Cape Town - Two Saturdays ago the DA, usually labelled as a party of the affluent middle class, presented by far the most viable set of policy proposals for uplifting the poor that have been put before the country.
Yet it received negligible reportage in the mainstream media, which I find troubling. There seems to be a strange and mutually reinforcing antagonism between the leadership of the main opposition party and the mainstream newspaper editors, which is not in the interests of either and certainly not of the country.
The proposals were put forward by Mmusi Maimane, the DA’s rising young star and its candidate for the premiership of Gauteng, which is likely to provide the most interesting contest in the May 7 elections. He did so in his presentation of the party’s election manifesto at a rally attended by about 8 000 supporters who overflowed the big Standard Bank arena at Johannesburg’s Ellis Park.
Of the major Sunday newspapers, only the Sunday Times ran a terse 15cm summary of Maimane’s key points the next day. Business Day, whose editor has often complained that he doesn’t know what DA policy is, ran nothing on the Monday. I saw none of my fellow media analysts at the rally.
The centrepiece of Maimane’s manifesto was that the DA would give the black people of Gauteng the homes they are living in and the title deeds certifying to their legal ownership of their properties.
The implications of this are potentially transformational for our society. Only a small percentage of the millions of the black population of this country own the properties they live in, and even fewer have title deeds. Which means the properties are of no capital value to them. They are what economists call “dead” capital, not useable as economic assets.
What the DA is proposing accords with a doctrine propounded by the world-famous Peruvian economist Hernando de Soto, who contends that giving these assets economic value is the most effective way to leverage the poor out of the subsistence economy in which they are trapped.
It is a thesis I have supported ever since reading De Soto’s seminal book, The Mystery of Capital: Why capitalism triumphs in the West and fails everywhere else. In it, De Soto argues that an economy cannot progress beyond the stage of a simple subsistence economy when there is no formal system of owning property.
Developing countries, he points out, don’t have such formal legal systems to secure property rights. People live under various systems of “informal ownership,” where there is no formal certificate to show that the land legally belongs to them.
Therefore they can’t go to a bank or other financial institution to raise a loan to start a small business or other enterprise to start leveraging themselves into the market economy. They have no collateral, so they are stuck at the bottom of the economic ladder. They can’t even sell the property on a formal property market, which is why there are no estate agents in black townships.
De Soto’s solution is to give them the properties they are living in along with title deeds to certify to their legal ownership. Informal ownership must be made formal, then it will be easier for the people to get credit and start climbing the ladder.
That, De Soto argues, is the way the developed world reached where it is today. Secure property rights are what he calls the “hidden architecture” of modern economics.
The ANC, for all its claims to be the party of the people, has failed dismally to provide this architecture. It talks endlessly about the need for land restitution to redress the 1913 Land Act which prohibited black people from owning land, but it says nothing about urban land, which is vastly more valuable than the farmland which is the ANC’s focus of attention.
There were a handful of black townships with freehold property rights in the pre-apartheid era, notably Alexandra on Johannesburg’s northern outskirts – where ANC stalwart Walter Sisulu once ran an estate agency – and Sophiatown, in the heart of suburban Joburg. But the apartheid government nationalised that land (without compensation), bulldozed Sophiatown and placed Alex and all other townships under the Department of Bantu Administration and Development.
After coming to power, the ANC incorporated all black townships into its new system of extended town and city councils – which effectively became the new landlords. For the most part, the residents of those townships have what De Soto calls “informal rights.” Only a handful have title deeds. So most black people can’t use their homes as collateral to start small enterprises, as white South Africans can.
That is what keeps them down. It is why we are failing to build a class of small entrepreneurs in the black community, so desperately needed if we are to narrow our disgraceful wealth gap. To its credit, over 20 years the ANC governments have built several million RDP houses to accommodate the homeless. But again, few of their occupants have title deeds.
In fact the recipients of RDP houses have to occupy them for eight years before they qualify for ownership. During that time they are not allowed to sell or rent them out. Of course many do – up to 90 percent in some communities – because of a desperate need for money.
In those cases the tenant or new owner becomes an illegal occupier, subject to eviction even if he has paid an informally agreed sum to the original occupier. There is no title deed to certify to the legality of such a transaction.
This is what Maimane is talking about. He has ascertained that there are 220 000 homeowners in Gauteng who don’t have the title deeds to which they are entitled – and would have if they were white. What an irony!
Maimane has pledged that if he is elected premier of Gauteng on May 7 (and it will be a close contest), he will ensure the prompt issue of all those title deeds. Calculated on the common rule-of-thumb of eight dependants per household, that would affect the lives of 1 700 000 people in Gauteng alone.
Maimane made several other innovative policy pledges:-
Altogether, Maimane said, the ANC provincial government had squandered R6 billion on wasteful and irregular expenditure over the last financial year – more than enough to fund all his projects.
It was a tour de force.