SA aims to expropriate land without compensation

There are many issues and risks to be considered though.
President Cyril Ramaphosa during oral replies at the National Assembly in Parliament, Cape Town on Wednesday. Picture: GCIS

The ANC aims to change the constitution to allow for land expropriation without compensation to address racial disparities in land ownership that persist more than two decades after apartheid’s demise in 1994.

The following explains some of the issues and risks involved in the plan, which President Cyril Ramaphosa outlined to parliament on Wednesday.

What has the ANC done?

Spurred by the rise of the far-left Economic Freedom Fighters (EFF), the African National Congress (ANC) adopted a resolution in December to redistribute land to black South Africans without compensation. Parliament then backed an EFF motion last month seeking to change the constitution to allow for this. A committee will report back to the chamber by August 30.

Together, the ANC, the EFF and other small opposition parties could muster the two-thirds majority needed for a constitutional change, but it is not clear when, or if, a vote will take place.

What needs to be addressed?

South Africa has a history of colonial conquest and dispossession that pushed the black majority into crowded urban townships and rural reserves.

The 1913 Native Lands Act made it illegal for Africans to acquire land outside of these reserves, which became known as “Homelands”. While blacks account for 80% of South Africa’s population, the homelands comprise just 13% of the land. They are largely controlled by tribal authorities rather ordinary residents and farmers.

What has been done?

Since the end of white minority rule in 1994, the ANC has followed a “willing-seller, willing-buyer” model whereby the government buys white-owned farms for redistribution to blacks. Progress has been slow.

Based on a survey of title deeds, the government says blacks own 4% of private land, and only 8% of farmland has been transferred to black hands, well short of a target of 30% that was meant to have been reached in 2014.

AgriSA, a farm industry group, says 27% of farmland is in black hands. Its figure includes state land and plots tilled by black subsistence farmers in the old homelands.

Ben Cousins, a professor in Agrarian Studies at the University of the Western Cape, has noted there are no estimates on private transactions involving black farmers who have purchased land themselves, so the data is incomplete.

There has been a parallel process of “land claims” by individuals or communities dispossessed under white rule, but most of the settlements have involved cash paid by the state instead of people reoccupying their land, and 87% of the claims have been urban.

Politics

The 17 million people who reside in the former homelands, a third of the population, are mostly subsistence farmers working tiny plots and subject to customary law.

Critics of ANC land policy say that instead of seizing farmland from whites, such households should be given title deeds, turning millions into property owners.

David Masondo, a member of the ANC’s Economic Transformation Committee, said last week the party was considering this, but it would face resistance from traditional leaders, a key ANC political base cultivated by former president Jacob Zuma.

A proposal by a panel headed former president Kgalema Mothlanthe to dissolve the Ingonyama Trust, which controls the land in the former Zulu homeland, was condemned by Zulu King Goodwill Zwelithini. Zwelithini is the custodian of the Trust, giving him wide powers to allocate land use.

Risks

Analysts say South Africa is unlikely to follow the route of Zimbabwe, where the seizure of white-owned farms under former president Robert Mugabe triggered economic collapse, in large part because most of the new farmers lacked capital for investment or experience with large-scale commercial agriculture.

Agriculture was the backbone of the economy and so there were ripple effects, with the undermining of property rights also shattering investor confidence.

Ramaphosa has said the policy will be undertaken in a way that does not threaten food security or economic growth and the ANC’s Masondo has said unused land will be the main target.

On Sunday Ramaphosa pointedly warned against land invasions.

Still, the risks are substantial. South Africa feeds itself and is the continent’s largest maize producer and the world’s second-biggest exporter of citrus fruits.

Agriculture accounts for less than 3% of national output but employs around 850 000 people accounting for 5% of the workforce. Threats to production would also fan food inflation, hurting lower-income households.

Wandile Sihlobo, an economist with the Agricultural Business Chamber, says the farm loan book is around R160 billion, and if farmers could not repay loans there would be ripple effects across the economy.

Why now?

Analysts say the ANC wants to appeal to poorer black voters, the core of the ANC’s support, ahead of elections next year. Ramaphosa has said he aims to resolve the issue of racial disparities in property ownership “once and for all”.

The EFF, headed by firebrand Julius Malema, has made expropriation of land without compensations his clarion call.

South Africa’s proportional representation system can make small parties – the EFF only has 6% of parliamentary seats – kingmakers in tight polls. This was the case in 2016 when the EFF backed opposition Democratic Alliance officials to run key metropolitan areas including the capital Pretoria. 

