South Africa: expropriation without compensation
A noisy new opposition party is not the only one with extreme land reform plans
Say what you like about Julius Malema, but the man knows his politics. The controversial leader of South Africa’s Economic Freedom Fighters (EFF) has an unerring sense of self-preservation, coupled with an unmatched and fearless talent for identifying and exploiting the country’s fault lines: talents that took him from apparent political suicide—when he was expelled from the ruling African National Congress (ANC)—to become leader of the country’s third-largest party, securing an astonishing 6.35% in South Africa’s last general election in May.
Mr Malema campaigns on issues of race, language and nationalisation. He rips the Band-Aid off South Africa’s rainbow nation fable and reminds us of our unjust, sullied past. But unsurprisingly, the issue closest to his heart—number one on the EFF’s election manifesto—is land. Specifically, he demands more radical action on the twin pillars of land reform: restitution or returning land taken before and during apartheid; and the redistribution of land away from the white minority that continues to own most of the land.
The issue of property rights has a long and bitter history in South Africa. As long ago as the 17th century, white people were dispossessing black people of their land. This process was formalised in the 1913 Natives Land Act, which restricted black South Africans to just 7% of available land. White farmers also benefitted from massive government assistance and subsidies, and a policy ensuring white ownership of the most fertile land.
South Africa’s new democracy was supposed to make land tenure fairer. A Land Claims Court was established to deal with restitution, and a Land Claims Commission to facilitate settlements. The ANC government said that 30% of commercial agricultural land would be redistributed to black owners by 2014. To accomplish this, the administration outlined the policy of “willing buyer, willing seller”. This was meant to assure landowners that property would not be expropriated forcefully but would change hands by mutual consent.
The government has failed drastically to meet that 30% target. Just over 8% of farmland was black-owned, President Jacob Zuma noted in his 2012 state-of-the-nation speech. Of South Africa’s approximately 82m hectares of arable land, just 6.7m are black-owned, according to the Department of Rural Development and Land Reform. Government has fared marginally better on the restitution issue: independent researcher Bernadette Atuahene estimates that around 80,000 claims for land restitution have been received; and of these, at least 8,000 submissions remain outstanding, according to a 2014 UN Development Programme report.
EFF commissar, chief ideologue and newly-appointed member of Parliament (MP), Andile Mngxitama, was swift to point out the ANC’s failures. “How do we call each other honourable when we preside over a landless people?” he asked in a June speech to Parliament. “It’s a disgrace and dishonour that for 20 years, this house has allowed 40,000 white families and trusts to own more that 80% of the land.”
Five days later Mr Mngxitama was ejected from Parliament for insulting Freedom Front Plus MP Pieter Groenewald, who was arguing that black people had stolen land from the indigenous Khoi and San people. The incident underlines the emotive nature of the land issue, as well as its deep and contested historical roots.
The EFF claims to have a simple solution: “expropriation without compensation”. This major EFF rallying cry during this year’s presidential election campaign sums up the new party’s approach. “All land should be transferred to the ownership and custodianship of the state” and owners should not receive financial compensation for their loss, according to the manifesto on its website. “Once the state is in control and custodianship of all land, those who are currently using the land or intend using land in the immediate [sic] will apply for land-use licences, which should be granted only when there is a purpose for the land being applied for.” These licences would last 25 years, but would lapse if the land were not used appropriately.
In other words, the state would own all land and determine who gets to farm it. Landowners would cease to exist as a social class—and they would not be paid for their troubles.
This extreme approach befits a party that champions “radical and militant economic emancipation”.
But the EFF is not the only party looking for drastic solutions. “We must provide a radical answer to the land question, and the ANC has the answer,” Mr Zuma said at an ANC rally in January. This was more than rhetoric: quietly and through several initiatives, the ruling party and the government are working on a new land reform policy that is nearly as extreme as that proposed by the EFF’s young firebrands.
The impetus for the new legislation ostensibly comes from South Africa’s National Development Plan (NDP), a comprehensive blueprint outlining where the country should be by 2030 and how to get there. Land reform is mentioned repeatedly as a key driver of positive change because it “will unlock the potential for a dynamic, growing, and employment-creating agricultural sector”, it claims.
The goals of the NDP’s proposed land transformation are ambitious. Its alleged “workable and pragmatic” property restructuring seeks to speed the transfer of agricultural land to black ownership without distorting land markets or business confidence. It aims to ensure that land is reassigned only when “human capabilities” are assured; that is, when potential black landowners have been trained to farm.
