Floyd Shivambu's proposed state custodianship of land farcical and tragic

Terence Corrigan

Floyd Shivambu's piece on the land debate ('The state should be custodian of land', 27 May) serves as an indication that the idea of a wholesale custodial taking of landholdings in the country remains very much on the table. The implications of this are potentially vast and deeply troubling.

Under a custodial regime, individuals would not be able to own property in land. The state, while perhaps not technically owning it, would assume most of the powers associated with ownership, such as deciding and licensing its use. The former owners would, to all intents and purposes, lose their holdings. 

When the EFF tabled a parliamentary motion calling for the expropriation of land without compensation and the "the necessity of the State being a custodian of all South African land", it was echoing what has been a recurrent theme over the past few years. 

An early draft of the Preservation and Development of Agricultural Land Framework Bill would have placed all agricultural land under the custodianship of the state. The government's land audit, made public earlier this year, likewise recommended "(vesting) land as the common property to the people of South Africa as a whole". 

Mr Shivambu calls for "direct state intervention to restructure landholding to direct and aid processes of production strategically". This, he adds, "can only be done through expropriation of land and placing it in the custodianship of the state".

This is a highly questionable proposition.

Shivambu refers – as have many others – to the fact that minerals have been taken into state custodianship, greatly expanding the state's responsibilities and discretion to "direct" the industry. But South Africa's mining industry has not performed well over this period. Even during the period of the commodities boom between 2001 and 2008, it shrank. One reason for this (and to be sure, there have been others) was the clawing away of property rights and the regulatory uncertainty that this produced. 

The National Development Plan itself expressed concern about this: "The central constraints are uncertainty in the regulatory framework and property rights; electricity shortages and prices; infrastructure weaknesses, especially in heavy haul rail services; ports and water; and skills gaps."

State custodianship has meant that mining operations are dependent on adherence to often vague and ambiguous regulations – and consequently, on the decisions of officials. The resulting uncertainty has been a significant deterrent to investment. 

If anything, the experience of mining argues directly against custodial takings in land.

A major part of the problem is administrative. The South African state simply does not have the skills or capacity to manage resources on the scale being proposed. 

On top of this – as Mr Shivambu and his party colleagues would surely agree – outright corruption and the 'capture' of state programmes have severely compromised the state's abilities to perform its responsibilities. This is something which has been flagged specifically as a problem confronting South Africa's land reform endeavours. 

A corollary of this is the near-certainty that a custodial taking of land would deliver a body blow to the agricultural sector. Deprived of the ownership of land, farmers – be they black or white – would be deprived of the prime asset against which they raise both investment and working capital. The sums at stake are enormous – estimated at some R180bn, some two thirds of which are to commercial banks.  

Absent land as collateral, the banking industry would be unwilling to remain engaged with farming, certainly on the scale it is now. Banking Association of South Africa head Cas Coovadia warned about this last year. 

There is no readily apparent alternative source of capital for the industry. The sums involved are way beyond the scope of government to provide. While it is possible that some large-scale farmers and agribusiness corporates might be able to navigate this by securing funding in other ways (a lien on crops, for example), this would put most commercial farming operations out of business, while offering little opportunity for others to step in and take their places. 

The upshot, inevitably, would be a severely damaged agricultural sector, dominated (perhaps) by a small number of highly capitalised large entities, alongside – perhaps – communities of subsistence farmers. The latter would live in perpetual thrall to the state, probably suffering continuous rent-seeking and ultimately seeking an escape to the cities and hopes of salaried employment.

Should our often poorly capacitated state attempt to take on the control management of 121 million hectares of land, with all the temptations and opportunities for patronage and malfeasance that it would entail, and all the damage it would inflict on the capital base of agriculture, it is difficult to imagine an outcome that would not verge on the tragic. 

That it should even be considered verges on the farcical.

- Terence Corrigan is a Project Manager at the Institute of Race Relations (IRR).

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