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We should get clarity on the following point mentioned in the article. The Zim economy did not collapse after land-grabs because those who stole the land were incompetent farmers, the economy collapsed because the banking system collapsed.

The land-grabs led to the destruction of the collateral held by banks, which in turn caused the banking system to implode, which in turn forced the Reserve Bank to re-capitalize the system, which in turn caused the runaway printing of money, which in turn caused hyper-inflation, which in turn caused the destruction of the economy and the living standards of all Zimbabweans, which in turn caused Zimbabweans to flood to South Africa where the law protects property rights………..

Thanks Sensei, for giving a different perspective. We keep forgetting the critical role of a well-oiled banking system.

OK, I think I’ve got it. Ramaphosa is going to do a Zim on the farming industry of the country, but he’s going to chop it up under anaesthetic instead of beating it to death with a club.
What did a much cleverer man than Ramaphosa say about doing the same thing over and over again,and expecting a different result?

I feel confident that the ANC will manage EWC with the same professionalism and effectiveness that they have shown us in the past. The rampant crime, lack of service delivery, record unemployment, corrupt dictator for President, xenophobia, weak economy, exodus of skills, rape and murder, dysfunctional police-force, citizens paying for other abuse of funds, key institutions in tatters, corruption, continual infighting, habitual lying in Parliament, lawless roads, cadre deployment, misuse of public funds, racist politicians, incapable for executing, talk-shops galore, Ministers fronting for a foreign family etc. etc. I could go on but it’s getting late and you get the point.

The ANC has no economic policy other than theft. EWC is merely another aspect of this same policy.

And guess who will be first in line when the expropriated land is handed out? The cadres, of course. Who else?

The article states that analysts do not expect the country to go the same route as Zimbabwe… do these people also believe in Santa clause?

If the government assumes ownership of land on which any property is built, it effectively devalues the property value to zero. If you don’t own the underlying land, you also don’t own any property built on it. Furthermore, government officials would be in a position to instruct you to relocate to another area or control where you can stay… This all sounds like deja vu. Have we really learned nothing from history?

The other thing that one should not lose sight of is that this could easily be extended to other forms of property, like shares held in your name, retirement savings, vehicles etc. What will stop these kleptocratic government criminals from taking ownership of anything else that belong to you?

It would be foolish to think that we would somehow escape the destruction that similar policies have caused in other countries… Zimbabwe included.

SA is a Zimbabwe in “slow motion”. Much larger ship to sink. Will also take a generation or two…I recon the children of this country born after say 50 yrs from today, will not realise what this country had today & what it could offer them.

Natural ‘progression’ after colonialism is defeated on this continent. Have to happen. No use resisting it. Enjoy SA while good life lasts. But colonialism is still present in SA…”we” the non-indigenous people are still here. It will evaporate / go into less significance after passing of a generation of two. Give it time.

Not that I care too much, most of us won’t be here in any case. Structure your investments / personal wealth accordingly. Hopefully cryptos would be fully mature by then & wealth is more movable…

The question is; Why ‘without compensation’? Then there is also the glaring issue of the large number of farms on the market and available for purchase right now – many below market value due to the drought.

If the government expropriates all the land (including urban areas) this will mean that as owners they will be liable to pay municipal rates. If these are not paid (which they won’t be)then we will see the collapse of all the municipalities and the services (such as they are) they provide.

I had the very same thought, but then realised that in the race to re-embrace the apparent wonder that was Feudalism (ironically a European concept), we will all become tenants that will pay rates on the buildings and rental on the land. I guarantee that no financial loss will be tolerated on that front.

This will always be an emotionally charged debate, which resolves nothing and leaves us devided on soapboxes each in our opposing corner, wagging an AK47 or a vierkleur.

We seem to forget the ‘unity is strength’ we grew up with.

This however requires a commercially viable and long term solution.

I am no agri-economist or politician, but I have seen the worst of this in my life, not only from our northern neighbour who did the same, but also since the early 2000’s, when the previous land claim/land redistribution in the agricultural sector failed dismally.

Our aim should be real empowerment and value creation.

There is little value in giving someone a piece of developed agricultural land, pat him on the back and walk away for him to farm on the same basis as the previous owner, who probably farmed on the same land for generations, has a credible track record with banks and other financiers, etc.

This is merely the same as giving a hungry man a cookbook.

