The Foreign Question

Private Property South Africa
Lea Jacobs

The news that foreigners will be prohibited from owning agricultural land in South Africa has, given what has happened in so many other African countries, undoubtedly caused more than a few eyebrows to be raised. Perhaps even more concerning is that when government was asked to clarify its initial statement that foreigners would be banned from owning land in this country, Land Reform minister Gugile Nkwinti said that the State was only focusing on agricultural land - for now.

Is this all a storm in a teacup? One wonders, as it has been estimated that only one percent of agricultural land is owned by foreigners. The ownership of residential property by this sector is also estimated to be on the low side. So why is government targeting this small group which, on the face of things, creates jobs, adds to the economy and brings much needed foreign investment into South Africa?

Government is being more than a little hazy about the details. Nkwinti recently stated that the department of Rural Development and Land Reform was in the process of establishing the race and nationality of landowners. He stressed that once this exercise was complete, foreign nationals would not be able to own agricultural land, but would only be allowed to lease it. What isn't clear however is whether this will only apply to new foreign investors. The idea that government could be considering taking back property which an investor has legally bought and owned for a number of years is more than a little disturbing.

We have all seen the disastrous consequence of land redistribution efforts in Zimbabwe. Once regarded as the 'bread basket of Africa', massive tracts of once arable farm land have been turned into virtual deserts, leaving the country with major food shortages.

One of the biggest challenges government continues to face is how to live up to electoral promises concerning land distribution without disrupting food supply. It pays to remember that farms are not just arbitrary tracts of land; they are well-run business entities that not only contribute to the country's economy, but play an important role in feeding the nation. Taking arable farming land from one party and giving it to another may appear to be an easy way to resolve some of the problems Apartheid created, but, as has clearly been seen in the past, if not handled correctly, this will most likely create more problems than it solves. There is also talk of how much land South African farmers may own. This too remains somewhat vague.

In country like South Africa, with its variable geographic and climatic conditions, there is no such thing as a ‘one size fits all’ farm. By their very nature and micro climate, each farm is subject to its own set of criteria for viability. Unless the officials concerned are experts in this field (and they clearly are not) they are flirting with disaster.

Without necessarily being malicious, the vacillation by the minister gives the distinct impression of wanting to test the water before making a commitment. The problem with this approach is that it is going to cause foreign investors to either hold off or go elsewhere.

We are not referring to the likes of Karen Blixen here, but rather to the multinational agricultural companies like seed distributors which require vast tracts of land under secure title to ensure that their products are viable under any given condition. Research costs millions, if not billions, and it is extremely unlikely that anyone wishing to invest this sort of money is going to do so if the investment is, thanks to the lease arrangement, going to be regarded as short term. Remember, individuals may think in decades, but companies think in centuries.

The land issue is always going to be a contentious one. Addressing the problems while trying to keep everyone happy and the nation fed is going to be a tricky balancing act.

Globalisation has changed the way people do business. Successful countries welcome foreign investment in land, agricultural or otherwise. Closing the door on potential foreign investors runs contrary to the current globalisation trend and could cost South Africa dearly in the very near future.

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