VOICES
01/03/2018 06:16 SAST | Updated 02/03/2018 08:29 SAST

'Land Ownership Is The Key To Prosperity'

"South Africa is the most food-secure country on the African continent mainly because of investment."

Edgard Garrido/ Reuters

Agricultural economist Wandile Sihlobo was interviewed by Zimkhitha Mathunjwa on the land debate and what it means for the South African populace, with particular focus on how it will (or should) work in order to benefit all concerned, while still maintaining the country's economic output.

Q: Many people have wondered what this new resolution means, because land doesn't just mean farmland. There have been many questions about whether people will lose their homes, etc. What does land expropriation refer to?

A: There hasn't been clear communication regarding this, but hearing what the political parties have said in the land debate, it appears to look at land as a whole – whether it is in the housing section or from an agricultural perspective.

My observation of the general public's reaction is that it's almost as if they're reasoning that if one doesn't have a farm, then it's not their problem. But this encompasses both households and farms. The key basic principle that we all need to know is that if you go around talking about expropriation, you undermine property rights, which is the key aspect bringing value to whatever you sell. You can sell it because you own it, and owning it means you can trade it, gain value on it or even borrow against it.

If property rights are undermined, it would affect the housing market even if expropriation is happening only to farmland. What we are getting from the parties on this, is that it's targeting all land – they're not only talking about farmland, although discussions and commentary around this debate have mainly been dominated by the agricultural space.

It is important for everyone to know that if it affects property rights, this means it affects everyone – and is not only limited to farmers.

Q: When one compares the availability of land in urban spaces to that in the rural areas, there seems to be more land in the latter. Moeletsi Mbeki has written about the availability of land in the rural areas and how the government has access to this land. Why is it that the government doesn't allocate this land to the people for them to farm or live off?

A: Property rights, which are title deeds, are a key ingredient for the prosperity of any society. At Agbiz, we are of the view that this is about the failure to extend property rights to the rural areas – Eastern Cape, Limpopo, KwaZulu-Natal, etc. It is a failure to extend these rights to the individuals in those areas
that is somewhat intertwined with inequality in South Africa.

If you can go to those rural areas and give those individuals title deeds, you will be empowering them to be able to go to any commercial bank (even if they are not going to venture into agriculture) to borrow against the house, thus enabling them to prosper.

Over the years we haven't seen any progress, or anything to be excited about, coming from communal land. What we propose is what Moeletsi Mbeki is arguing – to extend property rights to those areas, because they don't really own that land, it belongs to the state. But the kings act as custodians looking after that land through their traditional arrangement – a system, by the way, that was started by the apartheid government to make sure that the kings were in charge.

So the question then becomes, why is the current government not extending property rights and ownership to black folk? Does the government not trust black folk to manage the land, prosper and make good of the opportunity?

There are a vast number of studies that have explored this thought. One such study is from McKinsey, titled, "South Africa's Big Five: Bold Priorities For Inclusive Growth", that came out in September 2015. If you were to look at the agricultural chapter, they identified over a million hectares of land between Eastern Cape, Limpopo and KZN that were pretty much unused – and one cannot say that the people in those provinces are not motivated enough to utilise the land.

Thre is no incentive for them to use it, because firstly, they don't own it and secondly, why would they invest in that land if they don't own it?

We know that land reform in South Africa started in 1994, and from and agricultural perspective there are a number of farms (over 5,000) that have been given from the government's side ... if one reads general media reports, one sees stories of how land-reform farms are failing, and how the new owners don't know how to farm, etc.

However, when one goes to the root of it, one finds that government gives three- to five-year leases to black farmers who have to take this land and utilise it – and these are people who have no means of actually raising capital to work that land. Because the previous owner owned that land and had the property rights, he could go to the major banks and borrow against the property to buy tractors and other equipment, to efficiently utilise the land.

Then you get a black man who has a weak balance sheet, perhaps earning a R1,000 each month with no money to get that land going – and then you get people saying: "Oh, he doesn't know how to farm..."

How do we expect him to farm, when he has no capital to get all the required material to run the farm efficiently and profitably? It isn't only hinged on "knowledge", as some people say.

In addition to teaching people, they also need to be given title deeds, so that they are able to raise capital. It almost appears to me as though yes, the land is being given to government, but they aren't really giving it to the people. How then do we expect people to prosper and reach food security? Who will invest in this land after it has been taken?

They're given leases, but no financial institution will give money to individuals to work on a five-year land programme. These are some of the really conflicting issues which I'm trying to make sense of, when it comes to what we are trying to achieve with this land expropriation.

So when government talks of expropriating without compensation and ensuring that they do not destabilise food security, how do they plan to do that?

On the one hand, they're expropriating, on the other protecting food security – how will this be done without destabilising agricultural output? Once you expropriate, you undermine investment.

South Africa is the most food-secure country on the African continent mainly because of investment. Investment comes if there are strong property rights. Without these property rights, there will be no investment, and without investment, how will we get the agricultural sector to be productive?

Q: Are there other positive virtues in the land debate – besides the agricultural benefits (if done right)?

A: South Africa has been moving on the issue of land in three branches:

1) Land redistribution - where we are really looking at making sure that everyone has access to land, etc.

2) Land restitution – where people have to prove that they own a certain piece of land which was taken from them, and this is where the emotional aspect of land is found.

3) Land tenure - which centres on the title deeds.

Giving people ownership rights is the key to the prosperity of society (which is a major positive aspect), and we shouldn't be working against this by saying people shouldn't own land and that the state should own it – we should trust people enough to manage the land they've been given.

When it comes to land reform, I am not saying it shouldn't be done – rather that it should be done in a sustainable way, in which we know we are not going to mess with the institutions and other functions that have held this society together.

There are many ways of ensuring this, and government can explore these avenues by working closely with the private sector and ensuring that this process is fast-tracked.