Redistribution – of assets and other forms of wealth p2

he main potential to reduce rural poverty and inequity lies in the development of overall frameworks providing social security, education and training as well as health care, and in developing adequate infrastructures in rural areas.

In a review of poverty and policy in South Africa in the first ten years of democracy, Bhorat and Kanpur (2006: 12-13) identify five main trends, which are largely hostile to the poor, albeit with some ameliorative effects:An increase in both absolute and relative income poverty.

An increase in both absolute and relative income poverty

An increase in income inequality

Increased unemployment rates (as growth in the labour force outstrips growth in employment)

A large fiscal resource shift that has engendered wider access to assets and basic services for poor households

‘Tepid’ economic growth rates, which have failed to keep pace with population growth.

“The first ten years have seen rising unemployment, rising income poverty and rising income inequality, all in the context of a lack lustre performance in economic growth” (Bhorat and Kanpur 2006: 1).

Policies to increase participation in the rural economy and diversify incomes are key to addressing rural poverty. Rural poverty in South Africa appears to differ from other countries in three ways:

  1. among the rural poor, income generated directly from agricultural activities and food consumed from own farm production are minor components of household resources (estimated at 10% to 20% of the total);
  2. many households continuously rotate between rural and urban base;
  3. and rural society is closely linked to the social and health problems of urban
    areas.

 The main potential to reduce rural poverty and inequity lies in the development of overall frameworks providing social security, education and training as well as health care, and in developing adequate infrastructures in rural areas. There is a need to examine how recent and ongoing sectoral and economy-wide policies contribute to poverty reduction by integrating poor population in broader economic activities.
OECD 2006: 25

Redistributionof assets and other forms of wealth – has been a prominent feature of the economic and political debate in South Africa both before and after 1994, captured in the competing slogans of ‘growth through redistribution’ and ‘redistribution through growth’. Redistribution was at the heart of the 1955 Freedom Charter, described by Seekings and Nattrass (2005) as the closest the ANC had to an economic policy prior to 1990, and the Reconstruction and Development Programme (RDP), which was effectively the manifesto on which the ANC came to power in 1994 (ANC 1994).

Debates about the relationship between redistribution and growth, and the means by which redistribution should be brought about, have not abated, despite the ANC’s decisive turn in favour of growth (now seen as a precondition for redistribution) from around 1996 (Marais 1998). Nonetheless, important forms of redistribution have occurred. Notable amongst these are significant increase in government spending on infrastructure, welfare and social services aimed at the poorest sections of the population, significant increases in earnings for those in formal employment, and opening up of opportunities for share-holding and business opportunities in the corporate world for previously disadvantaged people through the BEE programme. While this has led to a substantial de- racialisation of the upper and middle socio-economic classes, it has had remarkably little impact on overall income inequality or poverty.

Redistribution of assets – notably land – has a special place within the discourse on redistribution, both in South Africa and internationally. Land redistribution (including the associated processes of restitution and tenure reform) has been an important component of policy since 1994 and features prominently in the 1996 Constitution. Yet, an explicit link between land reform and poverty is difficult to find in official policy pronouncements, especially since the change from the Mandela to the Mbeki presidency in 1999.

The arguments for land reform in South Africa have been dominated since the outset by a discourse of restorative justice which seeks to return land to its previous owners and redress racial imbalance in landholding, with relatively little attention to the economic dimensions of land use, in general, and the links between land reform and poverty alleviation (or economic growth) in particular.

It is important to consider the theoretical arguments for land reform and the ways in which redistribution is linked to poverty alleviation, both in South Africa and internationally.

 

 

Source:Bhorat, H. and Kanbur, R. 2006. ‘Poverty and well-being in post-apartheid South Africa’, in Haroon, and Kanbur, R. (eds), Poverty and Policy in Post Apartheid South Africa. Cape Town,: HSRC Press.2.Seekings, J. and Nattrass, N. 2005. Class, Race, And Inequality In South Africa. Yale University Press.3.Marais, H. 1998. Limits to Change: The Political Economy of Transformation. London and New York: Zed Press.4.http://r4d.dfid.gov.uk/PDF/Outputs/ESRC_DFID/60332_Lahiff_Redistributive.

The Need for Redistribution of Land Reform in South Africa -P1

Today, South Africa has one of most unequal distributions of income in the world, and income and quality of life are strongly correlated with race, location and gender. The political compromise that ensued left much of the power and wealth of the white minority, including land ownership, more or less intact.

The extent of land dispossession of the indigenous population in South Africa, by Dutch and British settlers, was greater than any other country in Africa and persisted for an exceptionally long time.

By the twentieth century, most of the county, including most of the best agricultural land, was reserved for the minority white settler population, with the African majority confined to just 13% of the territory, the ‘native reserves’, later known as African Homelands or Bantustans.

Over thirteen million black people, the majority of them poverty-stricken remained crowded into the former homelands, where rights to land were generally unclear or contested and the system of land administration was in disarray.