A shortage of interested black farmers, however, is one of the major factors slowing the pace of redistribution, explains Frans Cronje, CEO of the South African Institute of Race Relations (SAIRR), a think-tank. In a July 2013 review of the NDP, he highlights an astonishing statistic that illustrates the scale of this problem: of the approximately 77,000 people identified as eligible to claim land restitution, only 5,856 have chosen this route. The rest have opted for financial compensation. “Poor people want jobs in towns, not the hardships of eking out a living from the land,” Mr Cronje suggests. The facts support him.
Nonetheless, the NDP is forging ahead with its redistribution model that relies on trained black farmers who want to own land. It calls for the creation of district committees to identify potential properties for redistribution, focusing on land: already on the market; held by absentee landlords; where the owner is under severe financial pressure; and in a deceased estate. The state would buy this land at 50% of market value, with other commercial farmers in the area—presumably white—volunteering to make up the shortfall. As a juicy, yet incongruous carrot to encourage their cooperation, the government would not only protect these generous farmers from losing their land but also give them black economic empowerment status, an affirmative action scheme.
The NDP, however, remains a vision as opposed to a legally binding document. Three recent pieces of legislation indicate the government may be heading in a different, more practical direction.
First, a new law passed in June re-opens the land claims process for those who missed the original 1998 cut-off date. Government is expecting to receive 397,000 new claims between now and the next cut-off date in 2019, according to a March 2014 piece on the Timeslive news site quoting the land reform department. It remains unclear, however, how the government intends to pay for these claims, which could cost 179 billion rand ($16.9 billion),according to the state’s own regulatory analysis, notes Anthea Jeffery, head researcher at the SAIRR. “In the 2013-14 financial year, the restitution budget was roughly 3 billion rand [$283m],” she writes in the think-tank’s February bulletin.“How, then, is the state to find the money to settle all these new claims, especially when some 8,000 existing claims have yet to be resolved?”
Second, a new bill regulating foreign investment is expected to be tabled in Parliament towards the end of this year. In its current form it will have serious consequences for property owners and might explain how the government intends to cover the aforementioned funding shortfall in its restitution program.
“The investment bill is, in fact, a new expropriation measure that will apply to property owners in South Africa, both local and foreign,” Ms Jeffery says. “It is also likely to result in many people receiving zero compensation on the loss of their property” because a legal loophole permits the state to confiscate property without payment if it assumes “custodianship” rather than “ownership” of the property, she explains. This could open the door to EFF-style expropriation without compensation.
The final piece of significant legislation is the Property Valuation Act, also passed in June. This is designed to accelerate land reform by abandoning the “willing buyer, willing seller” principle in favour of a model where a state-appointedvaluer determines the price of land to be acquired for land reform purposes, or in other words, for the land it intends to expropriate.
At first glance this makes sense: inflated market values and long negotiations over price have slowed the pace of land reform in South Africa. Setting a fixed price should speed up the process. However, this may have the opposite effect, argues Richard Spoor, a public interest lawyer, in a column on the Daily Maverick, a local news site. The vast majority of land claims are currently settled out of court at the Land Claims Commission simply because most land owners are willing to sell if the price is right, Mr Spoor notes. But if owners do not want to sell, they are entitled to stand their ground and demand a ruling from the Land Claims Court, an expensive and time-consuming process. Mr Spoor argues that landowners are unlikely to be happy with theValuer-General’s valuations, and many more will insist on taking the matter to court.
“At present the Land Claims Court has one permanent judge and five acting judges,” Mr Spoor observes. “If each of them adjudicated one land claim each working day (which is impossible) it would take more than 300 years to finalise all the anticipated claims.”
These three pieces of legislation offer a more practical insight into the South African government’s plans for land reform than the NDP’s lofty ambitions. Most telling is the sheer impracticality of the restitution of land rights law and the Property Valuation Act. They are cumbersome and expensive. They are likely to create more problems than they solve, unless the investment bill becomes law. Its “custodianship” loophole could cut through the expensive red tape and bureaucratic inertia, but at landowners’ expense.
It remains to be seen how the ANC-led government intends to implement these new and proposed laws. At the very least it is clear that the ruling party could steer South Africa’s land reform policy in a direction that is closer in spirit to the EFF’s “expropriation without compensation”. This is much more extreme than the “willing buyer, willing seller” approach that has defined land reform in South Africa thus far. Maybe the ANC’s economic policies are as radical as Mr Malema’s after all.
