Clarity on property rights needed to unlock investment, says agricultural body

Image: 123RF/ ZYCH

An agricultural industry body has urged the government to provide clear policy guidance on land reform and property rights to unlock the full potential of the sector amid the fiscal constraints brought on by the Covid-19 crisis.

The sector, which contributes about 3% to GDP and is responsible for close to 900,000 jobs, has been hampered by policy uncertainty around land reform that has left investors jittery. The ANC is pushing for expropriation of land without compensation to tackle skewed land ownership patterns dating back to apartheid and colonial eras. Parliament recently re-established the ad hoc committee to look into the contentious issue, and it has until December 31 to conclude its work.

Last week, the economic transformation committee of the ANC and business lobby group Business for SA (B4SA) each released their discussion documents about the post-Covid-19 inclusive economy for SA. Agriculture features prominently in both documents as a priority sector for growth and job creation.

“Given the current fiscal constraints, development in the sector will be private sector driven as acknowledged by both the ANC and Business for SA, but the private sector involvement will require clear policy guidance on land reform,” Wandile Sihlobo, head of agribusiness research at the Agricultural Business Chamber (Agbiz), said in a market update on Monday.

He noted that B4SA argued in its discussion document for strengthened property rights and the extension of secure tenure or tradable leases in government land as part of means to attract investment, which in the long run leads to growth.

Meanwhile, the ANC argued that the state should release land to individuals, but is not clear whether on tradable leases or another form of tenure rights that will be afforded to the holders and occupiers of these land parcels.

Furthermore, the ANC argued that “to acquire land for redistribution, the programme to expropriate land in line with the existing legal and constitutional prescripts should be continued. To further accelerate land redistribution consideration should also be given to the taxation of unused land.” This position was not shared by B4SA.

Sihlobo said the release of the land the ANC argued for will need to be on long-term tradable leases so that investment could flow, particularly in areas with better infrastructure.

“Overall, the ANC and B4SA agricultural development plans have more in common than opposites. The broader land reform question needs urgent attention, as does water infrastructure and policy since this will hold the key to development in the areas that have the potential to deliver the envisaged million jobs,” Sihlobo said.

He said both plans recognise that poor infrastructure, both in the former homeland regions of SA and general logistics to move produce to the ports and processing plants for established agriculture, is an area that needs urgent attention. Another point of commonality that arises from both B4SA’s and the ANC’s economic recovery document is the need to improve agricultural finance through stabilising the Land Bank.

“What these documents are perhaps silent on is a recognition that the aforementioned agricultural ideas have been touted since 2012, but accompanied by limited success on implementation over the past couple of years. This is not to suggest that there is a need for change in the framing of agricultural development — we certainly agree that there is no need for such. The focus, however, should be on understanding why the implementation has lagged over the past couple of years and what will make things different this time around,” Sihlobo said.

According to Agbiz, the lack of implementation of agricultural government policy and infrastructure-related constraints are down to three broad reasons. First, the limited government capacity to execute government programmes and misalignment of functions and priorities between the three spheres of government. Second, the misallocation of the budget by the national and provincial governments. Third, the poor co-ordination and alignment of transformation programmes and general misalignment of incentives, and vision in some cases, between the government and the private sector.

By Bekezela Phakathi 

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