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Land Reform -- Giving With One Hand; Taking With The Other

Expropriation without compensation would negate the benefits of a reformed communal land-ownership system, by denying poor farm owners access to capital.

24/11/2017 04:59 SAST | Updated 24/11/2017 04:59 SAST
Ann Hermes/ The Christian Science Monitor/ Getty Images
Yarrow farm in the Makana municipality in Grahamstown, South Africa.

2017 has seen an unprecedented number of policy proposals to accelerate land reform in South Africa. Some of the proposals have been bold and progressive –– such as giving title to communities living communally on state land –– and one must give credit where credit is due.

Sadly, these positive strides could be undermined by potentially harmful proposals, such as amending the constitution to allow for expropriation of land without compensation.

Those supporting the latter may argue that it is intended, at face value, to assist the landless and destitute. This may be the intention, but it would be a mistake not to consider the potential impact that such a proposal could have on those who are finally set to receive ownership of their land after decades of waiting.

Communal land tenure is a complex and controversial topic in South Africa. Formally speaking, the land officially belongs to the state, but it is administered by traditional authorities, and land allocation takes place on an informal basis according to custom.

Reviews of this tenure system are mixed; in certain instances, where the administrative structures are functioning well, the system works and occupiers enjoy security of tenure despite the absence of formal documentation.

The Communal Land Tenure Bill recently published for public comments seeks to put an end to our dualist economy by transferring ownership of the land to communities.

Be that as it may, allegations of poor governance and gender discrimination from certain corners have dampened support for the informal system. The bottom line is that even when the system does work well, the fact that the land still belongs to the state denies occupiers the chance to use the full potential of the land as a catalyst for socioeconomic development.

The reason for this is simple; as long as the land belongs to the state, it will remain "dead capital". Property ownership is a springboard to creating wealth. For example; if I own a farm, I can borrow against the farm to start a business, I can sell it to realise a profit, or I can rent it out and receive income if I move to another area.

Unfortunately, communal occupiers do not have any of these options, because they do not own the land themselves –– the state does. And since the state will not likely consent to the land being mortgaged, sold or leased, it is a dead asset –– the communities occupying the land cannot access its inherent value.

This is a reality that the state knows all too well and fortunately, efforts are being made to remedy the situation. The Communal Land Tenure Bill recently published for public comments seeks to put an end to our dualist economy by transferring ownership of the land to communities.

Although the bill still needs some panelbeating, the basic idea is right. It is not impossible to imagine that hundreds of thousands, if not millions of new title deeds will be created, providing citizens in these areas with a platform to create wealth.

This is, of course, based on the assumption that land will continue to be an asset with an inherent value.

Should the constitution be amended to allow for expropriation without compensation, however, financial institutions may no longer place their faith in land as security.

If land is no longer regarded as reliable security, new property owners in communal areas may not be able to access the same capital as their commercial counterparts did to grow their farming businesses.

This will hit aspiring farmers in communal areas very hard, as the agricultural sector often borrows funding to buy the inputs required to farm by putting up land as security.

If land is no longer regarded as reliable security, new property owners in communal areas may not be able to access the same capital as their commercial counterparts did to grow their farming businesses.

This will, in fact, continue to perpetuate a dualistic agricultural economy. Furthermore, if the inherent value of land is undermined by expropriation without compensation, new owners may struggle to sell or lease their land, as the land market would become compromised.

Should we go the route of expropriation without compensation as a country, communal occupiers would be right to feel aggrieved, as they would once again be short-changed in the process –– because their newly acquired assets would be devalued.

Such a situation would surely not be in the best interests of the millions of people that call communal-land areas home.