State of the Nation 2013 – What should we make of the state of land reform?

Land reform received a fair amount of attention in the President Jacob Zuma’s 2013 State of the Nation Address.

Sceptics will say “we’ve heard it all before, now show us that something will happen” and the pessimists will say “there is no virtue in admitting failure and government still doesn’t understand the fundamental challenges facing land reform and the land claims process”.

The more positive view would be that Zuma has always placed land reform on the top of his agenda and that it was inevitable the process of identifying the central challenges in land reform would take up the five years of the policy cycle between the Polokwane and Mangaung conferences. The performance of the present government is dealt with in a departmental mid-term review released in 2012.

So what did the president say about land reform in SONA and what should we make of it? Here is the excerpt:

“As stated before, we will not be able to meet our redistribution targets.

Government’s mid-term review last year revealed a number of shortcomings in our land reform implementation programme. We will use those lessons to improve implementation.

Firstly, we must shorten the time it takes to finalise a claim. In this regard, government will now pursue the ‘just and equitable’ principle for compensation, as set out in the Constitution instead of the “willing buyer, willing seller” principle, which forces the state to  pay more for land than the actual value.

Secondly there are proposed amendments to the Restitution of Land Rights Act, 1994 in order to provide for the re-opening of the lodgement of restitution claims, by people who missed the deadline of 31 December 1998.

Also to be explored, are exceptions to the June 1913 cut-off date to accommodate claims by the descendants of the Khoi and San as well as heritage sites and historical landmarks.

Another key lesson is to provide adequate post-settlement support to new landowners so that land continues to be productive.

We also need to provide better incentives for commercial farmers that are willing and capable of mentoring smallholder farmers.

Another challenge we have faced is the preference for money instead of land by some claimants, which also does not help us to change land ownership patterns.”

When commenting, it is important to distinguish between land reform in the context of restitution claims (commonly known as land claims) and land reform in its general form of land redistribution. The former is driven by legalistic court processes while the latter is driven by policy and administrative processes.

What were the targets of land reform? And by just how much has the target been missed.

Shortly after 1994,  government identified  a target of 25-million hectares for transfer to Africans. This was apparently done in conjunction with the World Bank and represented 30% of agricultural land. At the time, land prices were typically between R2 000 and R4 000 per hectare. Averages would suggest that the estimated total cost would be around R75-billion. Nobody would argue with those figures as being good value for constitutional capital. Inflation adjusted, that would be about R165-billion in 2013.

By the way, the South Africa’s land area comprises 122-million hectares. Apparently, according to the latest land audit, the state owns about 22% of this.

So how far are we off target?

Well, very far. Around five to six million hectares of land has been transferred to land claimants and land reform beneficiaries. But most of this was state land and not really part of the 25-million hectares originally envisaged. Only about 2.5-million hectares of private land has been transferred, 10% of the original goal. 

The figures given by government are not always common cause. In the area of land and land reform, there is never any agreement on anything.

So the first question is, why are things going so slow? The reason is that government completely underestimated the complexity of land reform, especially the land restitution process. The reform that has taken place, has mostly been either unsuccessful or very disappointing.

So government has now postponed the target date to 2025. Is this realistic? It is certainly more realistic than the previous target dates that have all been shifted with a bit of egg on the face. Those in the know, know that rural land claims will take many more years to finalise. 2025 is probably a more realistic target. Some would suggest that we should realistically add another 10 years after 2025. The time horizon for land reform should have been revised long ago and it is a positive development that the official stance of government has accepted basic realities.

The statement that the “willing buyer, willing seller” principle has slowed land reform is a misdiagnosis of the problem. What has slowed down land restitution claims is the lack of capacity to research land claims in the offices of the Regional Land Claims commissioners and a lack of advancing the complex legal processes. Up until now, the disputes in the land restitution process has concerned the validity of the claims, not the price of the land. It is also important to distinguish between land restitution and land redistribution. The former is the “land claims” process that goes through the land claims commission and the Land Claims Court.

General land redistribution processes have in turn been hampered by the slow progress of land restitution processes. In the northern and eastern provinces of South Africa, the land claims process in terms of the Land Restitution Act of 1994 must first be finalised before there can be general land redistribution. Land cannot be given to black beneficiaries until there is certainty in respect of whether a land claim over that land is valid and who the rightful claimants are.

In provinces where land claims are not an impediment to land redistribution, such as the Free State, Western Cape and Northern Cape, the process has been hampered by the limited uptake capacity of black emerging farmers. In fairness it should be conceded that unrealistically high market prices have played a role in slowing down this part of land reform.

The real reason for the delays in land redistribution has been the high failure rate of redistribution projects. This in turn has been caused by the lack of post-settlement support and the abolition of the system of extension officers. A well-established network of such officers existed during the apartheid era. Today this system is being rebuilt and is combined with the mentorship program that the SONA refers to. It will take decades for black farmers to take their rightful place in the agricultural sector. We simply have to be patient.

Since 2008 the purchase of new land for land redistribution has slowed down remarkably. It was realised that the failure rate was too high to maintain the rate of land purchases at that time. The financial pressures experienced by the Treasury also played a huge role. Also, land was no longer cheap. Land prices had shot up by 300% to 400% since the mid-1990s when the 25-million hectares target was determined. The R75-billion bill now looked more like a R250-billion bill.  And then should be added the bill for post settlement support.

This jolted government into making business of all the lip service it has paid to abolishing the “willing buyer, willing seller” principle. Civil society warned government from the outset that this policy will drive up land prices. Government never was a willing buyer, it was a forced buyer, and a bulk buyer at that. One needs no training in economics to know that a market player that wants to buy up one third of all agricultural land (and wants to do so with tax payers’ money), will force prices upwards. Again, organised agriculture differs strongly. They believe the uncertainty created by land reform has depressed prices, and that the abnormal price increases in agricultural land have followed trends in other property market segments.

Whatever the correct position, it has become clear that land reform will be unaffordable if government continues to pay market price for land. It is therefore a welcome development that government is finally serious about ditching this policy. However, government previously promised to do so after the 2007 Polokwane conference of the ANC. Government needs to prove that it has the political will to do so.

A new policy aimed at paying less than market value will inevitably lead to litigation in the courts. The courts will similarly have to accommodate such a policy by developing a realistic jurisprudence in respect of compensation payable for expropriation. Again, it is an extremely welcome development that the debate about what is fair compensation has begun.