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Collaboration is key to land reform success

Jul 03 2018 09:35
Andile Ntingi

In traditional economics land is more than just a piece of earth; it is a factor of production. 

This means in its absence no production would be possible, and therefore no serious wealth accumulation can take place.

Since the ancient times, the true value of land has always stemmed mainly from its scarcity, but many land buyers purchase it to capitalise on its paucity, either to develop it for residential and commercial settlements, commercial farming, mining and minerals processing, or a whole host of other cash-generating activities. 

On top of its cash-generating potential, land is loved by the commercial banks because it is one of the oldest forms of collateral as it cannot be moved, stolen, wasted or destroyed. 

Throughout the world, land is not only scarce; its ownership is concentrated in the hands of the few.

In South Africa, land ownership is linked to the colonial and apartheid conquest and dispossession of land previously occupied by black Africans. 

This resulted in whites owning the lion’s share of the land.

Attempts under SA’s democratic government to alter this skewed land ownership by redistributing a fair amount of land to landless blacks have been less successful. 

In fact, the land redistribution process has moved at a snail’s pace, and a large number of the commercial farms that have been transferred to blacks have failed and are no longer productive. 

This has raised concerns about what would happen to food security if land redistribution was to be aggressively pursued and widened.

In the latest flare-up of the often-heated land ownership debate, which is unlikely to fizzle out anytime soon, the focus has been on whether or not to expropriate land without compensation to speed up land redistribution. 

The glaring failure of the farms that have been transferred into the hands of emerging black farmers has largely been overlooked in the current debate. 

According to figures provided by former rural development and land reform minister Gugile Nkwinti during a State of the Nation debate in February 2013, a total of 5.56m hectares had – at the time – been redistributed since 1994 to land claimants through various land reform programmes. 

However, this is still a long way from the government’s target of redistributing 24.5m hectares of agricultural land to black South Africans. 

So far, land that has been acquired by the government and returned to its original owners is equivalent to about 6.78% of commercial agricultural land.  

Due to a lack of post-acquisition support, some black farmers feeling the pressure of being thrown in at the deep end have since rented their once-productive farms or are considering selling them back to established commercial farmers.

There is a myriad of factors that lead to black farmers throwing in the towel.

These include a lack of access to start-up and investment capital, markets, skills, mentoring and training; and corruption, whereby unskilled politically connected individuals hijack state-sponsored financial assistance at the expense of emerging farmers. 

The combination of insufficient government assistance and corruption displaces emerging black farmers, defeating the objectives of the land reform policy. 

Whether any future land reform policy involves expropriation of land without compensation or not, it will have to provide black farmers with effective assistance that addresses their shortcomings. 

The make-up of this assistance should involve roping in the private sector to contribute to the sustainability of black farmers. 

Without the buy-in or involvement of the private sector, there is little hope of developing emerging black farmers into successful commercial farmers. 

A concerted effort should be made to open up the entire food production value chain to black farmers to ensure that they generate sufficient income to sustain their ventures. 

Food retailers and food manufacturers must be encouraged to procure from emerging farmers.

As part of their enterprise and supplier development programmes, mandated under empowerment legislation, these companies must be persuaded to offer long-term off-take agreements to emerging farmers to alleviate the cash plight of these farmers.

Emerging farmers will then be in a position to secure loan funding on the back of the off-takers. 

Since farming is a capital-intensive industry, banks should be encouraged to design lending products for emerging farmers that take into account the cyclical nature of farming. 

The reality is that black farmers may need to access loans during the planting season and then repay the loans after harvesting. 

They can’t be expected to service the loans on a monthly basis, but only when they have generated income from their harvest. 

Another industry that has a moral responsibility to support the development of commercial farming in rural areas is mining.

Mining takes place mainly in rural areas and employs many workers from labour-sending regions – often poor, underdeveloped rural areas. 

Mining company Sibanye-Stillwater is implementing community development programmes that are aimed at stimulating food production and large-scale commercial farming in areas that are impacted by its mining operations.

There is much that can be done to support black farmers, but a coordinated response by the private sector and government needs to be mounted, otherwise land reform will fail again. 

On its part, the government needs to raise its service delivery game and clamp down on corruption in its ranks.

Andile Ntingi is the chief executive and co-founder of GetBiz, an e-procurement and tender notification service.

This article originally appeared in the 5 July edition of finweek. Buy and download the magazine here or subscribe to our newsletter here.

employment  |  land reform  |  land redistribution

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