Sunday, November 28 2021

South African President Cyril Ramaphosa has conceded that the country’s land reform program is taking too long to meet the challenge of inequalities in land tenure in South Africa. Bureaucratic delays, favoritism and political influence, as well as opportunism among beneficiaries and landowners are among the challenges that have hampered the progress of South Africa’s land reform program.

At the same time, government farm support programs have not been nimble and swift enough to provide the necessary support to beneficiaries.

In 1994, when South Africa became a democracy, white farmers owned 77.580 million hectares of farmland out of a total area of ​​122 million hectares. The new government has set a objective of redistributing 30% of the 77 million hectares during the first five years of government. This target has been steadily shifted over the years, and now the target is to reach 30% by 2030, in accordance with the National Development Plan. agricultural and land reform objectives.

Our estimates, which include restitution, redistribution, private transactions and public procurement, suggest that 13.2 million hectares (or 17%) have already been transferred from white landowners to the state. An additional 3.08 million hectares have been transferred to black owners and 10.135 million hectares through private and state funded transactions, including land restitution.

The addition of 2.339 million hectares of land that have been identified for restitution but for which communities have chosen to receive financial compensation as a means of restitution brings the total area of ​​land rights that have been restored since 1994 to 15, 56 million hectares. This equates to 20% of the land once held by whites.

We argue that things can happen much faster if the arteries of land reform are unblocked.

One proposal is the creation of an Agrarian Reform and Agricultural Development Agency. Ramaphosa announcement the creation of such a body in his State of the Nation Address in February 2021.

Here we describe how the proposed agency could accelerate land reform by removing the process of political and bureaucratic control. The only role of the state would be to create an enabling environment. Much of the work would be done by landowners, agribusinesses and large corporations. Their job would be to facilitate a fair and sustainable land reform.

We believe that the model presented below, with the agency proposed by the President as a starting point, would give South Africa another chance to launch a meaningful land reform program.

The model could be the vehicle through which farmland can be returned to the majority of South Africans, with two notable differences from previous efforts. First, it would ensure that beneficiaries are not bankrupted, as has been the case in the past. Second, commercial farmers, who have benefited from the injustices of the past, would have the opportunity – in a non-politicized way and with little red tape – to contribute significantly to land reform.

How would it work

The agency should ideally provide national coordination, reduce bureaucracy and become a one-stop-shop for issues related to decentralized redistribution of agricultural land. This would not require additional tax expenditures. Rather, it would use existing sources of equipment and other forms of support from the commercial agricultural sector.

The idea for the agency was developed from proposals on the decentralization of land reform first articulated in South Africa. National development plan published in 2012. The ideas of the plan were taken up in a 2019 report by the Presidential Advisory Group on Land Reform and Agriculture.

The central principle is to entrust the responsibility for redistributive land reform to the land committees at the district level. These would design local solutions created on dominant agricultural businesses while taking into account the community and social dynamics of a region.

The agency would remove the task of land acquisition and redistribution from the government sphere and put the blame on those who benefited from the previous regime.

At the district level, farmers, communities, agribusinesses and other private sector actors would develop local solutions within a framework managed by the agency.

Local district land development and agriculture committees would be established in a particular area. They could include ten voting members (all bona fide farmers: five blacks and five whites). This structure could then elect a president and invite six other members (agri-food companies, banks, community, etc.) to join.

The local committee should consult with all stakeholders in the region and register as a non-profit company with a founding act, budget and board of directors.

The functions of the committee would include:

  • the list of land,

  • identification of potential beneficiaries in terms of objectively agreed criteria,

  • funding, training and support programs,

  • business monitoring and

  • liaison with ministries and the secretariat of the overall national agency.

The mechanism would not require the state to provide funds for land acquisition since the land would be made available by farmers and transferred to beneficiaries without any flow of funding.

What is proposed is a form of “self-expropriation without compensation”, but on the terms of the current landowner. This implies that no legal procedure is required to obtain land for free. It is carried out automatically by the current owner and will transfer the land to the beneficiary of his choice.

Success factors

There are a number of critical success factors that should be in place before any transaction takes place. These would include: access to land, long-term ownership or rental, skills, access to markets for inputs and the sale of products, finance, exit strategy and an enabling environment.

Simply put, the new agricultural enterprise on redistributed land should be immediately linked to commercial value chains.

The district committee would be responsible for coordinating and facilitating implementation in accordance with agreed principles.

The national agency would be established by the Minister of Agriculture, Agrarian Reform and Rural Development and overseen by a 12-member council that would meet quarterly. A small secretariat would have the financial and administrative capacity to liaise with the local committees.

Its main functions would be to create favorable policies and smooth bureaucratic dead ends, set up a land reform fund, prescribe rules for local committees, and record and monitor the progress of land transactions.

Nudges

To encourage current landowners to donate land, we offer:

  • Gift tax exemption for land or funds donated for agrarian reform purposes.

  • Capital gains tax exemption on the sale of land to a beneficiary or to a new entity.

  • The registration of title deeds and important notarial links on the deed signaling the status of the land reform of the deed. The swift transfer of land titles and negotiable long-term leases to beneficiaries, including those occupying land already acquired for land reform purposes, will go a long way in supporting the land reform process.

  • Exemption from transfer fees.

  • Recognition mechanisms to promote voluntary donations. This could take the form of water rights and access to an agrarian reform fund at favorable interest rates. Large-scale black economic empowerment scores could also be used. These have been put in place by the government advance economic transformation and increase participation of black South Africans in the economy.

Empowerment recognition could also be given to individuals or businesses that donate funds to a land reform fund.

What we are proposing is a way forward that avoids overly cumbersome and bureaucratic-driven processes. The agency would operate largely virtually. It would only report progress and ensure that politicians do not hinder land redistribution. This would facilitate the land redistribution process by ensuring that incentives for land donation and transfer are in place.

This would ensure limited opportunities for political rent seeking, jobs for friends and corruption.

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