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Thursday May 26, 2016

There's more to land reform than expropriation

Did you know the government could radically speed up land reform without expropriation? Did you know that 5 million to 7 million black South African families live on council-owned urban property, which could be transferred into their names, giving them security and injecting billions into the economy? Did you know that the government owns vast tracts of unused land that could be given to the indigent?

Measures aimed at empowering South Africa's black majority to share in the wealth provided by our land have long been supported by the Free Market Foundation (FMF). Apartheid spatial planning was a travesty, which saw unelected and prejudiced bureaucrats control the use and allocation of residential, as well as agricultural land.

The current government's decision to pursue a similar faulty line of thinking by enacting into law the Expropriation Bill is worrying at best, and disastrous at worst. President Jacob Zuma is set to sign this bill into law soon, thereby striking a blow to security of property rights and investor confidence - two things for which South Africans fought hard and long. The FMF, however, suggests some better alternatives to expropriation.

The Khaya Lam (My Home) Land Reform Project, one of the FMF's flagship initiatives, is dedicated to transformation through ownership. Between 5 million and 7 million urban plots - mostly residential - throughout South Africa are owned by local government, and not the people who live on them. Converting these plots from councilowned to privately-owned with full freehold title deeds will bring a sense of pride and dignity to the occupants, who, as 'new owners', will be able to invest in and perhaps generate an income from their property.

In many cases, ownership is all that is needed for millions of South Africans to enter the market as legitimate small business owners, or landlords to others who do not yet have the means to own property.

The Department of Land Affairs and Works, according to the Deeds Registry, owns a substantial amount of unutilised land - both urban and rural. In certain areas, there is land marked as "reserved" for specific government functions. However, due to the complexity of apartheid land law the government inherited, the departments which are to use these plots, in many cases, do not even know they exist.

The government, therefore, has it well within its means to convert millions of plots across the country to full ownership title and to distribute, at virtually no cost, unused government land to landless black individuals. The massive amount of land the State owns has not been given the attention it deserves in the national conversation about land reform.

Where the government has done substantial good - RDP houses - it has not gone far enough. RDP title deeds include "pre-emptive clauses" that prohibit owners from selling their home for a specified time period. These clauses nullify a central feature of property ownership, which is the choice and the ability to sell or let.

According to studies referenced by the FMF, this phenomenon has led to 80 percent occupancy of RDP homes by people who "bought" them illegally from the previous owners. There is no justice in forcing poor homeowners to choose between losing their home and getting a job in another city, or remaining where they are and jobless, just because they are not permitted to sell their house and move to another area.

FMF argues that the government should treat black South Africans the way whites are treated. Whites are allowed to let and sell their property; so too should black people be allowed to utilise their most valuable asset.

Finally, the Subdivision of Agricultural Land (an apartheid land law) prohibits owners of "agricultural" land from subdividing it without jumping through bureaucratic hoops.

Poor individuals cannot buy a small plot of land from a farmer for their own purposes, unless they get consent from the Minister of Rural Affairs and Land Reform.

To add insult to injury, the minister may dictate "as he deems fit" the purposes for which the new subdivided land may be used. As with RDP homes, this is an instance of the government severely limiting ownership rights to the detriment of the poor. This act should be substantially amended to reflect our post-apartheid dispensation, or repealed entirely.

There is clearly much the government can do to effect equitable land reform, rather than hold the threat of expropriation over the heads of all South Africans.

Temba Nolutshungu
Free Market Foundation
Business Report




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