South Africa’s government has been buying land and leasing it to black farmers. Why it’s gone wrong and how to fix it
This has resulted in an incorrect understanding of the real progress made to correct the racial distribution of farm land ownership in South Africa.
- This has resulted in an incorrect understanding of the real progress made to correct the racial distribution of farm land ownership in South Africa.
- In 2012 the National Development Plan set a target to redistribute (or restore) 30% (or 23.7 million hectares) of all freehold agricultural land to black South Africans by 2030.
- The general perception is that the land reform programme has failed to deliver a recognisable shift in ownership patterns.
- I have also identified steps that the government should take to fix the problems.
Land acquisition
- Since then, by our calculations, the total area of land rights transferred away from white ownership – either to the state or black beneficiaries – or where financial compensation has been made, is equal to 19,165,891 ha.
- This is equivalent to 24.7% of all freehold agricultural land.
- Although the number may look heartening, given that it is close to the 30% target set out in the National Development Plan, the issue of concern is that the state is now a major owner of agricultural land (more than 2.5 million hectares).
Flawed design
- Through the scheme the land is then held by the state for the use by lessees of the programme.
- By June 2023, the state had acquired 2.5 million hectares of productive farmland through the programme.
- Most of the roughly 2500 beneficiaries have a 30-year lease agreement with the state.
- It's not gone well
I have gained further insights in conversations with farmers currently leasing land from the State.
Major obstacles
- This makes it difficult – or impossible – to invest in the land or secure loans for improvements and growth.
- Beneficiaries have to rely on government grants to do business.
- Farmers have limited credit history, collateral or access to formal financial institutions because of the nature of the lease arrangement.
Action that needs to be taken
- Firstly, the government should transfer the asset to an institution with a vested interest and capacity to provide both oversight and finance.
- Fifth, the purchase price (pegged value minus lease amounts paid) should be financed over 25 years at a preferential interest rate.
- Seventh, put a moratorium on the allowed window of reselling the farm to 10 years and let government have the first right of refusal.