Today, South Africa has one of most unequal distributions of income in the world, and income and quality of life are strongly correlated with race, location and gender. The political compromise that ensued left much of the power and wealth of the white minority, including land ownership, more or less intact.

The Constitutional clause on property guaranteed the rights of existing owners but also granted specific rights of redress to victims of past dispossession.

South African agriculture is highly dualistic in nature, where a highly-developed and generally large-scale commercial sector, controlled largely by whites, on privately-owned land, co-exists with large numbers of small-scale and mainly subsistence-oriented black farms on communally-held land.

South Africa had a thriving African peasant sector in the early twentieth century, but this was systematically destroyed by the white settler regime on behalf of mine-owners demanding cheap labour and white farmers demanding access to both land and cheap labour.

One such estimate in the mid-1990s found that, among black rural households, 67.7% considered themselves in need of land, with provincial figures ranging from 40% in the Northern Cape and North West to 78.3% in KwaZulu-Natal.

 


source:http://r4d.dfid.gov.uk/PDF/Outputs/ESRC_DFID/60332_Lahiff_Redistributive.pdf.by Edwin Lahiff accessed28/07/16

Will the EFF make South Africa a “BASKET CASE”?

According to the EFF founding manifesto The state should, through its legislative capacity, transfer all land to the state, which will administer and use land for sustainable development purposes.

The manifesto says those intending to use land under state control will apply for a land-use licence .

The licence would be valid for 25 years and could be renewed based on whether the land was being used as planned.

EFF leader Julius Malema says he is not aiming to be president of South Africa, but is focusing on his party becoming the government by 2019.

The party was open to working with any party who represents clean governance, anyone who wants to restore the dignity of black people , but would reject those who wanted to bring white dominance through the back door .

When asked whether the EFF policies would turn South Africa into an economic basket case with ratings agencies already breathing down the country’s neck, Malema said South Africa was at a point where alternative policies could be introduced.

We need to go to the court and stretch that constitutional clause, Malema replied, adding that the court should issue a declaratory order over whether compensation is necessary.

He wants the EFF to become the government, just not under his leadership.

“I don’t have ambition to become a president, I have an ambition of making the EFF the government of South Africa,” he said in an interview with Al Jazeera on Sunday night.

“I am not in this thing for myself.”

According to Malema’s math, the 6% his party got in the 2014 elections should increase to a point where the EFF is a serious contender in 2019… he’s obviously not paid that much attention to the Cope ‘fairytale’.

“We want to take this country by 2019,” he told Jonah Hull. ”And if we don’t take this country by 2019 we must be an official opposition with a clear direction of taking over power. Because we said, from the beginning, we are government in waiting.”

He added that the EFF is open to collaborating with any other political party “who represents clean governance, anyone who wants to restore the dignity of black people”, but not those who intend to bring back white dominance “through the back door”.

“We want a party that is ready to empower a black nation.”

Malema was then asked whether his party’s – insane – policies would turn SA into an economic “basket case,” but he simply said that SA is ready for alternative policies.


_____________________________
source: http://www.news24.com/SouthAfrica/News/malema-i-dont-have-ambitions-to-become-a-president-20160425[picture]http://www.dispatchlive.co.za/news/chaos-reigns-as-malema-takes-on-jz/accessed25/04/16

EFF threatens to target South African whites!

“Don’t think that Zuma is our enemy. Zuma is not our enemy, it’s just that he is standing in the way, and we must remove him to get our land back,” said Malema. “Zuma is standing between us and our enemy. Move out of the way. Zuma must pave the way because they [whites] are the one who stole our land.

“Don’t think that Zuma is our enemy. Zuma is not our enemy, it’s just that he is standing in the way, and we must remove him to get our land back,” said Malema.

“Zuma is standing between us and our enemy. Move out of the way. Zuma must pave the way because they [whites] are the one who stole our land.” Malema was addressing a large gathering at the University of Pretoria’s Mamelodi Campus, where the Economic Freedom Fighters had a memorial lecture on the life of Solomon Mahlangu.

Malema said people should never think the party had taken a detour on their fight for land.

“White people are going to return our land the same way Zuma will return our money. White people must never think we have abandoned the land question. We will never abandon it. We are the land, our identity is our land. We are nothing without our land.” “We are coming for you. Zuma must pay back the money, the Guptas have left South Africa, and our land must come back. ABSA bank must never think that by closing the Gupta bank account, you are our friend. You are our enemy in SA,” he added.

Malema said the bank represented white monopoly capital, which was an enemy of the EFF “White monopoly capital is the primary enemy of the EFF. Who is white monopoly capital? It is the Rupert, the Oppenheimer, and all those who benefited illegally from our land. This land is going to be returned, whether you like or not. There is no white man who came with a piece of land,” Malema said.

“What we do with it is none of your business. Solomon Mahlangu died for this land.” Malema also took issue with those who said the land did not belong to Africans, but to the Khoisan.

