Johan Fourie's blog

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Land reform: a political not economic problem

with 12 comments

Two sides of land reform? Photo by Robin Hammond, National Geographic.

Commercial or subsistence depends on political and not economic objectives. Photo by Robin Hammond, National Geographic.

Minister of Rural Development and Land Reform Gugile Nkwinti kicked off the Land Tenure Summit yesterday by making several statements about land reform that has left me perplexed. Reported here, the minister said that “privately-owned land is a serious problem”, that “we want to correct a particular South African historical problem”, that “it cannot be that the worker will work forever and at the end of their time on earth, have nothing to show for it. It is not right, it cannot be right” and again promoted the department’s radical plan to give half of each farm to the labourers working on it.

The distribution and productivity of land is the most serious political issue facing South Africa. The alienation of Khoesan lands by European settlers had already started soon after Van Riebeeck arrived in South Africa, but it was really the expropriation of land in the nineteenth century (as British settlers arrived in the Eastern Cape and the Voortrekkers moved into the interior of the country) that has created a legacy of injustice. By 1913 when the Land Act was signed, black South Africans (and those living in neighbouring colonies like Basotholand, Bechuanaland and Southern Rhodesia) had lost large territories of their most fertile land. The Land Act consolidated this expropriation, and even may have prevented further expropriation (see my earlier post on this).

There is no doubt that redress is needed. The question, really, is how to affect this redress. The reason Julius Malema and his Economic Freedom Fighters did so well in the recent elections was because he pushed the land reform agenda to priority number one, and he had a plan. The EFF wants “expropriation of land without compensation for equitable redistribution” and propose a system whereby the “State should, through its legislative capacity transfer all land to the state, which will administer and use land for sustainable-development purposes. This transfer should happen without compensation, and should apply to all South Africans, black and white.” The State will then lease the land for 25 years.

My suspicion is that performance of the EFF in the recent elections has forced the ANC’s hand, and they’ve come up with their own plan for land redistribution. The plan will force commercial farmers to cede 50% of their farms to their workers. This is not the forum to critique these plans in detail, but I can point to others who have done so. Read this, and this. My field of expertise is economic history, not agriculture, and so my only recourse is to look at land expropriation in history. It is not a story to smile about: during the process of collectivisation in the Soviet Union, at least 4 million people died of starvation alone, and the recent land reform in Zimbabwe has resulted in large declines in production, malnourishment and close to 4 million Zimbabweans emigrating to other countries, notably South Africa.

Yet knowing that something has failed in the past – and even knowing that it will fail again – is usually not enough reason for politicians not to attempt it again. In the absence of alternatives, my sense is that black voters will be happy to go along with any plan to redress land, because it will by implication by more fair than the counterfactual, which is to continue the status quo. (This reminds me of why the National Party won the 1948 elections. The ‘racial issue’ had come to dominate the national agenda after the Second World War but the United Party under Jan Smuts had not articulated a clear plan to tackle this issue. Instead, DF Malan proposed a clear plan of separation, of apartheid. Sometimes all you need to win is a plan, even if it is a bad one.)

So what are the alternatives to the Minister’s proposed plan? It depends on your objectives. If the only criterion is to redress past injustice, land expropriation, either fully or, as the Minister suggests, partially, seems like a solution, right? But what are the consequences of such a policy? One can only speculate, but it is likely that commercial farms will see large-scale disinvestment. Farm prices will collapse, forcing other farmers, who have used their land as collateral for loans, to also sell their properties. Movable assets will be sold to provide some capital for a new life in the city. (Other perverse outcomes: expect more golf courses, light industry parks, gated communities and rural retirement villages, and conservation parks and holiday resorts as farmers shift into other industries not affected by the policies.)

Little of this will benefit the new owners. Land is only as useful as the capital investments on it, and without capital (or, at least, new investment in the farm), many of the new owners will find it increasingly difficult to continue the earlier outputs. The state can help, of course, but the state is not a bank who can easily make decisions about which risks to take and which to avoid. (See my earlier post on Tito Mboweni’s plans for a state bank.) Where the new owners are not former workers, an even more serious issue arises: skills and experience. Farming is an increasingly scientific industry. Our agricultural colleges are simply not producing enough graduates nor would they have the experience to take over the immediate operation of large-scale commercial farms producing for the export market. Learning-by-doing is really the only option, which is why this opinion piece by Peter Curle is a useful read. He suggests that the principles of successful BEE transactions could easily be applied to the agricultural sector. This would mean that farmers are able to choose their black shareholders, train them, and be partly responsible for – and benefit from – their success. That is a system that gets incentives right.

