I recently read Clem Sunter (the Don of CEO's), relating to the comments made by the ANC Youth League on land redistribution in South Africa, where he refers to the urgent need for a Codesa 3 in order to avert a ‘failed state’ scenario.
In short, I fully agree with him on the issue, and here's why...
The bottom line is that land redistribution is the single most important issue in the South Africa at the moment, and has the ability to destabilise the country to such a point where it ceases to exist as such, in a worst case scenario.
Consider the most likely two scenario’s on the topic, each falling on different sides of the scale;
option one is the laissez fair route, where nothing is done to address the issue.
We carry on as normal, and disregard the calls for ‘radical’ redistribution as a declaration of war against the Constitution. We place troops on all farms and the Youth League becomes a pseudo rebel group, directly and indirectly setting the fall of dominoes in motion for young, unemployed and uneducated people to violently grab land (or attempt to anyway) by any means possible.
The downside to this is that we simply don’t know how much support for such radical action may exist. We may see the rise of a group similar to the Revolutionary United Front (RUF), which brought complete chaos to Sierra Leone, and left a legacy of the most atrocious of war crimes imaginable.
The other possibility is that the South African military are strong enough to quell the uprising swiftly, and nothing more comes from it after that.
Yet somehow, most people know that the latter outcome is highly unlikely, as this would simply ignite a new ‘struggle’, which immediately starts with armed conflict; thus nullifying what we as a country achieved until now.
Quite obvious then, that neither of the above brings about stability. So, even if we win, we lose in the end.
This brings us to option two, which is the willingness to surrender land to those that are entitled to it.
Currently, land redistribution is governed by the Constitution and the Restitution of Land Rights Act 22 of 1994. It is according to both these, that land is distributed by the willing-buyer-willing-seller method, although they also include expropriation clauses.
According to National Treasury statistics, 95% of all land claims have already been finalised, and the remaining 5% are to be finalised in the next ten years. Incidentally, this 5% includes some of the largest commercial farms in the country, complicating the matter even further.
It is a known fact that the majority of farms that were re-distributed to black owners, currently produce nothing more than patches of cultivation with the sole purpose of supporting subsistence farmers.
South Africa is known for a strong agricultural industry, and projected food shortages due to future world over population already indicate massive shortages in food and water to come. This means a progressive, industrialised and stable agricultural sector will literally be worth its weight in gold in the near future, especially in terms of exports.
The point I’m making is basically that we cannot afford to lose any commercially productive farms at the cost of politics...frankly, at the cost of nothing.
The solution then, could be found in the commercialisation, and more specifically, the draping of the corporate veil, over agriculture.
Allow me to explain...
Black Economic Empowerment (BEE) can be viewed as another flawed model in S.A, simply because the copious amounts of money invested therein, haven’t produced the goods in terms of the purpose it needed to serve.
Most black people are still stuck in poverty, whilst black billionaires ordered jets, before they even finalised large BEE transactions.
The reason I’m dealing with BEE, is basically because I am of the opinion that both the land redistribution problem as well as BEE could be addressed in one go.
It’s simple; the Government encourages a model where all large commercial farms are placed in private or public companies, where 50.1% of the shareholding is allocated to the current owners, and 49.9% to the people staking claim on the farms themselves.
Effectively, nearly half the farm is expropriated without payment... with a catch.
When you consider how much is currently spent on the purchase of these farms, as well as the programs the Government would have to have implemented to keep them commercially viable after the transfer to the new owners, the figure reaches tens of billions; money that also had the possibility of ending up in yet another bottomless pit.
These funds could be used to establish trading caucuses, with the sole purpose of marketing the farms produce to local and foreign markets. Some of the funds can also be utilised to construct factories, such as washing and boxing facilities on the farms, creating ‘super farms’ with exponential growth potential.
This sorts out the ownership issues, as the current owners either purchased or spent large amounts of money on improvements on the farms, and by expanding their markets, their income is relatively unscaved by the loss in profit share.
On the other hand, the black owners do not need to invest in the farms themselves, and valuable industry knowledge is maintained within the corporate entity, without the risk of it becoming the victim of tribal infighting and yet another white elephant (not meant in a racist manner...call it black elephants if you want Youth League...)
Skills development and job creation is given a massive boost, as these farms are industrialised to produce finished products, instead of raw materials.
The new black owners will also have the opportunity to build wealth for the first time in their lives, as a ‘slow-retreat’ clause could be implemented, providing for the purchase of the 50.1% from the previous owners over a period, with profits generated from the farm itself, making the investment self sustaining.
Given that the caucus groups could have sales targets for each farm, the market expansion strategy they are supposed to implement may just supply the catalyst needed.
To circumvent the Constitutional issues, without having to change the Constitution itself, Treasury could implement massive tax breaks for farms that willingly engage in such a model within a period of time, and huge penalties for those who do not.
This applies indirect force, without direct intervention into property rights, and unnecessary Constitutional reform, thus, maintaining stability.
I fully agree with Sunter’s sentiments, although I do think that he is drawing a worst case scenario in his findings that we are on our second tipping point with civil war looming.
However, the idea that we could have averted such a potential catastrophe by just applying some logic is not something I would want to say retrospectively.
I am also not blind to the idea that the Youth League is creating an issue for political gain so as to appear as the ‘champions of the people’. They truly are astonishingly short sighted as to what is going on in the world.
I sincerely hope, and trust that their lack of insight and vision is not matched by the agricultural community, who has the opportunity to assist in creating a win-win situation for themselves, the country and the claim stakers involved.
Codesa 3, as Sunter and Co so eloquently phrased the round table discussion required, seems to be the starting block for ideas like the ones I have put forward to see the light, and hopefully surprise the world once again by snatching victory, in front of the beady eyes of defeat.