Private property: overall, a good thing- South Africa

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For somewhat over a decade now, a theme in South Africa’s land politics has been whether a new system of landholding is necessary. This is a different issue from the problems of forcible dispossession in the past or the distribution of property ownership today, but is arguably of greater importance.

Recently, the Daily Maverick carried a news piece entitled ‘Land reform can only happen by targeting private property ownership, says Tembeka Ngcukaitobi’. It is not an especially good piece and seems to have missed the broad point of his address – interested readers can find a video recording here. Ngcukaitobi argues that private property in land was something from which Africans were generally excluded, and quotes a colonial-era report on land tenure in West Africa explaining that land always ‘belonged to either the community, the village or to the family… never to the individual.’ (The DM article indicates that these are Ngcukaitobi’s words.)

He goes on to argue that as property became a signifier of ‘civilisation’ and a precondition for inclusion in the colonial society – property ownership being linked to the right to vote – the African elite responded by accepting this. It was, he said, one of the demands of the middle-class African leaders who convened the South African Native Convention and went on to form the South African Native National Congress – the early incarnation of the ANC – that Africans should be able to buy land and be freed from the restrictions on their right to do so.

This commitment to private property in land has continued into the democratic era. Private property, and titled ownership of land, has been viewed as a sort of ideal for land reform. 

‘The worship of title deeds, nevertheless, as the Holy Grail for land reform has also been aggressively fueled by the state. In May 2018 President Cyril Ramaphosa launched what he called “Title Deed Fridays” – most of you must have seen that – he envisaged that 11 title deeds would be handed to qualifying beneficiaries. He extolled the importance of title deeds on the basis that a house is the most important asset that one can own.’

He disputes the importance of private ownership of land on economic grounds, citing research in informal settlements as disproving the thesis that title deeds open up access to finance (a critique of the Peruvian economist Hernando de Soto’s The Mystery of Capital.)

He concluded: ‘Our land reform programme continues to regard title as the preeminent vehicle for the return of the land. Perhaps it is time to lift our gaze beyond the private property paradigm. It has now lost its shine.’

I would disagree with much of this. At best, the official attitude to private property in land has been ambivalent, at least for the past decade. Private ownership has not been disavowed. Indeed, at times it has been enthusiastically endorsed, such as in the initiative launched above. When title deeds were handed over to the community of Tafelkop last year, this was described by a fellow cabinet minister as his ‘best day in the office’.

‘The land and everything on it’

Or consider the remark by Northern Cape Premier Zamani Saul, also last year: ‘A title deed ensures that you take ownership of your property, the house, the land and everything on it, no one can come and claim it’s theirs.’

Yet, official redistribution policy is based on the idea that beneficiaries will not receive title, at least not for a protracted period. The State Land Lease and Disposal Policy of 2013 was clear that land for redistribution would be leased to prospective beneficiaries. The option to purchase would be available only to select farmers who were operating on a commercial scale, and then only after about 50 years (this timeframe has apparently been quietly reduced).

Professor Ruth Hall of the Institute for Poverty, Land and Agrarian Studies – hardly an opponent of land reform, nor a pro-private property ideologue (nor, for that matter, a fan of the IRR) – once described that policy as one which declared ‘that black people are not to be trusted with land’.

Later, the government’s papers in the David Rakgase case reiterated this position. To recap, this successful black farmer had attempted to buy the state-owned land on which he worked, this having been initially approved, but then doggedly opposed by the state. The stated policy at the time followed the ‘principle that black farming households and communities may obtain 30-year leases, renewable for a further 20 years, before the state will consider transferring ownership to them.’

Given how Ngcukaitobi described the colonial era link between land ownership and ‘civilisation’, one may be tempted to see a horrible symmetry between that time and this.

There is reason to accept his caution that private ownership and titling is no panacea. He correctly indicates that titling does not necessarily equate to collateral that can be used to access bank finance. This is unsurprising to those familiar with critiques of De Soto’s work. The ownership (or not) of any asset is likely to be one factor among several in leveraging finance.

But that would not apply to all property. Whether land is a source of collateral would depend very much on the nature of the specific asset, its use, the circumstances around it, the approach of the financial institution and so on. Loans against homes are a common source of financing for small businesses, and indeed, loans using farmland as collateral are important for commercial farming. To recognise this is not to make a unidimensional argument about the importance of private ownership, merely to note that this is part of the financing environment. 

Land reform beneficiaries who are denied ownership, or even long-term and tradable leases, are shut out of this option. 

Presumed economic incentives

Besides, the presumed economic incentives in private landholding are far from the only reasons that people might desire it. There is a sense of achievement and security in ownership – the notion that whatever happens, one will always have a roof over one’s head. For many, this might be linked to the very deprivation of property rights that existed in the country’s past. In the South African case, there are also the not inconsiderable risks of existing as a perpetual tenant of the state or a customary authority.

