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Researchers plot 4 outcomes for land expropriation without compensation

Feb 26 2018 17:25

Cape Town - The ANC's policy decision on land expropriation without compensation could result in four possible outcomes, according to a paper by Wandile Sihlobo, Theo Boshoff and Sifiso Ntombela, researchers at the Agricultural Business Chamber (Agbiz).

In the paper, they explore alternative legal theory which could relate to land expropriation and compensation. They make it clear, however, that their discussion of possible alternatives is not based on already settled law.

The researchers emphasise that the four scenarios they outline are not intended to be recommendations, but simply four distinct possibilities that could arise, depending on which mechanisms and directions government decides to pursue.

They also emphasise the need to tackle barriers to market for communal and smallholder farmers, as well as access to inputs and seeds for sustainable production.

"Distributing and increasing access to land without addressing the market access barriers, and input supply constraints coupled with a lack of infrastructure for smallholder and communal farmers, will not yield production growth, but subsequently will exacerbate the food insecurity problem in the country," the research paper cautions.

"Food insecurity in the country is already at unacceptable levels and could get worse if land is distributed to previously disadvantaged individuals without putting proper mechanisms in place to increase access to markets, financing, inputs and infrastructure."

The four scenarios:

The land grab scenario

In this scenario Sihlobo, Boshoff and Ntombela envisage a situation in which ordinary people, triggered by political statements, take the law into their own hands in an unusual manner.

"In this scenario, a lack of clarity on what is meant by statements such as ‘taking the land back’ could prompt citizens to disregard the rule of law. As a result, incidents of illegal land occupation will escalate, coupled with farm invasions, subsequently making the agricultural sector non-functional and unproductive," states the research paper.

"Aside from human rights violations becoming commonplace, employment will decline, production will fade and imports will rise, leading to high levels of food insecurity. Strong reliance on imported food could be risky for the country..."

This scenario will rank poorly from both an economic and a legal point of view, in the view of the researchers.
 
The legal land grab option

In this scenario, the view of the researchers is that the ANC (possibly with assistance from the Economic Freedom Fighters) could amend the Constitution, paving the way to implement expropriation without compensation at government level.

The researchers point out that, although no compensation is payable for the land in this scenario, compensation is still paid for incidentals related to the going concern, as the intention is for the beneficiary to continue with the farming enterprise.

In this scenario the researchers expect land acquisitions to still take place within the law and follow a fair administrative procedure; disputes are settled in the courts, and no one is evicted without a due court process.

They expect illegal land occupation and rights violations to be prevented in this scenario, but the protection of property rights in SA to diminish, as well as investment in agriculture.

In the view of the researchers, this scenario also gives rise to the agricultural, financial and agro-processing sectors being the biggest losers in terms of production, exports and employment.

Although they regard this second scenario as slightly better than the land grab scenario, they see it as negative from an economic point of view.

This is because they expect the reduced recognition of property rights in this scenario to lead to disinvestment and a gradual decline in the agricultural, agro-processing and financial sectors. 

The business-as-usual scenario

The researchers explain that this scenario will prioritise the significance of sustaining the agricultural and food system, as well as not harming other sectors of the economy – as stated in the ANC’s decision.

If this scenario is chosen, the researchers do not expect the Constitution to be amended or the existing powers of expropriation to be used. Instead, the current mechanisms of acquiring land for redistribution will be followed to avoid damaging the economy.

The researchers point out that the inclusion of previously disadvantaged individuals in the formal food system remains relatively low, despite a growing amount of land being transferred to them through government and private sales.

To the researchers this indicates that there are many factors other than land scarcity that sustain the food production system. These include access to markets, the availability of financing, infrastructure, training and skills, as well as access to information.

The research paper states that the third scenario provides strong protection for property rights and upholds the rule of law. There are, however, different opinions on the extent to which current mechanisms used by government will comply with the constitutional requirement that citizens must be able to gain access to land on an equitable basis.

"While we note that there are differing opinions regarding the extent to which the state-led land reform programmes have delivered on their constitutional mandates to date, the public discourse leading up to the ANC’s elective conference has been aimed at accelerating land redistribution and to expedite the realisation of the constitutional mandate to enable equitable access to land," the research paper states.

A hybrid approach scenario

In this scenario, different mechanisms are used to speed up the pace of land reform. The researchers expect a blended financing model and BEE in agriculture being used to transform productive farmland. Land that is unbonded, unused and uninhabited by the owner is targeted for expropriation to reduce the economic impact.
 
"Policymakers realise that it might be possible that a nominal amount of compensation still needs to be paid for relocation costs and other incidentals, even if the Constitution were to be amended," states the research paper.

"This is based on a number of untested legal assumptions, but it is argued that the public interest would require compensation to be significantly less than market value in instances where land is unused, unbonded and uninhabited."

The researchers expect that, if this scenario is followed, the decision will be taken to test the theory and determine whether this approach would result in similarly discounted compensation being awarded, without facing the potential lawsuits and socioeconomic upheaval that may result from amending the Constitution.

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