A South African Land Grab?

Via The Wall Street Journal, commentary  on South Africa’s land expropriation-without-compensation plan:

Global economic jitters make this an especially bad time for developing economies to embark on bad policy experiments, yet that’s what South Africa did this month in advancing a sweeping plan to expropriate private land. The only saving grace is that voters will have a chance to weigh in before this scheme becomes law.

A parliamentary committee on Nov. 15 recommended a constitutional amendment that would allow the government to expropriate land without compensation. The idea has been a fixation in South Africa for years, in the belief that bouts of poor economic growth arise because colonial rule left whites with a majority of the country’s farmland.

But anyone seeking the roots of South Africa’s recent malaise should look elsewhere. Agriculture accounts for less than 3% of gross domestic product, and the number of acres owned by nonwhites or the government nearly doubled between 1994 and 2016 under the “willing buyer, willing seller” land policy adopted by Nelson Mandela. 

Weak rule of law and bad policies during the nine-year left-wing administration of former President Jacob Zuma are better explanations for the country’s woes. Land expropriation will make matters worse by deterring investors worried about property rights, especially if such a policy is written into the country’s constitution as the current proposal envisions.

President Cyril Ramaphosa entered office this year promising a turnaround from a shrinking economy with 27% unemployment. As a businessman, perhaps he understands the economic stakes in the expropriation fight. But he is bowing to political pressure from the left of the ruling African National Congress party and is supporting the land grab.

No one should believe his bromides that this is a pro-business policy undertaken “so that we can have more stability.” The experience of Zimbabwe says otherwise.

Robert Mugabe allowed millions of acres of commercial farms to be seized in the early 2000s. Skilled farmers fled, and one estimate showed food production fell 60%. Export earnings and foreign-currency reserves disappeared along with foreign direct investment. Banks were drowned in bad debt as land titles became worthless. Hyperinflation began once the country tried to pay off its debt by printing more money. The economy shrank.

The bright spot in South Africa’s expropriation gambit is that there probably won’t be time to finish the legislative process before next year’s national elections. Several parties object to expropriation, setting up a vigorous debate on the question. It’s a discussion South African voters need to have before their lawmakers do serious damage to the country.

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About This Blog And Its Author
Seeds Of A Revolution is committed to defining the disruptive geopolitics of the global Farms Race.  Due to the convergence of a growing world population, increased water scarcity, and a decrease in arable land & nutrient-rich soil, a spike of international investment interest in agricultural is inevitable and apt to bring a heretofore domestic industry into a truly global realm.  Whether this transition involves global land leases or acquisitions, the fundamental need for food & the protectionist feelings this need can give rise to is highly likely to cause such transactions to move quickly into the geopolitical realm.  It is this disruptive change, and the potential for a global farms race, that Seeds Of A Revolution tracks, analyzes, and forecasts.

Educated at Yale University (Bachelor of Arts - History) and Harvard (Master in Public Policy - International Development), Monty Simus has long held a keen interest in natural resource policy and the geopolitical implications of anticipated stresses in the areas of freshwater scarcity, biodiversity reserves & parks, and farm land.  Monty has lived, worked, and traveled in more than forty countries spanning Africa, China, western Europe, the Middle East, South America, and Southeast & Central Asia, and his personal interests comprise economic development, policy, investment, technology, natural resources, and the environment, with a particular focus on globalization’s impact upon these subject areas.  Monty writes about freshwater scarcity issues at www.waterpolitics.com and frontier investment markets at www.wildcatsandblacksheep.com.