Property & Wealth

Reality check; SA economy remains deep in trouble

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The continued failure to stimulate job creation spells disaster that keeps a brake on the economy and threatens a recessionary relapse in the final quarter of 2017.

After two successive quarters of steady decline, the 2nd Quarter 2017 surprised us with a positive upside and injected the possibility of a resilient 2.5% growth in GDP. That, however, is probably a vain hope.  

One should bear in mind that the unemployment rate is at a 14-year high, with over 9 million people who want to work, but unable to find any. To be frank, job creation is at a standstill as the public sector appears to be paralyzed by rampant corruption and the private sector remains uninspired to apply their substantial reserves and war-chests to realising the National Developments Plan’s target to reduce unemployment to 14% by 2020.

And, as if that is not enough, state-owned infrastructure is, with few exceptions, poorly maintained and in many instances deteriorating beyond repair. To many citizens, this malaise on the part of government is simply attributed to another aspect of poor service delivery, contributing to the visibly escalating response by violent protest.

Infrastructure

Take a minute and think infrastructure in terms of airports, education, electricity/power generation, health care, rail, roads, sanitation, solid waste and water. How would you rate it? World class; fit for the future; satisfactory for not; or at risk of failure and/or unfit for purpose?

The point is that even though our infrastructure spend, as a percentage of GDP, appears to be adequate, it is not succeeding in satisfying citizens, expectations, nor is it turning the economy around – which we now direly need.

In these challenging times one would imagine that the governing executive, as public sector’s most important ‘think tank’ would have drawn up a short list of low hanging fruit to pick for getting some growth on the road.

And, you would also think that the government would consider turning to the 1.4 million hectares of land it has under its control and which, if correctly managed and transferred to private ownership, could just help to spark the desired say 5% growth rate so desperately needed

More specifically, if the government commenced with the transfer of that land to its legitimate owners, that step would result in a roughly R8 billion bonanza for those beneficiaries, which would translate to economic activity.

Where potential windfall comes from

How this potential windfall has come about, emerged in Parliament from a question posed on the subject of how, that since 1996 the ANC government spent R21billion in acquiring 3.4 million hectares of land.

However, since then only 2 million hectare, or 59% of that land, has been successfully transferred to the end-beneficiaries. A whopping 41% has yet to be transferred.

Not only does that challenge present us with the proverbial economic carrot, but it will enable the government to claim the kudo's for undertaking a massive exercise in economic transformation.

The background to the current status of this category of state land was the subject of a recent joint-study conducted by the University of the Western Cape in conjunction with Rhodes University. It focused on specific farmland in the Eastern Cape that had been purchased by the state.

The investigation revealed that, while these poor communities and families had access to and inhabited the land, they merely did so as the de facto occupiers of the land, without permanent and tradeable title to it. Their tenure merely served to vest them as custodians for the benefit of the state.

In most instances they were simple tenants and, not even free to add improvements to the land as they will not, under the present dispensation, necessarily derive any future benefit from the increased value they add to the land they occupied.

It appears that the policy of the Ministry of Rural Development and Land Reform, is rather to lease the land to these small-scale and subsistence farmers living on the land.

Larger scale farmers, on the other hand, enjoy a greater degree of future certainty. After having leased the land for 30 years, they have a contractual option to buy the land.

The point here being that, if one is speaking about real land reform, it means transferring the land from the state to the individuals concerned. It is a bitter pill to swallow for all those rural folks who were denied full property rights under apartheid and now still find themselves in a similar situation.

Conclusion

Lest we forget, land is not simply, in this context (especially with 2019 election already underway), another commodity. Full ownership can not only give these poor communities entry into the formal economy, it is also the issue on which many of the poorer communities are hanging their flag, and importantly, it is an issue related closely to the injustices of the past – so beware, land restitution delayed, is simply another form of justice denied.

by Eve van Basten

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