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26/03/2018 13:23 SAST | Updated 26/03/2018 13:23 SAST

Land Reform: The Free Market Way

The land debate in South Africa is intensely confused when it comes to restitution and redistribution.

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If not expropriation without compensation, then what? How do South Africans finally redress the imbalances caused by apartheid? EM Jadwa from Durban asked these very questions in a letter to The Star last week.

What is the answer? It is a fallacy to believe the authoritarian notion of the forceful seizure of property and the allied notion of state custodianship of all property is the way to distance ourselves from an equally authoritarian past. The 1994 election and the 1996 Constitution were meant to be a departure from the state-centric mentality of apartheid toward a people- and freedom-centric future.

Here are some solutions to the problem of skewed property (moreover, land) ownership caused by apartheid that do not violate the necessary ingredient for prosperity: private property rights.

Redistribution is an injustice, is ideological, and amounts to naked robbery.

Restitution

The land debate in South Africa is intensely confused when it comes to restitution and redistribution. There is a mammoth conceptual difference between them.

Restitution means that if you or your ancestors owned land that was taken without informed consent, you are entitled to receive that property back (or compensation, if you so choose). And the individual who currently possesses that property, if they are innocent in that they didn't know the land was forcefully taken, must be fairly compensated. This is justice, and is an inherent part of private property rights. The Constitution makes ample, explicit provision for this.

Redistribution is something else. Property is selected, often at random and arbitrarily, to be taken without the consent of the owner whose family may have owned that property legitimately for centuries, and the property is likely, from then on, to be owned by the government – or (less likely) distributed to another citizen. It is the epitome of arbitrary governance and was a hallmark of apartheid.

Redistribution is an injustice, is ideological, and amounts to naked robbery. The Constitution does not provide for robbery explicitly, so to justify it, proponents of redistribution often have to come up with innovative interpretations of the words used in the constitutional text.

The restitution process in South Africa must continue and the "cut-off" point should no longer be "1913" but "the beginning of time". But this depends on what can be proven: if a person can show that Jan van Riebeeck chased their ancestors off a plot of land they "owned" in Table Bay in 1652, they (not the state, or some other random citizen who happens to share their skin colour) should be fully entitled to receive that property back.

If South Africa is to take ownership seriously – as a departure from apartheid thinking – then government must stand back and allow nature and commerce to take their course.

Subdivision of Agricultural Land Act, 1970

This apartheid law is a problem few people know about. It has contributed to the unnecessary concentration of property ownership in a small number of hands because it disallows owners of agricultural land from subdividing their property and selling those subdivided plots to others without the permission of the Minister of Agriculture.

The justification behind this Act is to prevent land that is agriculturally useful from being used for other forms of development or being divided into portions so small that they are no longer agriculturally viable.

This is problematic for two reasons. Firstly, having to obtain someone's "permission" to subdivide one's own property is insulting and implies that one is not truly the owner of that property. Secondly, this law has stood in the way of affordable pieces of agricultural property being "redistributed" on the open market by, for instance, prohibiting farmers from selling parts of their farm to their farm workers.

If South Africa is to take ownership seriously – as a departure from apartheid thinking – then government must stand back and allow nature and commerce to take their course.

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Urban tenure security

Most people around the world, including most South Africans, prefer to live in cities where opportunities, recreation, and progress theoretically await. The political class in South Africa, on the other hand, would have us believe that there is a deep-seated and widespread "hunger for land" among South Africa's mostly black poor. If by "hunger for land" they mean "a comfortable house to live in", they are correct, but this would indeed take a stretch of the imagination.

The hunger for rural land is found exclusively in the minds and hearts of the political class, who have an ideological imperative they wish to achieve. South Africa urgently needs reform in urban areas. Millions of people need to possess title deedsper se, and millions more need to own proper title deeds. RDP deeds come with pre-emptive clauses, often in effect for eight years, that prohibit the so-called "owner" from selling the property.

If they wish to move elsewhere in the likely pursuance of better opportunities, they must sell the house back to government. The argument advanced for the eight-year limitation is that many people will simply sell their house as soon as they receive it.

We need to embrace property rights fully and ensure the benefits of ownership are enjoyed by everyone.

With regard to agricultural land, Gugile Nkwinti, during Parliament's expropriation debate, said that 5 percent of the redistributed land had been "lost to the market" because those with full ownership had decided to sell the property. He said this as if it were a problem that requires addressing, when in fact, there is no problem: ownership includes the right to sell.

Government and the land crusaders are in no position to second-guess owners who decide to sell their property. The Constitution enjoins government to ensure equitable access, not permanent occupancy.

RDP deeds also often prohibit the owner from leasing or even subleasing the RDP property to others. This otherwise valuable source of income, it is not surprising to know, is often made use of regardless of what these deeds say, and rightfully so. Such a lacklustre, watered-down concoction masquerading as a property right should be treated with contempt.

The market, quite contrary to Nkwinti's disparaging remarks, is how South Africa will escape its current quagmire. Those who have accused the current government of being "neoliberal" or "capitalist" are in for a surprise when the reality of state ownership and state control sets in in their leafy suburbs. South Africa will then truly know pain. To avoid this, we need to embrace property rights fully and ensure the benefits of ownership are enjoyed by everyone.

Martin van Staden is legal researcher at the Free Market Foundation and is pursuing a Master of Laws degree at the University of Pretoria