The government could, of course, also take another approach. Given that the agricultural sector employs large numbers of unskilled labour (and has the potential to employ more), it could focus on improving the productivity of existing farmers. To do this, the most obvious thing is to identify the currently most unproductive land. That turns out to be communal and state land, not privately-owned land. (And certainly not foreign-owned land, which seems to get all the blame, but is in fact a tiny share of land owned in South Africa.) The power of traditional leaders, however, prevent such communal or traditional lands from being used more productively. In a recent working paper, Daniel de Kadt, PhD-student at MIT, explains why these traditional leaders continue to have such a powerful hold on the ANC:

We argue that traditional leaders, whose power depends on the state, may be incentivized to strategically support political parties who can guarantee their survival and provide them with rents. We study this quid pro quo in the Apartheid-era Bantustans of South Africa. We show that an alignment between the state party and the chiefs maps to increased political support for the party. Further, we provide quantitative evidence consistent with chiefs acting as clientelistic brokers. Our results suggest that chiefs boost African National Congress (ANC) vote-share by 8.2 percentage points in the Bantustans. This translates into roughly 4.5% of the ANC’s total vote-share, and a distortion in the national vote of 2.5 percentage points. This distortion is pivotal in determining whether the ANC is able to alter South Africa’s constitution.

You could also translate it thus: The poorest of the poor South Africans live in Bantustans on communal lands. They, however, are being held ransom by their chiefs who are in cahoots with the ANC, who rely on their support for 2.5 percentage points in each election.

To eradicate the legacy of colonial land expropriation, a thriving agricultural sector is key. The problem is not “privately-owned land”, as the Minister seems to think. Policies that affect commercial farms will only hurt workers and the consumers of cheap food, exactly those people that suffered because of the initial land expropriation. The solution lies in tackling the unproductive, communal lands that is currently held by chiefs or the state. If these areas can prosper, not only will it pull millions of poor South Africans out of poverty, but it will create the necessary skills and capital to allow faster land reform elsewhere. Yet this most important step is unlikely to occur any time soon. That is because poverty alleviation and real redress is not an economic problem, but a political one.


12 Responses

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  1. Since the mid-1800s, under white administration, the black African population has increased from 1 million to 44 million.

    The white population of the mid-1800s was similar in size – around 1 million.

    I am hard pressed to find an economic evaluation of:
    – the differences between the white and black populations in terms of physical and non-physical capital, at the point that they met – less than 200 years ago, in the middle of South Africa.
    – the overall contribution of the white presence in South Africa to the black standard of living.
    – the change in black standard of living since 1994, allowing for global modernisation effects.

    Do we know how much land was being utilised 200 years ago? Do we know how much of these lands were taken, and by what means?

    Was land the only reason for white wealth and productivity? Surely not, as blacks had equal access to the same lands, and with a headstart of at least a few hundred years.

    But if land was the only reason, is land today the only representation of white wealth and productivity? No. So how should we apportion white wealth and productivity?

    (I see in the comments, some actually would like to now claim a part of the white productivity – keep them working to directly sustain the black population.)

    What are the positive examples in history of redistribution of private wealth and the loosening of private property rights?

    What would be the current situation of the country if the white population had not arrived? What stage of development would South Africa have been in today as a black African country? Would the population have thrived to such an extent? Would the Khoi and San peoples, whose male gene can only be found today in the western half of the country, have been genocided as they were by the blacks in the eastern half of the country?

    What would be the current situation of the country if some kind of white administration could have continued until today? (Even better, if Smuts had had a more concrete plan post-WWII!)

    What if the mission schools, which educated virtually the entire crop of early black leaders, have taught “equal but different”, rather than “equal in every way”.

    Will the Bantu peoples have rights to any territory under expropriation, in light of the fact that they also came to the land as settlers?

    What if certain white lands were originally legitimately paid for?

    What if certain white lands were legitimately settled as free, unoccupied land in a vast country, which at the time was only occupied by 2 million people?!!!

    Will there be recompensation by the Zulu people for the breaking of the Natal land contract given to Piet Retief? Will Britain recompensate the Afrikaans and Zulu people for their subsequent annexation of Natal and invasion of Zululand?

    Will there be intertribal recompensation made by the Zulu for the mfecane wars?

    Will there be recompensation paid by white Rhodesians for offending the Zanu-PF so much that they had to be thrown out and the bottom fell out of the Zimbabwean economy?

    Many questions, which in today’s academic climate, cannot be even minimally searched out.


    February 28, 2018 at 21:58

  2. the issue of land redress remain a very sensitive issue to the descendants of Black natives which I think it needs to be address accordingly. Indeed most of the Blacks descendants lack skills and knowledge of using land productively, but that can not again constitutes the land to remain in the hands of Whites simple because S.A. is for the Blacks, Whites came in 1652. The land was not purchased from the Black natives but forcibly taken if not stolen by the White people.

    It should be returned to the rightfully owners first; and should they (farmers) wish to continue utilizes the land, they need to reach agreement in terms of profit sharing.

    sipho zulu

    March 16, 2016 at 14:21

  3. There are many of points raised within this post that I feel are valid.
    The redistribution of land has failed dismally in the past in other countries and for South Africa to try to implement it would be a big risk in terms of the economy. The land cant just be taken from a certain group of owners to the other without first making sure that they will be able to maintain the level of output that the land produced before. I feel that bringing history and how the land got into “their” possession is being rather subjective than objective. If this is to become successful the government are to ensure that the receipients are well prepared for the responsibility. The country”s overall well-being is dependent on the economy. As much as the idea seems appealing the feasibility has to be considered.


