Vast state land holdings a prime candidate for privatisation
Gary Moore, a practising attorney for 30 years, is a Senior Consultant at the Free Market Foundation. He has written extensively on the legality of state action and the meaning of statutes.

One of the most important types of privatisation that must happen in South Africa is the privatisation of land. Black South Africans should receive full ownership of state land on which they lawfully reside, rather than continuing to occupy it as mere tenants of the state.

The Bill of Rights requires the state to take reasonable measures to foster conditions enabling citizens to gain equitable (i.e., non-discriminatory) access to land.  

The state is the country’s biggest landowner. The government’s property portfolio has been said to be worth more than the total assets of the property sector listed on the stock exchange.

In 2013, the Department of Land Reform published the results of its audit of “state land” (land owned by the national government, the nine provincial governments, the eight metropolitan municipalities, the 44 district municipalities and their 228 constituent local municipalities, and parastatals).

The Department’s audit showed that some 14 percent of the country’s land was registered state land, another four percent was surveyed but unregistered state land, and another three percent was “unaccounted” (unsurveyed and unregistered). The audit concluded that government at all levels owns 21 percent of the land (the other 79 percent being owned by individuals, companies or trusts).

High Level Panel

But astoundingly, the government does not even transfer ownership of state land occupied by black persons to the occupants, but merely grants them leases. It can’t even do that efficiently, according to the 2017 report to the Speakers’ Forum by the High Level Panel on the content and implementation of key legislation passed since 1994 to address land restitution and redistribution and security of land tenure.

The Speakers’ Forum consists of the National Assembly’s speaker and deputy speaker, National Council of Provinces chair and deputy chair, and provincial legislatures’ speakers and deputies. In 2015, the Forum established an independent High Level Panel of eminent persons to assess and report on the content and implementation of key legislation enacted since 1994 to address land restitution and redistribution and security of tenure, among other things. The Panel was chaired by former president Kgalema Motlanthe.

This Panel’s 2017 report stated that its investigations and public and expert submissions revealed that the lack of progress on the realisation of those rights was concerning. The pace of land reform has been slow. There were also significant gaps such as tenure security, where legislation had not been adopted.

The Panel was confronted with evidence of weaknesses on the part of the government in executing legislation. Submissions to the Panel lauded the substance of legislation and found no fault with its content but raised fundamental concerns about its implementation.

According to the Panel, the consensus appeared to be that financial resources were not the main constraint to the realisation of positive outcomes. Instead, weak outcomes reflected a lack of political will to pursue the stated constitutional imperatives such as equitable access to land, where implementation was dysfunctional and policy had shifted towards state ownership, which echoed apartheid-style notions of “custodianship”.

The Panel observed that, in urban areas, the Reconstruction and Development Programme (RDP) had failed to transfer titles to beneficiaries. In rural areas, legislation denies the constitutional rights of people living in areas under traditional leaders. The Panel noted that the Constitutional Court has found (presumably in the 2003 dispute between Alexkor Ltd and the Richtersveld community) that indigenous customary law provides for ownership of land.

The Panel remarked disapprovingly that government funding for land reform was less than two-fifths of one percent of the national budget.

Significantly, noted the Panel, those who do receive redistributed land are made tenants of the state, rather than owners of the land. Experts advise that the need to pay compensation has not been the most serious constraint on land reform. Other constraints, including corruption by officials, diversion of the land-reform budget to elites, lack of political will, and lack of training and capacity, have proved more serious stumbling blocks.

It was of great concern to the Panel that recent policy shifts appear to default to key repertoires that were used to justify the denial of property rights for black people during apartheid. These include the assumption that customary and de facto land tenure systems do not constitute property rights for the poor. The State Land Lease and Disposal Policy defaults to the model of state trusteeship in the 1936 Development Trust and Land Act as the appropriate form of land rights for beneficiaries of land reform. That model previously applied only in former homelands but appears to have been extended to all land made available for restitution and redistribution.

State-centric “land reform”

Since at least 2013, the state has abandoned the practice of conferring full title on beneficiaries in favour of long-term leases. New insistence on “production discipline” suggests that those with the resources to continue commercial farming operations will be prioritised, and that the state will evict tenants unable to do so. This approach has widened the discretionary powers of officials. Notions of “proper farming” used by the apartheid government have been invoked again, constraining opportunities for poor people to secure rights to land, including ideas about minimum farm sizes, income targeting and full-time farming.

Land claimants gain few if any benefits in practice. Institutional arrangements allow dominant claimants to monopolise land. Many who testified in the Panel’s public hearings spoke of corruption in allocations of land, with government officials acquiring large tracts of land.

According to the High Level Panel’s report, in urban areas there was high demand for land, which the land reform process did not address. There is no adequate provision of rural or urban land for multiple livelihood purposes, which are the mainstay of poor families, or for non-agricultural purposes.

Despite those criticisms, in 2019 the Department issued a state land leasing policy which is substantially the same as its 2013 leasing policy.

Also in 2019, a presidential advisory body on land reform and agriculture issued a cautious report containing tentative general remarks and no firm conclusions, although it largely turned its face against individual ownership in favour of collective tenure.

That advisory body’s 2019 report spoke vaguely of transfers from the state to local communities of various forms of secure and registrable tenure “that respond to the needs of beneficiaries in rural and urban spaces” and transfer of well-located land “for specific identified individuals, groups and communities.” It recommended that the starting point for redistribution must be “serious engagement with the nature of demand—who wants what land, where, for what purposes.”

The courts have invalidated some oppressive government practices, such as attempts to replace secure tenure with leases requiring occupants to pay rent or risk eviction.

