There’s a Better Way to Take White Farmers’ Land

The fate of South African farmers is now a turf war on Twitter: U.S. President Donald Trump tweeted this week that he wanted U.S. Secretary of State Mike Pompeo to examine land seizures and “large scale killing of farmers” in the country. His comments generated swift condemnation from South Africa, where issues of land ownership are explosive and racially charged.

Unsurprisingly, Trump’s impressions of the issue are ill-informed (farm murders are at a 20-year low). But the importance of South Africa’s long struggle over rural property ownership is undeniable. Land appropriation was at the core of the colonial project in South Africa, and its redistribution has consequently been a cornerstone of efforts to democratize economic and political opportunity ever since. Fortunately, there is a solution to be found that takes a middle ground between the insufficient progress of the last two decades and a radical Zimbabwe-style reform.

Late last month, South Africa’s current president and the head of the African National Congress party, Cyril Ramaphosa, declared that the ANC would seek to change the constitution to allow the expropriation of land without compensation. But the country’s heavily skewed distribution of property ownership has been tearing it apart at the seams for years. Although the ANC has ruled the country for two and a half decades, income inequality has eclipsed its level at the end of apartheid. Blacks earn far less than whites. Complicating this problem is the fact that unemployment is an incredible 27 percent, disproportionately concentrated among blacks.

These gross disparities are rooted in part in inequitable land ownership. When apartheid ended, 86 percent of land was concentrated in the hands of just 60,000 white farmers. Blacks were relegated to marginal, poor-quality land as the children of indigenous South Africans pushed off their ancestral lands. However, the transition to democracy ushered in a land reform program oriented toward restituting this property. The reform was a market-based, willing-buyer willing-seller program, Land Redistribution for Agricultural Development, in which the government buys large properties from farmers and then redistributes them to landless applicants.

But land reform progress to date has been held up by financial shortfalls. Furthermore, it only transferred 4.2 million hectares of agricultural land to black farmers from 1994 to 2007—a drop in the bucket compared to the government’s post-apartheid promise to redistribute 25 million hectares. Consequently, popular pressure for a more significant land reform is enormous. Many black South Africans are even willing to risk political stability for greater land equity. The government reopened the land claims process several years ago alongside monetary compensation to dispossessed blacks, but progress remains glacial.

Against this backdrop, Ramaphosa’s proposal to speed land distribution by dropping constitutionally mandated compensation has electrified land reform supporters and opponents alike. The most radical supporters, such as Member of Parliament Julius Malema of the Economic Freedom Fighters, claim that uncompensated land redistribution will finally level South Africa’s playing field and redress grievous historical injustices by returning land to black South Africans at the expense of undeserving white colonizers. The most radical opponents, by contrast, warn that South Africa will go the way of neighboring Zimbabwe, where the expropriation of white farmers in the early 2000s drove the economy into the ground and unleashed a torrent of rural violence against landowners.

Ramaphosa’s proposal may just be a political ploy to gain the support of the ANC’s populist wing in the run-up to 2019 elections. But the country faces a real opportunity to conduct equity-enhancing land reform while avoiding Zimbabwe-style excesses.

The path forward relies on a combination of international support, fair but not market-based compensation, and collaboration with business and property stakeholders as well as landless farmers. And it will not be easy: My research suggests that few democracies have been able to successfully redistribute land at a significant scale.

Compensation must substitute for force in acquiring private property—the question is whether the government can be sufficiently creative in acquiring the funds for such compensation. Though South Africa’s land redistribution program was slowed by corruption, bureaucratic red tape, and disorganized land registries, there is little question that much more land could have been transferred with greater access to funding. Foreign donors and governments could pledge to match government outlays for land purchases. The international community was a key player in helping to end apartheid and founding a transformational democratic experiment in the country. It should be willing to keep that experiment running.

Loosening the compensation standards for land acquisition, by contrast, can be a slippery slope. While market-based compensation is clear, what is a “fair” or “just and equitable” price for land? A third-party arbiter could greatly help to facilitate this shift. For instance, international organizations like the World Bank could work to generate transparent and clearly defined guidelines for “fair” expropriation that is less than market-value compensation yet does not scare off capital.

Though some may think this is unattainable or naive, there has already been substantial discussion of such a proposal. The late World Bank consultant and senior advisor on Africa Hans Binswanger-Mkhize wrote in 2009, “[T]he fear of adverse economic repercussions associated with the use of the expropriation instrument should not be a deterrent to its use, provided the state is using due process and is willing to pay amounts ultimately judged reasonable by the broader class of owners and the general public, if not by individual owners.” In short, land compensation cannot be confiscatory, but neither does it need to rise to market levels in order not to leave landowners high and dry.

The final component of a pragmatic path forward for land reform entails collaboration with business and property stakeholders in addition to landless farmers. Landowners are a varied group: Some are highly capitalized and productive with a large employee base, whereas others are undercapitalized, barely productive, or even absentee. The former merit greater protections than the latter. And by shifting the discussion to agricultural productivity rather than property size requirements or landholding ceilings, this can garner greater support from the bulk of efficient producers. Furthermore, expropriated landowners can be offered a stake in other sectors of the economy such as industry or manufacturing rather than being merely shown the door. Numerous countries such as Italy have used this tactic successfully in their land reform programs to reduce landowner resistance to land reform.

These are not pie-in-the-sky proposals. With external funding, clear requirements for which properties qualify for acquisition, and collaboration with property owners, countries such as Colombia have moved forward on land reform. Colombia’s longstanding but tepid land reform expanded in 2011 with the Victims Law, seizing illegally or improperly attained land and granting it as reparations to citizens displaced during the country’s civil war. This program was generously funded by the United Nations, the Organization of American States, the United States, and other countries. The land reform then further expanded as part of the country’s historic peace deal with the Revolutionary Armed Forces of Colombia (FARC) and has channeled some funding to reallocating underutilized private land in selected cases.

When done right, redistributive land reform can underpin rather than stall economic growth, as it did in countries such as post-World War II South Korea and Taiwan. Although agriculture is a progressively smaller portion of economic activity in South Africa, it employs a disproportionate number of workers. If these workers can improve their livelihoods through land reform, they can better afford to educate their children to succeed in the changing economy. At the same time, large landowners who lose their property in a well-defined and moderate land reform program are more likely to reinvest in other sectors of the economy rather than leave entirely, as has occurred with landowners in Brazil’s land reform in recent decades.

Land reform has also significantly reduced inequality in countries that conducted it successfully at large scale. South Africa can achieve these enviable aims if it avoids the temptations of falling into doing too much too fast, as in Zimbabwe—or too little, as it has done since the end of apartheid.