In Rakgase’s case, a significant frustration was the fact that his farm had suffered a land invasion, but that he lacked legal standing to remove his unwelcome neighbours.  The government showed little urgency in dealing with the matter. ‘Their officials are the reason my land was invaded in the first place,’ he said in a media interview.

Perhaps the real question to be posed is: what alternatives to private ownership should then be reconsidered? From his remarks, it seems that Ngcukaitobi has some sympathy for socially embedded systems of rights and usage. These are also legally informal, but are recognised by the community as legitimate. 

This is by no means a uniquely South African phenomenon, finding expression across Africa and beyond. Yet its informality creates its own set of problems, since little firm recourse would exist to someone who finds his or her recognition withdrawn. For this reason, various measures – with varying degrees of formality – have been adopted around Africa to give some form of legality to a socially accepted right. These may take the form of certificates specifying the boundaries of a particular tract of land, stamped and attested to by, say, traditional or police authorities. In the event of a dispute, the affected landholder would have at least some documentation to fall back on.

The most prominent proposal to arise in the policy debate has been the idea of custodianship. As with water and minerals, private ownership would be abolished, the state would step in as ‘custodian’ (not technically an owner but exercising such authority as to make the distinction a slight one) and approve land for use in housing, farming or industry.

v   “The threat to property rights is ongoing” –

It’s difficult to see this being remotely feasible, given the state of public administration – and we at the IRR fear that this may well be the endgame, as it certainly is for some political interests, both within and outside the ANC. The experience of some land reform beneficiaries at the hands of officials provides a warning to take seriously.

And that would be before factoring in the impact of this on existing financial systems, and the message that such a move would convey to potential investors, large and small scale, domestic and foreign. (President Ramaphosa has said that South Africa cannot expect investors to put their money in the country and then confiscate their assets – yet this is with perhaps some small element of caricature, precisely what the expropriation without compensation policy drive does.) 

‘Without assets’

Agricultural economists Wandile Sihlobo and Johann Kirsten have commented: ‘Overall, in the event of the nationalisation of land, the potential beneficiaries will not be able to build wealth without assets… therefore the proposed system will not enrich anyone, but rather will be a nightmare for the State to administer as we have already witnessed some difficulties in managing the current land programme.’

Interestingly, opinion polling shows some disjointed responses to the inquiries about land reform. It is agreed to largely in principle, although few South Africans view it as a priority or as something that will benefit them as individuals or households. There is also general agreement – close to two thirds of respondents across demographic groups – that land should be owned privately, according to polling the IRR published in 2018.

So, what does this all mean? Perhaps most importantly, it calls for a nuanced view of what any intervention vis-à-vis land holding arrangements will produce. As this is one factor among many in relation to prosperity and security, introducing changed property relations is in itself not likely to be a panacea. In South Africa’s case, a move to dilute or diminish private property rights would likely have a negative effect; moves to extend them would probably on balance be good. In some cases, this may purely be a matter of giving households that satisfaction of knowing that they are now in properly, recognised, formal control of their abodes. 

And this will, of course, need to be done with due respect for the difficulties inherent in titling, such as obligations to pay taxes (although a claim of indigence can mitigate this). Indeed, it might be a good idea to shift the needle on titling slowly, bringing people hitherto excluded from the system into it gradually, perhaps by issuing some form of documentation to confirm existing rights within the cultural milieu as a first step.

Compromise ideas

Wandile Sihlobo, Mzukisi Qobo and Theo Boshoff have written in relation to the country’s communal areas that it might make sense to explore titling for economically productive assets – crop and grazing land – but not for homesteads themselves, given the cultural significance of the latter. (Though the risk remains that the latter might be violated by those wielding effective authority.) These are compromise ideas that are worth discussing.

Yet it seems incongruous to deny black (‘emerging’) commercial farmers the benefits and flexibility that their white counterparts have enjoyed. The country needs more farmers, and those committed to participating in the farming economy should not be hobbled by the government’s mistrust of them. 

The private property paradigm is a good one, generally, just not a one-stop solution for all problems. If we realise this, it is within our power to create an appropriate system.

Terence Corrigan is the Project Manager at the Institute, where he specialises in work on property rights, as well as land and mining policy. A native of KwaZulu-Natal, he is a graduate of the University of KwaZulu-Natal (Pietermaritzburg). He has held various positions at the IRR, South African Institute of International Affairs, SBP (formerly the Small Business Project) and the Gauteng Legislature – as well as having taught English in Taiwan. He is a regular commentator in the South African media and his interests include African governance, land and agrarian issues, political culture and political thought, corporate governance, enterprise and business policy.