Land reform (through both the state and the market) has made more progress than experts and policy makers care to admit. Wandile Sihlobo and Dr Tinashe Kapuya explain this and why expropriation without compensation is a catastrophically bad idea.
Given that 90% of the value of a farm is the improvements to the land and that most farming operations have large debts – anything between 30% and 50% of the asset (land) value.
If the government declines to compensate its commercial sector for land improvements then it will be paid for indirectly. The entire economy and its citizenry will pay for land seizures through lost agriculture export revenues, lost job opportunities, loss of confidence – which would lead to the flight of domestic and foreign direct investment from the sector and the economy at large.
South Africa needs more public-private partnerships, such as the Agricultural Business Chamber (Agbiz) and the Banking Association of South Africa’s (BASA) land reform model. These should be tested in order to create joint collaboration between government and the private sector and, in turn, to build trust.