Rural land matters, but urban land matters more

Despite the generally positive response from business to the election of Cyril Ramaphosa as president of the ANC, a conference resolution to allow for land expropriation and redistribution without compensation has alarmed many observers.

Ramaphosa compounded investors’ unease at the weekend by saying that expropriation could “make this country the Garden of Eden”. This remark, and the debate that followed, perpetuated the misunderstanding that land is a rural issue.

The ANC’s low-key approach to land reform since 1994 has had three prongs: restitution of land lost through racially discriminatory apartheid-era laws; tenure reform to create legal coherence out of the diversity of inherited tenure forms; and land redistribution. Tens of thousands of restitution claims lodged in 1998 have been resolved, mostly through financial compensation.

The redistribution strategy has lacked urgency, and most of the 8% of land transferred has not resulted in viable black-owned farms.

The 2017 conference resolution was therefore no real surprise. Two-thirds or more of productive farm land cannot continue to be owned by whites, while major historic grievances remain unaddressed, and poverty and unemployment are at such extreme levels. Hasty policy changes pose major systemic risks. The farming sector’s capital assets, machinery and livestock are valued at about R400bn and forms the collateral for financing from commercial banks. Generalised expropriation without compensation would have catastrophic consequences for the banks, and for future investment and employment.

The ANC’s resolution included a strong qualifier: reforms must not affect food security or the economy negatively. This suggests that alternative policy pathways will be explored. The government may fast-track tenure upgrading and agricultural assistance for smallholder farmers. Meanwhile, the National Development Plan endorses significant further transfers of commercial agricultural property to black ownership by 2030.

Rural land reform is big news. Commercial farmers are major party donors, traditional leaders have fought hard to retain their apartheid autocracies, citizens of all races have romantic attachments to farm land, and the shadow of Zimbabwe hangs over policy debate. But land in SA is primarily an urban and peri-urban issue. SA is not Zimbabwe.

At least two-thirds of South Africans live in urban areas and this is rapidly growing. Agriculture generates less that 2.5% of GDP, compared with industry’s 30% and the service sector’s 67%. South Africans are overwhelmingly dependent on employment and wages. Most people do not want to farm but rather to make a home within striking distance of urban employment.

Urban land reformers have low-hanging fruit to pick. The metros are large landowners, and possess powerful regulatory powers over private land users. Other key owners in urban areas include government departments: in every city there are tracts of strategically placed land ostensibly occupied by military forces, public health facilities, state transport agencies, schools, or state security bodies. Just as much urban land is held — mostly wasted — by the parastatals.

Changing city land access and control is potentially hazardous because it brings policy uncertainty to the heart of the economy, and the politics of peri-urban townships are volatile. The potential pickings for corrupt politicians are also vastly greater. But the cities are the future, and this is where the government’s policy focus should lie. Rural land matters, but urban land matters more.

• Butler teaches public policy at the University of Cape Town

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