    October 14, 2014 at 10:36

  4. Training and Education are not a replacement for motivated intelligent self-help.

    As an example read this

    Rather than glorifying poverty and isolation, Ten Acres Enough shows farming as the path to financial security, while still providing all the benefits of country life—provided that the farmer understands that the key lies in producing crops of the highest possible quality, while living within striking distance of a major market.

    Ten Acres Enough has left its mark on generations of back-to-the-land farmers. Its influence on both the title and the contents of M. G. Kains’ classic Five Acres and Independence (1935) is obvious. And it is benefiting readers today, whether as a piece of Americana or as a source of small-farm ideas and inspiration.

    How many “traditional” land occupiers have ten acres at their disposal ?
    How many are actually doing something with the land that they currently occupy ?

    Most have a few scrawny cattle which they keep as a relic of an outdated system when cattle were kept as a means of exchange necessary to secure a wife ( the real economic unit in a traditional system — she had use and exchange value )

    If some Americans can make a living on ten acres let us see what nascent African farmers can do [ with land they already have ] ?


    October 10, 2014 at 16:24

  5. 14063124- I think that Johan really does have a valid point. The problem does not lie with the privately owned land. We can refer back to many economic tragedies that was caused by unfair decision-making and thus the government really needs to consider every aspect before making irrational decisions. Privately owned land produces a lot of our agricultural goods and by taking these farmers incentives away we might just end up with more economic problems. They would first need to educate people on how to farm and then the government could consider renting land that is not being used in a productive way to these new educated farmers.


    October 9, 2014 at 10:57

  6. Johan

    Is it really a good policy to return back the land to those who it was taken away from previously? They don’t have the skills and knowledge to sustain and keep a farm productive. Wouldn’t it be better for both the rightfully owner and the farmer reach an agreement on profit sharing or buy the land from the rightfully owner(with government intervention of course to maintain fairness), in this way they both benefit and the economy productivity won’t be affected that much.

    Fortunate Mahlatse Mangaba

    October 9, 2014 at 07:48

    • Mahlatse

      I absolutely see the need for the land to b given back to the owners, to some its a traditional thing since they feel connected to the land, it’s where their ancestors reside and after all it is their land right?


      October 10, 2014 at 10:37

      • in-terms of the economy like i said it won’t do us any good, we need people with skills, people who know a lot about the agriculture industry, the truth is people who are farmers at those land already have an inside about the indrustry. Even though the agriculture industry contribute a little to economic growth it still counts.

        Fortunate Mahlatse Mangaba

        October 10, 2014 at 10:53

      • A land belongs to a family Mahlatse, it can be passed on to their descendants or inherited by others member of the family, and training will be provided for those who are not skilled. Some are even workers on those farms so by now they acquired enough training and skills so it won’t be as bad as you make seem. There are numbers of solution which can tackle the unskilled labour issue namely training and education


        October 10, 2014 at 12:06

    • Manhlatse

      I think returning the land to black people would make more sense because initially the land was not purchased from them but rather stolen. Maybe a better idea would be for the current owners to offer the rightful owners shares in the land.

      Miss Kukulela

      October 10, 2014 at 19:08

      • Here we go again with the “stolen” mantra / dogma
        How much land did uShaka “steal” from other Nguni people who were not of the BakaZulu clan ?
        For that matter Mzilikazi of the Khumalo ?
        So many other historical land “transactions” ?

        What did these dispossessed people get in return for allegiance to a new despot ?
        The “privilege” of paying an annual tribute of cattle and young maidens.
        ( Seems to still be happening today )

        What did the current back Africans get in return for “their” land being “stolen”

        A modern democratic technologically advanced society — which they seem to take for granted — as some sort of given ! ( they really like all the trappings of this society though )

        It is time we started getting past old dogma and worn-out clichés and start looking not only at the reality of history but the need for an intelligent discussion about the kind of future that will lift ALL of the people that live in South Africa !


        October 13, 2014 at 09:24

  7. Johan
    You looked at the pictures and missed the “smoking-Tractor”

    She never saw the big tractor coming. First it plowed up her banana trees. Then her corn. Then her beans, sweet potatoes, cassava. Within a few, dusty minutes the one-acre plot near Xai-Xai, Mozambique, which had fed Flora Chirime and her five children for years, was consumed by a Chinese corporation building a 50,000-acre farm, a green-and-brown checkerboard of fields covering a broad stretch of the Limpopo River Delta.

    Does Minister Gugile Nkwinti know about these developments just across the border ?

    Is it OK for a foreign neo-colonial power to “own” 50,000 acres
    NOT ok For a PRIVATE land owner who probably never ploughed up any body else’s fields
    Employs locals according to strict labour laws
    Pays tax to a local government

    I think you have to understand that all of this “land-stuff” is really an assault on PRIVATE ownership and private initiative

    Most of the current ANC ministers are dyed in the wool hard core Marxists / Stalinists.
    When you understand this — you understand the Ministers outburst.

    What the minister and the rest of his “comrades” are aiming for is a Soviet Agricultural Collectivisation !


    September 5, 2014 at 15:44

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