Reform holds the key to economic growth

Individuals should control communal land. By Engela Duvenage.

Prof. William Gumede, an economist and political scientist at the School of Governance at the University of the Witwatersrand, briefed the audience about South Africa’s political landscape after the May 2019 elections. He said that leftist populism should be taken out of the South African land debate.

To strengthen the South African economy President Cyril Ramaphosa will need the political courage to release land from state-owned entities, cities and especially chiefs, and to place it in the hands of individuals and households. This is the strategy followed by most developing countries that over the past century have successfully moved from poverty to a low- to middle-income economy. It’s also the strategy that kick-started China’s economic growth after the Cultural Revolution of 1966–1976.

“There’s an important lesson in China’s history,” noted Gumede. “In China, the change really came when land was taken away from the state and given to individual households.”

According to Gumede, communal land is one of the reasons behind a lack of development and growth in the South African economy.

“Communal land must be moved into the hands of individuals. That’s where five to ten million black farmers are sitting,” he explained. “Because they do not have control over the land that they farm, they cannot go to the bank to secure loans or collateral for equipment, fertiliser and so on.

“One of the reasons why Africa has been left behind and may still be left behind as we enter the new world epoch, is that more than ninety percent of land across the continent is communal, controlled by chiefs and not households. People and households cannot use it as productive assets.”

He said that people farming on communal land do not have real power over decisions made on their behalf. “If they vote for the wrong political party or criticise the chief, they might not get further grazing rights, for instance.”

According to Gumede, no political pressure is placed on chiefs at all to release land. This is because of the way in which they have obtained the right to lead. “Political parties allow chiefs to be in power, and in return they must secure votes.”

A future of absolute uncertainty

“If President Cyril Ramaphosa has the political courage to do something about communal land, he will become more popular among millions of rural black South Africans,” Gumede noted. “However, it is politically very difficult for him to deal with.”

Ramaphosa would also have to make difficult decisions about the vast tracts of land that sit in the hands of state entities and cities that are unwilling to let go of it.

“The last pillar of land reform is getting housing right. People want housing and jobs. We need to solve it,” added Gumede.

He underlined that there are various practical solutions to the land debate. However, these are resisted by the populists within the ANC and the EFF because they know that Ramaphosa is against land expropriation.

Gumede warned that South Africans should not expect major changes in the first year of Ramaphosa’s current term. “There’s going to be a period of twelve months of absolute uncertainty as Ramaphosa tries to push through reform.

“President Ramaphosa has three years at most to take hard decisions, in an effort to steer the South African economy in the right direction,” said Gumede, who believes that the local economy is worse off than it was in 1994 during a period of recession.

“We are in a moment of uncertainty in the world and in South Africa. It demands leadership in every space of our society. The last ten years have depleted our fiscus, as well as the capacity of the state itself,” asserted Gumede. “It becomes important for the state to partner with the private sector.”

Gumede believes that South Africa has extraordinary surpluses of savings and human capital in the private sector. “The obvious thing is that the state will have to partner with the talent and the money in the private sector. But politically the struggle for Ramaphosa is that the populists inside and outside the ANC are hostile towards the ideas and capacity in the private sector.”

Using the private sector to deliver will be crucial to resolving the current crisis, concluded Gumede. “Every sector will have to take its own leadership now. You cannot wait on the state. You have to ask what your future is in the next five years, and then do it.”

From left to right: Dr Mogale Sebopetsa, Western Cape Department of Agriculture; Prof. William Gumede, University of the Witwatersrand; Ivan Meyer, MEC for Agriculture in the Western Cape.

Supplied by Carmé Naudé | Hortgro.