JOHANNESBURG - As pressure mounts around whether or not to amend section 25 of the Constitution, the questions we should be asking about resolving the land issue should also focus on what urgent steps needs to be taken to address the current challenges to ensure productive use of land.
We should ask: How can the current debates contribute towards job creation? How can we practically use land reform to improve the livelihoods of people? How do we ensure that land reform contributes to better living conditions and how to ensure that it benefits the targeted communities?
It would be amiss to move forward without addressing these questions.
Statistics show that agriculture has the greatest potential to improve the lives of people if the land issue is addressed efficiently. Unemployment in South Africa is currently sitting at 27.5%, with just over 6 million unemployed people in the country.
The agricultural sector has a strong development mandate. The National Development Plan identifies agriculture as a major driver of economic growth and job creation, estimating that given the right conditions, an additional one million jobs could be created in the sector by 2030.
Over the past five years, the agricultural sector has experienced a mix of fluctuations in job creation and job shedding, but of significance is the sector’s capability to employ many people at a time.
According to the Department of Agriculture, Forestry and Fisheries, the value of agricultural production was R218 million in 2014, while its contribution to the gross domestic product (GDP)was R69.4 m. The contribution of agriculture, forestry and fisheries for 2014 is 2.4% of the total value added to the economy in comparison to the mining industry’s value-added contribution to growth in GDP of -1.7% and electricity’s of -1% in the same year. In 2015, the agricultural sector contributed an estimated R72.2 billion to the country’s GDP.
Peter Setou is the chief executive of Vumelana Advisory Fund.
With increased production levels of grain crops, oil seeds, fruit and vegetables, coupled with better weather conditions, the potential for agriculture to contribute towards bridging the current gaps in the economy is immeasurable.
The industry’s financial position in the farming sector declined in 2015, when compared with 2014, when the industry was plagued by lower production levels in the case of grain crops, oilseeds and fruit and vegetables as a result of drier weather conditions.
In 2016, total income earned in agriculture and the related services industry was R277.6 billion compared with R250.2 bn the previous year. This reflected an increase of 10.9% between 2015 and 2016.
Despite the challenges to our economy, agriculture has remained one of the main drivers of growth alongside the mining and manufacturing sectors. The contribution of agriculture, forestry and fisheries to value added to the economy for the year 2017 is estimated at R106.4m. This represents 2.6% of the total value added to the economy. Over the first half of 2018, real value added in agriculture, forestry and fishing declined by 4.8% compared with the same period in 2017. In 2018, while we have seen South Africa enter a technical recession as a result of weak economic growth amid policy uncertainty agriculture remained one of the most important contributors to GDP.
Agriculture’s value is seen in its valuable contributions to job creation across the entire value chain. According to the National Treasury, for every R1million of extra output in the agricultural sector, the economy creates 3.9 unskilled jobs and one skilled job.
Without a doubt, the potential for agriculture to turn our economy around cannot be underestimated.
Since 1994, the government has invested more thanR60bn to fund the restoration of land to communities that have been dispossessed of their land since the 1913 Land Act. Researchers and industry participants argue that up to 70% of these projects have failed, resulting from myriad challenges, including a lack of support, a lament that we continue to hear from land reform beneficiaries; a lack of knowledge and skills; financial challenges; a lack of appreciation and adoption of good governance practices, among others. With this in mind, now more than ever it may be worthwhile to take a step back and reflect before we take another step forward.
While calls have been made to amend the constitution to explicitly provide for land expropriation without compensation, concerns remain. South Africa’s land reform programme buckles under the weight of discordant and acrimonious claim settlement processes and the widespread failure of existing land reform projects. If land reform is not addressed with caution, South Africa may easily turn into another case study of failed land reform as has been seen in other parts of Africa and elsewhere.
We must ask and resolve these questions before we forge ahead.
Successful land reform should be measured by its capability to improve the livelihoods of people, advance the communities that benefit from it and the country as a whole, increase economic productivity and create much needed jobs, increase food production and other agriculture outputs, enable the commercial viability of smallholder farmers and Communal Property Institutions (CPIs) who are the beneficiaries of land reform, and better the living standards of the majority of South Africans who still live in dire poverty.
lot of work has been done by industry experts on proposed solutions to addressing land reform; the Communal Private Partnership (CPP) as pioneered by Vumelana Advisory Fund presents one of many proven solutions to date. The CPP model enables the formation of partnerships between private parties, investors or businesses and communities that acquire access to land under the land reform programme. Here the communities typically bring their land and labour and the private partner brings capital and skills to the partnership.
Peter Setou is the chief executive of Vumelana Advisory Fund– a non-profit organisation that helps beneficiaries of the land reform programme put their land to profitable use by establishing commercially viable partnerships between communities and investors.
BUSINESS REPORT