Picture: 123RF/LOES KIEBOOM
Picture: 123RF/LOES KIEBOOM

The baldest challenge facing the ANC 25 years after coming to power is to explain why it doesn’t want black people to own land.

Democratic SA’s efforts to overcome historical dispossession have been abysmal, with the debate stuck in a rut of hostility, victimisation and careless rhetoric, with no new ideas about how to expand South Africans’ access to property in ways that would simultaneously benefit them and the country.

You’d swear “land reform” was intractable, so mired in racial antagonism and racist intransigence that expropriation and coercion were the only options.

But there are better ways. Last week, the Institute of Race Relations (IRR) published two policy proposals — Ipulazi  (farm in Zulu), and Indlu (house) — which can and should stimulate a fresh debate not just about farmland, but about solutions to the most pressing land reform challenge: urban housing.

Both proposals rest on two fundamentals: preserving property rights as the primary agent of economic dynamism; and expanding the opportunities for new farmers to succeed, and for city dwellers — in a country that’s already 65% urbanised — to gain and be able to exploit real assets in reaching for the urban middle-class life most desire.

Picture, for instance, SA’s 32,500-strong established commercial farming sector being augmented by no fewer than 10,850 additional and well-funded commercial farmers within just five years.

Such assistance would also be a far better use of tax revenues than repeatedly providing billions in bailouts to Eskom … and other poorly managed state-owned enterprises
Anthea Jeffery, IRR head of policy research

As author of the proposals, IRR head of policy research Anthea Jeffery explains in her “Reaching the Promised Land” report, the first step of the Ipulazi policy would be establishing a commercial farming fund within the Land Bank, which would issue farming empowerment bonds backed by Treasury guarantees. People and organisations investing in these bonds will receive tax benefits and empowerment points.

The fund will use the monies thus raised from investors and donors, domestic and foreign, to lend to established and disadvantaged commercial farmers. However, those who are disadvantaged — as identified on a socioeconomic test — will benefit from preferential interest rates (0%-2%), with differences between prime and preferential interest rates being financed by the state out of tax revenues and capital repayments made over time, helping to expand the monies available.

Loans for land purchases — and capital spending — should be repayable over lengthy periods (50 years or more), to reduce the burden of repayments.

Jeffery writes: “Such assistance would also be a far better use of tax revenues than repeatedly providing billions in bailouts to Eskom … and other poorly managed state-owned enterprises.”

Based on two assumptions — that a disadvantaged commercial farmer needs to borrow R20m from the fund to buy land and have enough start-up capital, the sum to be repaid over 50 years at 0% interest; and the state paying a R59bn portion of the money otherwise intended for bailouts into the fund — it would be possible to finance about 2,950 new commercial farmers in a single year.

Jeffery adds that cutting the public sector wage bill by 10% (R585bn in 2019/2020) “could save the fiscus R58bn, and so fund the establishment of another 2,900 commercial farmers. A further R100bn could be saved from both public service and state-owned enterprise salaries over the next four years, which could finance another 5,000 new commercial farmers. Between the initial R59bn outlay and these additional tax monies, the country could have at least 10,850 additional and well-funded commercial farmers within five years.”

It’s rational and doable, and all without the bluster, the economic risk of expropriation, or the damaging racial antagonism.

• Morris is head of media at the Institute of Race Relations.