Millions of jobs must be created in urban areas, where 70% of people live.
Central to President Cyril Ramaphosa’s plans for revitalising SA is “a massive increase in investment in the productive sectors of the economy”. What does this mean for land reform and the agricultural sector?
The bottom line is that new farmers on redistributed land will not be successful and new jobs will not be created unless the productivity of land is improved. Productivity will not improve unless investment in agriculture is increased.
The government cannot generate such investments, so growth and jobs in agriculture can only be produced by the private sector. Encouraging this kind of investment requires a new approach to land reform.
How can the environment for investment, growth, transformation and jobs be made more supportive?
The first principle should be to refrain from changing the constitution. There can be occasions when a constitution should be changed. However, some parts of a constitution are more sensitive than others; given the enormous economic challenges we face and the collapse of growth over the past decade, property rights is an area of particular sensitivity.
Blaming the constitution for the failure of land reform is classic political misdirection; acting on it will at best raise uncertainty and reduce investment and at worst provoke a banking crisis that will destroy institutions such as the Land Bank, spill over into the rest of the economy and make everybody, particularly the poor, worse off.
A second priority is to clear the decks. The report last year of the high level panel chaired by former president Kgalema Motlanthe estimates that there are more than 26,000 unresolved land claims dating from before the initial cut off date of 1999. Since then thousands of additional claims have been lodged. The process has decayed as a result of poor design, exacerbated by corruption, poor institutional capacity and legal and policy confusion. The political urgency of land reform is clear, but embarking on accelerated and extended state led land redistribution before strengthening a shockingly weak institutional infrastructure would be a dangerous gamble.
One of the keys to encouraging a supportive environment for investment and hence for successful land reform is to harness the private sector’s experience and expertise, not only in core areas such as agribusiness and processing but also in land reform partnerships. Over the past 10 to 15 years, many individuals, organisations and supporting institutions in commercial agriculture have worked hard to make such partnerships viable. If properly supported by government policy, attitudes and institutions, such partnerships could spread and multiply.
If these principles and priorities guide the process, land reform will have a much better chance of working. However, if the economic benefits are to be shared more widely than within a restricted class of new commercial farmers, then additional goals need to be targeted.
Addressing poverty, inequality and economic inclusion requires, above all, employment growth.
On most commercial farms, especially in grain areas, increasing mechanisation has meant fewer jobs per hectare, even when investment leads to growth and expansion. Other sectors are more labour intensive. These include field crops sugar cane and cotton and horticulture, such as avocados and macadamia nuts, for which there is fast growing demand. Mpumalanga and Limpopo, where investments in labour intensive exportable crops could create many thousands of jobs, are among the provinces worst hit by uncertainties over unresolved land claims, which stifle investment and job creation.
Perhaps the most important principle of all is to see transformation in land and agriculture in the perspective of the larger economy. An understandable sense of historical injustice encourages some to see land as a standalone issue that is the source of all SA’s ills, and to see transformation of farm ownership as the means of healing them all at once. This is to mistake a part for the whole. We have to acknowledge that ill judged land reform has the potential to destabilise the entire economy.
The backdrop to the issue is that half the population is poor, and SA has vast inequalities and the world’s deepest unemployment crisis. Nearly 70% of its people are urbanised. Any workable land reform scheme has to acknowledge that it would be futile to try to reverse the dynamics that have led to this urbanisation. Indeed, urbanisation can help drive growth.
Those who are committed to farming should be given the opportunity and support to do so. But the best places to create opportunities for millions of poor and unemployed people will be in dynamic, well managed cities in which employment and enterprise can grow.
Urban land reform is a key part of urban management and there is much to be done here. The government needs to pay more attention to the needs of our expanding cities.
Successful land reform means a rapid and steady expansion of black participation as owners, and also as managers and workers in the agricultural sector. This would be enormously beneficial but on its own it will not resolve most of our social and economic challenges. It is vital that we ensure that efforts to deliver land reform don’t make it harder to accelerate economic growth, inclusion and employment.
• Bernstein is head of the Centre for Development and Enterprise, which released a new report on agriculture, jobs and land reform this week.