The NDP vs the Land Panel report

Willem Cronje notes total cost of land reform has been a quarter of cost of Medupi/Kusile

In December 2017 the ANC Conference in Gauteng decided, by a small margin, to adopt Expropriation Without Compensation (EWC). The President subsequently appointed a Panel on Land Reform to advise him on how to effect EWC. This Panel (the Panel) reported in May 2019 (the Report).

Eight years ago, in November 2011, the National Development Plan (NDP ) was published which included land reform as part of a vision for SA in 2030. The NDP set a target of 30% of all commercial farmland as at 1994 to be transferred from white ownership to black ownership by 2030.

The question now arises: Is there a need for EWC? We are a fair way to achieving the NDP target of 30% by 2030. The ANC, until 2017, endorsed the NDP. The target of 30% is do-able, and establishes certainty. EWC will create utter confusion and, if implemented, will debilitate and ultimately destroy our market economy. It is one of the grander delusions of the governing party that markets are capitalist imports and alien to Africa. Markets in livestock and food supplies have existed throughout Africa for millennia. As cities, industry and modern housing become established, it follows that markets in property arise in order to supply this need. We cannot successfully industrialise while we at the same time destroy the markets that support industrialisation.

Notwithstanding the imperative for policy certainty, the Report ignores the 30% NDP target. The majority of the Panel are also only lukewarm supporters of extending ownership to black farming entrants. They prefer the concept of occupancy rights. The Report also believes that all land title and occupancy rights should reflect the demographics of the country. The Report endorses EWC.

The Panel could not, however, achieve unanimity. Two members, Dan Kriek and Nick Serfontein (both commercial farmers) issued a minority report rejecting both the approach and the main thrust of the majority report. It is crucial to note that the minority agrees with the majority that there should be full participation of all South Africans in farming and the agrarian value chain. The minority agrees that SA can only flourish if the talent of every group and member of society is unlocked and utilised.

If the majority have their way, we are headed for an African socialist revolution like Zimbabwe. The prescriptions of the Report are drenched in revolutionary romanticism. They are a recipe for conflict. Whether or not restricted to agricultural land, EWC will not only impact on agriculture, but will have a disastrous effect on investor confidence, the role of the market, and the entire economy.

The Panel, in endorsing EWC, seems to believe that the cost of agricultural land is an impediment to land reform. However, has cost really been a barrier to land acquisition? The cost of land reform from 1994 to date has been relatively small: some one hundred billion rand. This is only about one quarter of the estimated final costs of the Medupi and Khusile power stations. As pointed out in an opinion obtained by the Panel, EWC is an unknown concept in both international and foreign law. Revolutionary socialism is not government policy in a single industrialised country. One can only conclude that the endorsement of EWC by the Panel seems designed to fulfil the African National Congress dream of the national democratic revolution.

The NDP supports the extension of ownership title to the communal areas. Not so the Panel, which is enamoured of woolly concepts such as recordals of occupancy rights. The NDP wants to commercialise farming in communal areas. The Panel defers to the traditional leaders, effectively endorsing a dual economy. As far as the thorny issue of land tenure in the former homelands is concerned, the Panel is of the view that traditional African systems of land occupancy under chiefs should continue.

The NDP sees black farmers as beneficiaries of land reform. However the Panel sees land reform not only as a path to the development of black commercial farmers, but also as a means to advantage the marginalised poor, essentially the unemployed, and furthermore as a means to restore the dignity and cultural norms of the African majority. If the purposes of land reform are so broad, there will be endless conflict between the unemployed and marginalised on the one hand, and aspirant black farmers on the other. Existing commercial farmers (still mostly white) will be caught in the middle. The Panel risks entrenching conflict. White farmers will be located at the centre of disputes over poverty resolution.

The NDP accepts that SA is a market economy. Not so the Panel, which relies to a large extent on donations from land-owners. The Report posits Certificates of Recognition, granting a degree of property protection to donors. This could be intended as a subtle form of blackmail. In addition, other non-land owners such as companies or individuals will be asked to donate. Banks will be encouraged to lend against the occupancy rights which the Panel seeks to establish. The ever-looming threat of EWC will no doubt help to encourage donations and soft loans.

In contrast to the NDP, the Panel sets no target of hectares for the acquisition of land for redistribution. It is clear from the foreword and the introduction to the Report that the Panel espouses the view that ultimately land ownership and occupancy must reflect the demographics of South Africa. The Panel’s view seems to be that no value was contributed to this country by the colonisers and settlers. In seeking demographic distribution of land, while espousing the principle of EWC, the Panel follows Zimbabwe: the dispossession of white farmers can only be to the good.

In seeking to force the pace of land reform, the Panel does not believe that the majority of white commercial farmers want to live in a society where all talent is realised. As there are more potentially competent black farmers, and black actors in the agricultural value chain, than there are whites, we would all benefit from the realisation of this potential. However, the development and nurturing of this deep talent will take time and appropriate experience, and will require a market economy.

Agriculture has developed out of all recognition since 1913. It is now a highly scientific and industrialised form of enterprise. Black people in South Africa were, via race policies, excluded from this process, and therefore require compensating investment in human capital via education and training. Land alone is useless in today’s world. We need to revive our agricultural colleges and use the goodwill of our farming community to train and mentor new farming entrants.

In order to maintain our agricultural output and feed South Africa we need to give our farmers, black and white, security of tenure in the form of title. Let us not fool ourselves: EWC taken to its logical conclusion of so-called taking back the land will devastate not only agriculture: without a sufficient market in food, we will be unable to feed our cities. We will rapidly de-industrialise. This is the Zimbabwe route, only much worse. Zimbabwe could fall back on SA with our world class agricultural sector and industrialised economy. Zimbabweans are kept alive by remittances from hundreds of thousands of their citizens who have fled their revolution for employment in South Africa.

Unlike Zimbabwe, we will have no fall-back position. We will be at the mercy of outsiders.