During the previous land distribution with compensation exercise, land was claimed, taxpayers money used to fund the purchase, handed over and everyone sat back and thought things would miraculously turn out well.

In practice, the previous owner received a substantial payment (taxpayer funded), sufficient for him to retire.

The new owner, however, once he passed the euphoric state of his new ownership, soon realised he is unable make this a success or lived in denial whilst everything deteriorated.

As remedy, the previous owner approached him to farm on his behalf through a management agreement or pure rental, which usually happened too late and left banks with deteriorating collateral and material impairments and also write-offs.

The only winner was the previous owner.

Sustainable agricutural development requires scale, and this idea that one can feed many from a 1ha patch of land with goats and chickens and a pumpkin and potato here and there, is misguided and borders on stupidity.

This is not empowerment and makes no commercial sense.

The exercise should, as previously stated, focus on commercial long term viability to ensure we empower and feed the nation.

This requires cooperation between existing owners, the perspective new owner, banks and financiers and Government. Formalised and planned cooperation works.

Not lip service and pretty PPT’s that show how well this could work and how many tracts have transferred.

Ideally, a commercial farming operation can initially be co-owned by the existing and new owner – 60/40, 51/49, whatever works.

This gives banks and financiers comfort that skills are retained to maintain value and cash flow.

This also gives the existing owner an opportunity to transfer skills and the new owner to acquire them, build credibility with banks and financiers, and really become empowered.

Ownership from the existing owner is exited through profit participation over a viable period of time, i.e., myself as ex owner and now co-owner, receive payments over, say, a 5 or 10 year period while my shareholding dilutes.

This can all be fancied up with call options or put options or whatever mechanism is required to support value preservation through step-in, etc.

This can also be supplemented via a practical and commercially viable management agreement.

Once all parties are comfortable (banks and finansiers included), final ownership can transfer.

If our new leader can execute this on a basis similar to this, we can empower people, feed people, satisfy ratings agencies and protect stakeholders like banks, etc.

100% agree. This is the same with any form of transition, it takes time and structure. Unfortunately, the motivation behind this prohibits both as the elections are looming, and this is the entrance fee for votes.

Let be honest the problem is poverty and not land. 95% of whites also do not have farms but are more content since they live in less poverty. Also evident in restitution cases where 85% prefer cash to land. Question is will confiscating land reduce poverty?

Nope…it wont reduce poverty.

(…but the idea will bring more votes to the ANC in 2019)

The motion on land expropriation is a political masterstroke by the ANC (at a cost to the country) – It brought about the following:

1 It removed the ANC/Zuma/State Capture destruction off the agenda.

2 It pre-empted the EFF’s policy on land.

3 It split the DA EFF town councils.

4 It caused divisions with-in the DA.

However, it shows the ANC learned nothing from the Zim disaster and that the ANC first vote on a motion, then try to find out what it is about – both showing up the ANC as not a very clever organization.

My take is nothing will happen to general land and that former homelands might be privatized after the election.

…well, perhaps the ANC is extremely clever.
And they’ve LEARNED A LOT from Zimbabwe…especially for a ruling party to STAY IN POWER, even when there are worsening economic difficulties for the general population.

ANC = Zim ‘copy & paste’

Zim tanked economically…yet Zanu-PF remains in power. That is WHAT COUNTS in African politics. The elite stay rich & that is good enough.

Very simplistic. But reality.

“David Masondo, a member of the ANC’s Economic Transformation Committee, said last week the party was considering this, but it would face resistance from traditional leaders, a key ANC political base cultivated by former president Jacob Zuma.

A proposal by a panel headed former president Kgalema Mothlanthe to dissolve the Ingonyama Trust, which controls the land in the former Zulu homeland, was condemned by Zulu King Goodwill Zwelithini. Zwelithini is the custodian of the Trust, giving him wide powers to allocate land use.”

So what he is saying is that it is ok to take land from whites with no compensation, but we don’t want to give 17 million people the deeds to the land they already live on and work, because “we will face resistance from traditional leaders.” In saying this he admits that this has nothing to do with emancipating the poor of this country, but it is solely about politics. A handful of scared politicians are willing to sacrifice this country in order to keep their cushy jobs and proceeds of corruption. Disgusting.

Also, they allow a person, who has never received a single vote in a “democratic” country, to do as he will with large tracts of land, and the people living on it.
I will bet my bottom dollar that that is not what people like Mandela fought for.

End of comments.

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