Property Rights: The Key To South Africa’s Land Reforms

Property Rights: The Key To South Africa’s Land Reforms

South Africa recently reopened land reform claims, and new proposals for broader change are in the news. Land reform has been a mixed bag thus far, and the key issue is a lack of firm property rights. 

According to Aninka Claassens, senior researcher and the director of the Rural Women’s Action Research Project at the University of Cape Town, the early beneficiaries of land reform struggled to turn their properties into productive farms, and the South African government has responded by shifting its focus to productivity and commercial ventures rather than supporting the development of those smallholder farmers. 

“One of the things that government is shocked by is how the early transfers to groups of poor people didn’t really succeed, and in many instances people didn’t use the land productively. So they’ve created all these policies tied to productivity and how the land is used. They didn’t look at why land reform didn’t succeed, and that it was primarily due to the lack of support.” 

In other words, the training and skills development that can help subsistence farmers to become commercial farmers. 

For Jannie de Villiers, CEO of Grain South Africa, an industry organization providing strategic support and services to farmers, selection of appropriate beneficiaries of land reform is important, but training is vital. Grain South Africa itself has 4,000 farmers in study groups around the country.

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“We teach farmers how to plant, how to do weed control… but there’s also training on things like how to fix your own tractor,” Villiers said, argues that the major hurdle which remains is to find a way to secure financing for the beneficiaries of land reform.

“We’ve got the skills already in terms of training. Where we need government is to help us unlock this financing problem.”

And that is a matter of property rights. 

Right now, “There is no criteria in place that the farmer who gets the land from government will actually get the farm,” and according to de Villiers, the impact of secure tenure cannot be underestimated. 

“The effect of land reform without title deeds is that the farmer can’t get crop financing, and thus can’t produce anything — so the land turns fallow.” 

Solving productivity problems?

Tinashe Kapuya, manager of international trade and investment intelligence for South Africa’s Agricultural Business Chamber, notes that such uncertainty and instability around land tenure is a critical problem not just in South Africa, but across the continent as a whole. 

“In most, if not all African countries, small-holder farmers cannot use land as collateral due to a system of communal tenure that essentially makes land a dead asset.” 

“Attaining some form of secure tenure and stronger private property rights will most likely facilitate the inflow of funds into agriculture.” 

Secure land rights could also solve some of the productivity problems that small farmers experience. “With land being given its real value, improved productivity and utilization are aspects that will come naturally as farmers seek to maximize their returns and profits in order to repay loans and credit lines,” says Kapuya.

De Villiers seems to agree. “At the moment there’s a lot of land reform taking place, but the land is lying fallow because the property belongs to the government, and the farmer can’t get finance because he doesn’t own it.”  

The implication is that if the South African government wishes to see a viable increase in agricultural productivity from land reform, it would do well to address longstanding property rights issues. Instead of holding fast to trust arrangements and government ownership with insecure tenure, it might consider empowering citizens to have true ownership.

But should the right to property really be tied to an ability to produce commercially? 

Claassens argues that the raison d’etre of land reform has shifted from a means of restitution to a means of encouraging black entrepreneurship. “The early policy was that people would get secure rights, including ownership, in view of the fact that they’d suffered past discrimination. That policy has shifted towards giving only conditional rights and [farmers] have to prove they’re productive before they can develop to the point where they might get title.” 

In other words, she says, “We’ve got a separate system of ownership.”

“That is really reverting to the type of discriminatory system we had in the past, where there were all these limitations on black ownership. First elite white owners, and now elite black owners, have ownership rights.”

In addition to the ethical and legal quagmire of a modern constitutional democracy with two separate systems of property rights, there is a practical problem to requiring productivity. 

Kapuya points out that another hurdle is an eventual “marginalization of less efficient and less competitive farmers. This will create a challenge that I think governments have not given enough thought of, because the inherent fact is that not all of the small-scale ‘farmers’ in Africa are in fact bona fide farmers.” 

In the case of South Africa, should a farmer really have to prove his or her value as a farmer before being able to lay claim to deed and title? Kapuya notes that many farmers may have neither the interest nor the risk-appetite to use land as collateral for investment. 

However, these farmers “still need capital as much as their commercially oriented smallholder counterparts.”

Without secure tenure, access to that capital — for both the commercially-minded farmer and the one simply seeking to right a past wrong — remains, for now, stubbornly elusive.