To understand why land expropriation without compensation threatens to collapse the economy, we need to understand the economic value chain.
All major South African banks, the International Monetary Fund, national construction industry experts, and agricultural specialists have warned the ANC against land expropriation without compensation, but what do their concerns mean to the average South African?
The answer lies in a tangible understanding of the financial consequences a Constitutional amendment would mean.
The only reason land and property are considered assets against which an individual’s worth is measured, is because they retain value through a legal framework which upholds the right to property ownership. Much like a country’s currency, land retains value because of the complex legal, financial, and economic institutions which ensure the retention and movement of wealth between generations in an economic system.
Historically, the apartheid government excluded black South Africans from this wealth by not allowing them to own land. This skewed land ownership patterns. What land claimants seek is the very same wealth white South Africans have been allowed to accrue over generations under the apartheid government.
Yet, paradoxically, the process by which they seek land restitution - a constitutional amendment - will strip land of its value.
And it will collapse the very system prospective land recipients wish to benefit from.
Understanding this crucial economic relationship with the right to land ownership is key to formulating a land restitution policy that will sustain the economic system, while protecting the value land holds.
In 1994, the ANC said: “The ANC has stated on countless occasions that nationalisation of land is not the organisation’s policy. The ANC’s official policy document titled ‘Ready To Govern’ does not even suggest nationalisation is an option.”
Fast forward 24 years and President Cyril Ramaphosa announces to the nation the ANC will push through with expropriation of land without compensation. If the ANC understood the economic implications of nationalisation in 1994, what has changed? The answer lies in the ANC’s track record of service delivery.
In 1994, it promised to redistribute 30% of commercial farmland within five years. By 1999, less than 1% had been redistributed. By 2018, 9.7% of commercial farmland had been redistributed. The national Department of Rural Development and Land Reform’s budget allocation from National Treasury has also been dismally low, reflecting a severe lack of political will by the ANC to prioritise redistribution.
Professor Ruth Hall of the Institute for Poverty, Land and Agrarian Studies has estimated that if government continues to work at this pace, current land claims would take 178 years to conclude. This has created a climate of impatience, unrest, and political dissatisfaction among previously disadvantaged South Africans and a perfect opportunity for populists to latch on to the land issue to gain prominence and power.
Enter the EFF. Julius Malema and Floyd Shivambu have touted socialist policies as South Africa’s future, using Zimbabwe and Venezuela as examples. Both countries chose to nationalise land and resources, which includes the expropriation of land without compensation. What has become of them?
Zimbabwe suffered a financial crisis and was plunged into famine as farmers fled and food security crashed. In Venezuela, the economy has flatlined. The inflation rate has skyrocketed to 1million percent, the International Monetary Fund says. The unemployment rate is through the roof. Bizarrely, the EFF seems to applaud this as “progress”.
The scary thing is, the rash adoption of a populist policy can quickly collapse an economic system beyond repair. The same legal framework which upholds the right to property ownership is now on a knife-edge with the prospect of socialist policies coming into effect. It may be fun and games to Ramaphosa, but playing with the Constitution to attack individual rights is no joke.
Venezuela has a mass exodus of citizens fleeing President Nicolás Maduro’s government as jobs have disappeared, food is scarce, and land belongs to no one but the state. This is what land expropriation without compensation will mean for South Africa. But what is the alternative?
The Constitution provides perfect guidelines to successfully redistribute land to deserving claimants while growing and protecting the economy. By compensating land owners for their land, you retain the land’s value, and make it possible to share the country’s wealth. After all, it is not necessarily the land that claimants want, but the wealth associated with it.
The Constitution explicitly provides for this process, but it must be effected by a competent and capable government. For land recipients who want to farm their land, support must be provided to ensure food security and the success of emerging black farmers as commercial farmers.
Wandile Sihlobo of the Agricultural Business Chamber and Dr Tinashe Kapuya, an agribusiness trade specialist, have both backed post-land transfer support and mentorship to new beneficiaries by means of public-private partnerships.
This is what the Western Cape government has done with land reform for agriculture, by providing skills development, expertise, and mentoring to emerging black farmers. It has a 62% land reform success rate - the highest in the country.
This process transfers land along with skills and experience to foster greater economic growth and job creation, but it must be carried out without the threat of corruption and maladministration as under an ANC government.
The land issue is the cornerstone of our future. What we need to ask ourselves: do we want each and every South African to rent land from the state for eternity, or do we want each and every South African to accrue wealth by owning a piece of their own land to leave for their children? The latter requires not a constitutional amendment, but a dedicated, capable government.
Land only equates to wealth when the legal and financial institutions remain in place to protect its value. It is pointless being allocated a piece of land, when the economy on which you rely for a job has all but dried up.
Ask the Venezuelan fleeing his country whether land means anything without an economy to sustain it. You probably won’t get an answer before he crosses the border.
* Beverley Schafer is chaiperson of the Standing Committee on Economic Opportunities, Tourism, and Agriculture in the Western Cape Legislature