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Posts Tagged ‘land expropriation

Land reform: a political not economic problem

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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.

The Land Act of 1913 and its alternatives

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This year is the centennial commemoration of what many now believe was the one Act that irrevocably put South Africa on the road to Apartheid. Few have been more outspoken about its impact than South Africa’s leader of the opposition, Helen Zille:

 The 1913 Land Act was apartheid’s ‘original sin’ because it reserved 87% of South Africa’s land exclusively for white ownership, as the basis of the ‘Bantustan’ policy. It not only dispossessed many black South Africans of the land they owned, but also sought to prohibit black people from ever acquiring land in so-called ‘white’ South Africa.

Unfortunately, history is never that simple. There is no doubt that most white South Africans, English and Afrikaners, at the start of the twentieth century believed that the majority of South Africa’s land – and perhaps even the lands of neighbouring countries – should be proclaimed as ‘white man’s land’. The demand for produce in the rapidly-expanding urban areas combined with low input costs, notably the low cost of black wages, made large-scale agriculture a lucrative enterprise. White farmers were also keen to expand and thus enter the traditional black areas with its highly fertile land. This steady expansion had only one consequence: that, eventually, all black land would have been claimed by white farmers. This didn’t happen though. Instead, a group of white officials in the Department of Native Affairs after unification noted the rapid decline in black land and realised that without statutory intervention blacks may soon own no land at all. The result: the Land Act of 1913. Here’s Hermann Giliomee in The Afrikaners (p. 326):

 They saw merit in the idea that a settlement, even if not equitable to blacks, would at least prevent further white encroachment in the reserves. In 1915 the Secretary for Native Affairs referred to a district where fewer than half of the farms formerly owned by ‘natives’ were still in their possession. As the liberal historian W.M. Macmillan pointed out at the time: ‘[Open] competition in land is fatal to the weaker race … Given free right of entry of white into native lands, the natives will presently be landless indeed.

Looking back from our current vintage point, it is easy to assume that the counterfactual to the Land Act of 1913 was a larger share of land for black South Africans; i.e. that instead of the 13%, black South Africans should have received 30%, or 50% or 80%. But what Giliomee suggests here is that that would be a wrong conclusion: instead, in the absence of the Land Act, the land that black South Africans were living on would have been systematically claimed by white settlers, leaving blacks destitute with few alternatives other than to provide their labour to the mines and as farmhands. The Land Act thus protected instead of pilfered land belonging to blacks.

SANNC delegation that went to England to convey African people's objections to the 1913 Land Act, 1914. L-R: Rev W. Rubusana, T. Mapike, Rev J. Dube, S. Plaatjie and S. Msane. Courtesy of South Africa History Online.

SANNC delegation that went to England to convey African people’s objections to the 1913 Land Act, 1914. L-R: Rev W. Rubusana, T. Mapike, Rev J. Dube, S. Plaatjie and S. Msane. Courtesy of South Africa History Online.

(So here’s a thought experiment: there was no Land Act in 1713 for the Khoi of the southwestern Cape. What if the Dutch East India Company had proclaimed 13% of the Western Cape as Khoi-land. Would Khoi-descendants living in these hypothetical areas today celebrate or abhor the 1713 Land Act? That is an open question. Instead, what happened in the absence of a Land Act was that many Khoi died in the smallpox epidemic of 1713 and those that remained had little choice but to work on settler farms, where many of their descendants still work today.)

The late Lawrence Schlemmer once said that he knows of no former colony – other than South Africa –  where the indigenous population continued to live on 30% of the region’s most fertile land after colonisation (I thank Hermann Giliomee for this reference). This is not to suggest that colonisation – or the Land Act – was morally just or defensible, or that it did not contribute to a highly unequal South African society. But before we denigrate the Land Act, we should think about the alternatives. Maybe missionary societies would have acquired some land for black farmers to till. Perhaps white farmers would not have infiltrated black areas to any great extent. But probably not. In all likelihood, black South Africans would have owned considerably less land than what the Land Act of 1913 sanctioned.

Written by Johan Fourie

January 30, 2013 at 09:31