South Africa

OP-ED: Don’t expect a win: Expropriation has muddied the land reform field

The key challenges to fair and timeous land reform in this country include poorly implemented administrative processes, inadequate capacity and an astounding lack of government support, including financially, as illustrated by comparative fiscal budget allocations.

As the land debate cautiously manoeuvres its way towards the end goal of articulating the grounds under which there can be land expropriation without compensation in section 25 of South Africa’s Constitution, critical questions have been overlooked within the debate. Rewording section 25, known as the “the property clause”, may not provide the much sought-after solution to land that is anticipated by communities in South Africa.

A separate committee has been established in Parliament to begin the process of redrafting section 25 of the Constitution. This comes after both houses of the legislature have agreed to adopt the Joint Committee on Constitutional Review’s report, which recommends that section 25 of the Constitution be amended to allow land expropriation without compensation. The National Assembly wants to settle the issue of amending section 25 to allow for land expropriation without compensation by 31 March 2019, before the mandate of the current Parliament expires.

With so much attention placed on land expropriation without compensation, the core problems of land redistribution, restitution and tenure security that have defined the past 25 years have been largely overlooked.

The critical points that should have been included in this debate are why land transfers have moved so slowly — and just how slow have they been over the past 25 years? And why is it that so many land reform projects have been unsuccessful?

Compensation not pivotal to land redistribution challenges

It is important to consider that land expropriation without compensation is one aspect of the land reform programme. Evidence points to the fact that compensation has not been the stumbling block in land reform in the majority of land transfers and projects.

In the body of research that has emerged in the past 15 years on land ownership and tenure, there has not been a recorded case where financial compensation to current landowners was the obstacle to land expropriation. While there have been reports of instances where seemingly a great deal of money was paid to game farms, for example, this has never been a general trend.

Nevertheless, allegations brought against farmers prior to the 2005 Land Summit, suggested that farmers had inflated land prices over market value in cases of both redistribution and restitution. Despite these allegations, research evidence has not supported this.

For example, of the 34 sugar cane farmland cases transferred under the redistribution programme in northern KwaZulu-Natal in the early to mid-2000s (reported in 2010), the prices paid for farmland did not indicate higher than market-related premiums having been paid to sellers.

In March 2018, the Minister of Rural Development and Land Reform, Maite Nkoana-Mashabane, said that government had spent R50-billion to acquire 4% of total registered land. This statement points to the fact that prices for land acquired under the land reform programme have been much lower than those expected in land markets.

Four percent of agricultural land is about 4.4 million hectares in size. The price of vacant land in remote areas currently varies from R50,000 to R200,000 a hectare. Hence this means than 4.4-million hectares (4% of agricultural land) would at a minimum have cost government R220-billion (and at most R880-billion) in market value.

Therefore, the reported value of R50-billion for 4% of land registered under black ownership indicates that the land acquired within the land reform programme has not been overpriced. Additionally, this 4% of registered land is below non-official estimates of about seven million hectares of land that has been transferred under the land reform project. This implies that about three million hectares of land may have been transferred without formal title deeds for formal registration. Alternatively, it illustrates how government agencies have not kept good land registration records for the reform. The land registration is obscured further by land under traditional leadership, whose occupants do not have title deeds.

Moreover, a spending of R50-billion over 25 years on land acquisition indicates the land reform project over the years did not receive the government’s highest priority. In relative terms, R50-billion is only about 2,2% of the fiscal budget of 2018 alone. In the same 2018 budget, the government was able to set aside R57-billion as an emergency fund for higher education, but less money has been spent on land acquisitions over a period of almost 25 years.

Land redistribution hamstrung by poorly managed administrative processes

The establishment of the Office of the Valuer-General in 2014 in terms of the Property Valuation Act (Act no 17 of 2014), with the mandate to support the programme of land reform through providing independent and credible property valuation services, is another indication that government agencies understand that problems in land reform have mainly been procedural in nature and not financial.

For example, government valuation agencies would take too long to finalise the valuation process. In some reported cases the processes would conclude three years after initiation, by which time market prices had gone up. This too does not support claims that demand for financial compensation at above market prices has been the problem.

What we know is that the non-financial issues, some of which have been listed above, would still need to be addressed, even if the Constitution can be amended.

For example, the backlog of outstanding cases at the SA Land Court needs to be finalised. These were estimated at more than 20,000 cases after 2014.

Community issues around the collective management of acquired land resources must be addressed as well.

For example, these are issues that derail projects where disputes are never settled among community members regarding who forms part of lists of beneficiaries and who does not, and who should or can represent communities in decision making bodies such as Community Property Associations. Such community disputes plague processes before claims are lodged, during a hearing and even after land resources have been transferred to communities.

Looking beyond expropriation without compensation

To conclude, research has not highlighted expropriation without compensation (or even inflated land prices) as the key challenges to fair and timeous land reform in this country. Rather, it infers that it is issues of poorly implemented administrative processes, inadequate capacity and an astounding lack of government support, including financially, as illustrated by comparative fiscal budget allocations, that impede the process.

If these issues are not adequately acknowledged for what they are and addressed properly there is no hope in building a sustainable, workable land reform programme, with or without compensation for expropriated land.

A lack of meaningful funding and poorly conceived and weakly implemented processes that have given rise to backlogs and bottlenecks will not automatically fall away, no matter how the wording of the property clause may change. DM

Professor Nhlanhla Cyril Mbatha is a professor at Unisa’s Graduate School of Business Leadership. He has a PhD in Economics from Rhodes University and teaches micro, macro and public economics. His research focus is on the management of natural resources like land and water, skills development for the labour market and international trade of agricultural goods.

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