. Innovation is key and land reform is key. We are 20 years into democracy and land reform is still not implemented, or is still in the early stages of implementation. And land expropriation without compensation is not an innovative solution. To the contrary. It’s actually a very blunt policy to hide the bureaucratic and administrative failures.

RALPH MATTHEKGA:  Exactly, exactly. It’s not innovative at all. I mean, there is one part of this discussion that you are not talking about. We have centred our discussion of this on the historical aspect of retribution. It’s a question of historical injustice. Fine, we should not confuse things. If we are talking about historical injustice, we should also attend to the question of the economy in the manner in which we have handled this land expropriation … so far, how strong is the economic element? Are we allowing this process – if we are going to undertake this process – to make sure that we ensure inclusion of the majority of people in the economy? This is where innovation is required. But the manner in which this has been cast, as either you are for it or you are against it, without any nuances, without an opportunity for innovation, is not going to actually help us deal with the economic impasse of high unemployment that we have. We should try by all means to use any social policy that we have in our country to try to get economic benefit from it.

RYK VAN NIEKERK:  Well if you look at the investment industry, everyone who contributes towards a pension fund or any retirement annuity is being affected by this policy uncertainty. It has a negative impact on investor confidence as well as investment performance. Do you think there’s an appreciation within the ruling party and the EFF that there is a big opportunity cost to this policy?

RALPH MATTHEKGA:  I think that the ANC had a plan to manage the EFF. The manner in which I look at this thing, when they hastily adopted that motion in parliament, their plan probably was to say we will manage the EFF. If you listen to the ANC carefully, it appears to me that now the reality is catching up with them. They are being aware that this thing really reverberates beyond just land.

It’s not just about soil, but our economy. We live in a very complex market society where, if you do something wrong in what you might consider to be a very remote aspect of life, it ends up affecting other lives. It’s going to affect the savings that are out there, it’s going to affect the value of South Africa’s bonds and so forth, because it’s all about property.

Again, it is also about contractual obligation. Suppose, for example, that someone put their land as collateral five years ago and they have been able to attain funding and their payment term is 20 or 30 years. That is a specific contractual obligation. How then do you deal with that? Are you saying in South Africa that we are … frustrated with our social problem, we are going to renege on some of our contractual obligations? So I think we need to appreciate that. But the ANC I think are realising how much in a fix they find themselves on this and I think that either they are going to completely have to distance themselves from this or come up with a way in which they bring the nuances and allow for innovation, and make sure that indeed this is not detrimental to the economy and food security.

RYK VAN NIEKERK:  Thank you Ralph.

Ralph Mathekga is founder of research and consulting firm Clear Content.

Brought to you by Brenthurst Wealth.

The Quo Vadis Series kicks off on June 18 in Pretoria at the CSIR Conference Centre, and then on June 19 we are in Johannesburg and on June 21 in Cape Town. Ticket prices range from R350 to R450, and tickets are available at Quicket.co.za. For more information just search for “Brenthurst”.

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“So one could say that it is actually politics, it’s all about talks going into the election.”

Of course it’s all about politics and vote-bribing! Let’s try and think like business people here: your retail chain is losing custom to the opposition who have better service, better trained salespeople, more efficient and faster deliveries and so what do you do?

You get your staff to go out at night and firebomb the opposition stores.

Because you are incapable of stepping up your own business to compete locally and internationally. And in what way will this increase your profit margin once you have bombed and looted all the opposition stores?

This is primarily an urban not agricultural issue. A start would be to simply give those squatters the land they now currently occupy, provided they are SA citizens (they are not going to move off unless given better) and pay off the private owner (if privately owned) at market rate. Now use GPS technology to map the site and allocate each dwelling a unit reference and GPS co-ordinates so that each shack/dwelling has a two meter boundary. Build an online data base of the site so that it is accessible with an app on a smart phone. Now everyone in the settlement can see from an aerial graphic where their property is and now transfer the electronic title deeds to them and educate them in accessing the data base.

They now have a transferrable asset which they can borrow on or sell on the “electronic market” thus avoiding the mess that the title deeds office is in. This could be seen as an Alternative Exchange as operates on the JSE.

Finally they should now understand that as property owners they MUST pay an amount towards services which they now demand for free.Once again an electronic account data base would be accessible online – perhaps this would finally be a practical use of the blockchain software. This can be as low as .50c a square metre. If they do not want to pay, it will be noted on the credit rating network. No new account at Mr Price!

People HAVE to be brought into the formal economy and this would be a rational start. Not tho mention the billions of rands of free-floating cash in the informal economy out there which eventually needs to attract tax. We have the technology to do this and we could develop the world’s first online informal property ownership data base.

Comments?

Excellent analysis. When Cyril was elected he faced a threat from Zuma supporters. He also faced a threat from the EFF on his Left. He seems to have been so worried about neutralising Malema that he ignored the reaction from the centre, investors, and the Right, and has placed the economy in a precarious position.

The idea of turning the population to collective agriculture was tried in China (Great Leap Forward) and Cambodia (the Killing Fields), and led to massive famines and repression. It is unspeakably stupid to entertain this idea in 2018.

Work certainly needs to be done to end the enduring legacy of spatial apartheid in urban areas, but even there, the ANC has failed miserably, allowing inner cities (prime property, albeit declining, at the time that they came to power) to become slums.

In Johannesburg, Hillbrow, Joubert Park, and Alexandra (all situated well within the urban core, and in prime positions) are not exactly shining examples of the ANC’s ability to manage high density urban development.

The ANC needs to get back to basics, to sort out its inability to govern, and to deal with the existing land claims backlog before it tries to embark any “Hail Marys”. They had 24 years of unassailable majorities in Parliament, and they couldn’t do it, instead floundering about with a quiet dictator and AIDS denialist, followed by a keleptocrat while presiding over a terminal decline in state capacity. One has little hope that they’ll succeed before the 2019 elections.

Just as it is impossible to be only 5% pregnant, asset security — with the ability to defend one’s ownership in an independent court of law — is an all or nothing issue.

SA already struggles with a low “ease of doing business” (Kenya and Mauritius are already cannibalising “our” gateway to Africa role), low productivity, distance from major markets, droughts, crime & grime, Adding political risk merely undermines our ability to attract international capital, especially the long-term stable kind we need.

Further, people invest in farms, homes and businesses when they can pass the benefit on to their children and grandchildren; creating a short-term “expat mentality” amongst a section of South Africans (and augmenting the brain drain) is the best way to undermine the economy.

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