Government’s land reform is flawed

The main task of any government must be to allocate the funds available to it efficiently and prioritise those policies that will most benefit the country and its inhabitants, both in the long term and the more immediate future.

In South Africa the yawning gap between rich and poor must be closed as soon as possible and this can best be achieved by creating more employment at wages that allow a reasonable standard of living. The keys to this are better education at all levels, an effective infrastructure development programme and labour law changes. Unfortunately, whilst these policies still limp along, the government is intent on wasting millions on land reform, arguing that land is a key element in levelling up the uneven playing field.

To accelerate the land redistribution programme, the government intends to abandon the (objective) “willing buyer, willing seller” market value . This concept is used universally for most property valuations and accounting purposes.

Rural Development and Land Reform Minister Gugile Nkwinti is quoted as saying that the “willing buyer, willing seller” basis of valuation often leads to prices in excess of market value, which is akin to saying that market value is not really market value!

The definition now to be proposed will be a subjective one, dependent on what it is “just and equitable” for the government to pay. This price is to be determined by a new authority, the Office of the Valuer General, whose valuation will be subject to appeal to the courts.

This is nothing but an attempt to appropriate land at prices less than the market would be prepared to pay. Obviously, this proposal not only shows an ignorance of all established principles of valuation but also is unlikely to be in accordance with the constitution.

The minister’s own figures showed that over 93 percent of the beneficiaries of land restitution have opted for financial compensation rather than having their land back, which is not surprising, since most of the previously disadvantaged see their future in urban surroundings and not on the land. Recent statistics show that farmers are not earning great profits and are struggling with the competition from other countries.

Unfortunately, the government turns a blind eye to all this in its attempt to drive white farmers off the land and divide farms into smaller units, irrespective of the outcome for the country’s food production and even though at best only a few of the previously disadvantaged will benefit.

Land ownership is a very emotive issue that can easily be used for vote catching and often attracts ideological arguments that ignore the likely economic outcome of what is being proposed.

Even the secretary general of the ANC recently criticised black economic empowerment (BEE), saying it would only create millionaires and billionaires. It has taken almost 10 years for the ANC to accept that BEE is a failed policy. Let’s hope that it doesn’t take the government 10 years and wasted billions to realise that its ideas on land reform are just as badly faulted.

Dr John F W Morgan

Mossel Bay