In 2021, a full bench of the Pietermaritzburg high court dealt with a case involving the Ingonyama Trust and the national Minister of Land Reform. The Trust’s sole trustee is the Zulu king. The Trust is the registered owner of some 2,8 million hectares of land in KwaZulu-Natal, which it holds in trust “for and on behalf of the members of the tribes and communities” of the Zulu nation. The Trust had been inducing people living on the land to sign lease agreements and pay rent to the Trust to be entitled to continue living on the land.

The court found that occupants of the land are not obliged under customary law to pay rent to reside there, and it held that they are the true and beneficial owners of Trust-held land by virtue of being members of tribes or communities of the Zulu nation. The court ruled that the lease agreements concluded by the Trust with occupants were unlawful and invalid and it ordered the Trust to refund payments made under the agreements to the payers.

The court also declared that the Minister had breached her duty to protect the existing property rights and security of tenure of the residents of Trust-held land, as required by the Constitution.

The story of David Rakgase

In 2019, the Pretoria high court heard an application brought by a Mr Rakgase, then aged 78, to set aside the Department’s decision refusing to sell to him certain state farmland which he had occupied and farmed since 1991 as a lessee.

In 2003, a joint committee of national and provincial land-affairs departments approved the sale of the farm to him. The Land Bank office in Limpopo valued the farm at R621,000.00. The provincial land-affairs department offered Mr Rakgase in writing an opportunity to purchase it, which he immediately accepted in writing. Years passed. In 2009 the Department and an official provincial committee recommended that the Minister sell the farm to Mr Rakgase.

But in 2010 an official, acting as the Minister’s delegate, decided that the farm should not be sold to Mr Rakgase, but that he be granted a long-term lease instead, with the possibility of a future sale depending on performance. In 2011 the Department presented Mr Rakgase with an agreement for a five-year lease with no option to purchase. An official told Mr Rakgase that if he did not sign it, he and his family would have to vacate the farm. The government was evicting his neighbours in a similar position who had refused to sign the new leases. Faced with the risk of eviction, Mr Rakgase signed, but on the expectation of finalising his purchase of the farm. Provincial officials repeatedly assured him it would be transferred to him.

After the five-year lease expired in 2016, Mr Rakgase continued as a month-to-month lessee and regularly paid the monthly rent. Cynically, the Department then required Mr Rakgase to sign a lease for 30 years with a possible extension for a further 20 years.

In 2018 Mr Rakgase applied to the Pretoria high court for an order setting aside the Department’s decision not to sell the land to him, on the grounds of its absurdity. The Department gave the court no good answer. The court found that, at a time when black people own relatively little agricultural land, the Department’s decision was so unreasonable that no reasonable decision-maker could have taken it.

The Pretoria court expressed the view that, when a Minister is presented with a perfect opportunity to realise the imperatives in the Bill of Rights about the transfer of ownership of land, then the Minister’s failure to grasp the possibility with both hands amounts to Ministerial breach of a constitutional duty, and even more so if the chance is ignored for no good reason or justification. The court also remarked on the general ineffectiveness and tardy implementation of the government’s various land distribution programmes since 1994.

The court ordered the Minister to take all necessary steps to sell the land to Mr Rakgase on the terms and price that would have applied had it been sold in 2003 (i.e., R621,000) and to transfer the land to him at the state’s cost. (The Minister intimated that she would appeal against this judgment, but then abandoned that plan.)

In 2020, the Department, in disobedience of the court order, reportedly offered to sell the farm to Mr Rakgase for R5,5 million, nine times the R621,000 price that would have applied had it been sold in 2003. Mr Rakgase intimated that he would lay charges against the state for contempt of the court order.

Private property is the answer

The Institute of Race Relations observes that this illustrates the government’s partiality for state ownership and official control. Land will continue to be owned by the state, with “black farming households” accommodated only as perpetual tenants.

Stellenbosch University’s Bureau for Economic Research director Johann Kirsten points out that banks decline to lend to deserving farmers who are mere lessees and thus unable to mortgage the land to secure loan repayments.

Farmer’s Weekly has reported that investigations reveal that the leasing process is plagued by corruption and elite capture. The Institute for Poverty, Land and Agrarian Studies (“PLaAS”) in the Faculty of Economic and Management Sciences at the University of Western Cape states that evidence from 62 state-land leasing projects suggests that expropriation without compensation would similarly benefit the well-off at the expense of the poor.

In a 2019 appeal by a Mrs Mwelase and other land claimants aggrieved by the Department’s failure to process their claims, the Constitutional Court confirmed that courts have power to appoint a special master to prepare an implementation plan, for approval by the court concerned, to govern the carrying out by the Department of Land Reform of its statutory duties to process land claims properly.

The Constitutional Court referred to the Department’s “administrative lethargy”, “sustained large-scale systemic dysfunctionality” and “patent incapacity or inability to get the job done”.

The Court stated:
“The Department’s failure to practically manage and expedite land reform measures in accordance with constitutional and statutory promises has profoundly exacerbated the intensity and bitterness of our national debate about land reform. It is not the Constitution, nor the courts, nor the laws of the country that are at fault in this. It is the institutional incapacity of the Department to do what the statute and the Constitution require of it that lies at the heart of this colossal crisis.”

The current Minister of Land Reform, Thoko Didiza, admits that government officials do not have appropriate skills for the administration of land. The Department concedes that it does not have the capacity to manage all the leases, and that only grants of full ownership title can cure the problem. If even the government department entrusted with “custodianship” of land believes that full, private ownership is the answer, dare we delay?