South African citizens and global investors have reason to cheer President Cyril Ramaphosa’s recent statement in the Financial Times (‘Land reform in South Africa is crucial for inclusive growth’, 23 August) that under his leadership the “intention is to unlock the economic potential of land” in the country. We at the South African Institute for Race Relations have been making the case for doing just that since the darkest days of apartheid – but a fait accompli this is not.
Ramaphosa’s African National Congress has proposed amending the 1996 constitution’s protection against arbitrary dispossession by the state. The proposal was tabled by the hardcore Marxist and race nationalist minority party, the Economic Freedom Fighters (EFF), who repeatedly use the rhetoric of genocide as a bargaining chip in political negotiations. Ramaphosa’s attempt to succour rather than censure the EFF is only one reason for ongoing concern.
In his submission to the Financial Times, Ramaphosa claimed that one of the most “devastating” obstacles to economic growth is a racial disparity in land ownership. He thinks empowering the executive branch to get more involved by expropriating white-owned land without compensation will stimulate economic growth. This is the wrong cure for the wrong disease.
If the major economic challenge in SA really was wealth inequality along racial lines, agricultural land would be the last place to start, as it accounts for just 2% of GDP. Rather, Ramaphosa would be going after the mining sector and banks –which, incidentally, is exactly what the EFF (with 6% of the national vote) calls for.
But this is not the major economic challenge, as demonstrated by the near tripling of black dollar millionaires between 2007 and 2015, which approaches the shrinking number of white millionaires according to one study. Or, at the lower end, as demonstrated by the black middle class surpassing its white counterpart by 2017.
One basis of Ramaphosa’s misdiagnosis is a recent state land audit that cannot be trusted. It is riddled with typos, and tables that simply don’t add up. It also contains anomalies that suggest the auditors, whose database is a state secret, were biased.
Consider the Northern Cape, a province the size of Germany with a population one fifth of Bavaria. According to the state audit, 5% of white urban land owners own their land in this province, but this supposedly makes up 42% of white-owned urban land throughout the country. Furthermore, the Northern Cape makes up 2% of the population, but 21% of total individually owned urban land in the country, according to the audit. It would be easier to believe that one fifth of German urban land is in the lesser known province of Schleswig-Holstein.
Were it not for this anomaly, the audit’s headline might have been that black South Africans, previously banned from owning urban land, now own a larger share of urban land than any other race, while white ownership reduced swiftly to 38%. This would have indicated the dramatic change in ownership patterns in the landed property arena most directly backed by title deeds and shaped by the free market. The Northern Cape is an arid dust bowl that somehow obstructs this urban free-market progress. So long as the state refuses to offer an explanation for its anomalous data, one can only assume that auditors cooked the books to spice their own agenda.
Based on the audit, Ramaphosa made this claim: “Agricultural land ownership by race: 72 per cent of farms and agricultural holdings are owned by whites, 15 per cent by coloured citizens, 5 per cent by Indians, and 4 per cent by [black] Africans.”
Even the unreliable audit discredits that. The figures are derived only from land whose ownership could be verified by race, a mere one third of total rural land. So, at most, the audit shows that whites own just less than three quarters of one third of rural land, a detail the president brazenly obfuscates.
Ramaphosa’s deception runs deeper than numbers. He rightly noted that apartheid coerced millions of hectares of potentially productive land into the agony of dead capital. However, he failed to acknowledge that a) the party he now leads has maintained the policy according to which 17 million or more black South Africans live without title deeds in their “places of birth and burial”, b) another 5 million live without title in houses built for them by the state, and c) Ramaphosa and his party kowtow to hereditary tribal lords who subject their folk to vassalage by extracting annual rents on state-owned land.
But the numbers matter, too. The president wrote that the state owns “10%” of all land in South Africa, while even the unreliable audit indicates that nearly 23% of the total extent is owned by the state. This is more than all land claimed to be owned by whites.
Ramaphosa further found it unremarkable that black people have been subjected to arbitrary dispossession in the former “Bantustans” for years under his own party’s rule. Allegations of land reform officials demanding bribes, rewarding kleptocrats and nepotists, and blocking interracial agri-business plans have been long ignored but spread nevertheless.
I covered a particularly egregious case where a zulu impi went to burn poor black entrepreneurs deemed culturally inauthentic out of their homes, and were assisted by the police. To unlock this country’s dead capital will require a serious overhaul not only of the title deed system but also of the criminal justice system in rural SA. Ramaphosa has made no effort to make this happen or even signal that he will.
Instead, he assured Financial Times readers that his low-level bureaucrats will fairly decide which land is “unused” or “purely speculative” so that the state can take it without compensation. He clearly thinks they would be unhappy to learn that his party’s second most powerful man, Gwede Mantashe, thinks that land should also be confiscated if it is attached to a farm beyond a stipulated size. But this totally arbitrary measure, long touted by the ruling party, would impact sheep farmers in the semi-desert while leaving high-value feedlots and industrial vegetable growers untouched. Until the next time. The only rational explanation is that this is an attempt to divide some farmers against others so the state can creep in under cover.
The “cultural reserves” established by apartheid were designed to keep as many black people as possible out of the cities, and in a state of miserable economic dependence. Its effect on land capital was a disgrace, on human capital an atrocity. This was done by creating rural economic zones blind to banks where one’s survival depended on the grace of the next most powerful person in hock to the government, usually a chief. One solution would have been to integrate the country through universal franchise and open markets to all. The alternative, preferred by apartheid leaders, was to increase the size of the Bantustans just enough to relieve the political pressure for a while.
The growth of these anti-development zones began in the 1970s and continue today. Ramaphosa’s policy is no departure.
Gabriel Crouse is an Associate at the Institute of Race Relations (IRR), a liberal think tank that promotes political and economic freedom. If you agree with what you have just read then click here or SMS your name to 32823.