“Reconciliation must never replace justice. Justice is the return of the land. We must fight for our land,” he said.

 

 

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source: picture:http://newafricanmagazine.com/south-africa-land-statues-and-malema/http://www.politicsweb.co.za/news-and-analysis/no-white-man-came-with-a-piece-of-land--julius-malaccessed 24/04/16

 

Compensation for evicted white-farmers?

Zimbabwe’s plan to win back international funding by paying compensation to white farmers forced off their land faces a major snag: the black farmers expected to stump up the cash say they don’t have it. The new occupants working the land, many of who had few farming skills when they were resettled, say they can barely make ends meet, let alone pay an extra levy.

The new occupants of the farms say they can barely make ends meet, let alone pay an extra levy. Their agricultural output is a fraction of that before 2000 – when President Robert Mugabe introduced the land reforms that led to thousands of white farmers being evicted. The new farmers are also being hammered by Zimbabwe’s worst drought in 25 years and are toiling in a stagnating economy in which banks have become reluctant to lend and cheaper food imports from the likes of South Africa are undermining them.

“Are farmers able to pay? I will say ‘No’. Is the land being productive? I will say’No’ again,” said Victor Matemadanda, secretary-general of a group representing the self-proclaimed war veterans who led the land seizures in 2000 and now farm.The president of the Zimbabwe Commercial Farmers’ Union, Abdul Nyathi, also said that his members would not be able to pay the compensation levy.

 

source:http://news.yahoo.com/cant-pay-zimbabwe-farmers-resist-compensating-evicted-white-070233858-http://news.yahoo.com/cant-pay-zimbabwe-farmers-resist-compensating-evicted-white-070233858--business.html

It’s now official the South African government can take your property!

The Expropriation Bill was passed yesterday, I suggest you don’t merely gloss over making light of this Bill. This Bill affects all landowners, this new legislation makes provision for the state to deprive citizens of land.

Definition of Expropriation is the act of taking of privately owned property by a government to be used for the benefit of the public. 

The Expropriation Bill was passed yesterday, I suggest you don’t merely gloss over making light of this Bill. This Bill affects all landowners, this new legislation makes provision for the state to deprive citizens of land.

landMinister of Public Works, Thulas Nxesi said that landowners whose property is expropriated would be compensated, with the courts having the final say on the amount.

Such news would naturally cause alarm bells and the rapid increase to ones blood pressure so like most stealth modes – notes that the Bill provides for the expropriation of land for a public purpose, such as building a road or a dam, or erecting a power line or just maybe for land reform.

Despite concerns from opposition parties that it was unconstitutional it was nonetheless passed as the Bill was fair and equitable, and it was mentioned that if individuals disagreed with the amount offered during an expropriation, this could be challenged in court of law.

Could this be the legalising of land grab to that of our neighbours in Zimbabwe-  we all seen the results of such fairness?

Remember if you don’t like this, do ask your Councillor or Minister of Parliament, how did they personally vote for this Bill?

How the Loss of Property Rights Caused Zimbabwe’s Collapse -Is SA following ?

 For many years, Zimbabwe was known as the “jewel” of Africa. Rich in raw materials and productive farmland, it grew enough food to feed its people and export the rest. The farm sector supplied about 60 percent of the inputs to the manufacturing base—so agriculture was truly the backbone of the economy.
Yet, unlike most other African countries, Zimbabwe had a sophisticated manufacturing base as well. That sector employed thousands of workers who made things such as textiles, cement, chemicals, wood products, and steel. Zimbabwe also had a strong banking sector, vibrant tourism, and more dams than any other Sub-Saharan country except South Africa. Most people trusted the police and believed the court system would treat cases fairly; indeed, the low crime rate rivaled that of many European countries. Perhaps most important, the country had a secure rule of law, with a modern property rights system that allowed owners to use the equity in their land to develop and build new businesses, or expand their old ones. All that led to strong real GDP growth, which averaged 4.3 percent per year after independence in 1980.1
The Disparity in Farmland
  • Despite those successes, the notion of land reform had political appeal prior to 2000, when President Robert Mugabe began seizing commercial farms. Anyone flying over Zimbabwe on a clear day would have seen huge differences in the farming regions, and perhaps better understood the country’s long-standing concern with land reform. In some areas of the country, there were vast tracts of well-irrigated commercial farms, producing thousands of acres of tobacco, cotton, or other cash crops. In other regions, small, dusty communal farms were crowded together, typically suffering from a lack of water. Those farms produced maize, groundnuts, and other staple crops. About 4,500 white families owned most of the commercial farms. In contrast, 840,000 black farmers eked out a living on the communal lands—a legacy of colonialism.
  • More than 80 percent of white-owned commercial farms had changed hands since Mugabe came to power in 1980, and less than 5 percent of white farmers could trace their ancestry back to the original British colonists who arrived in the 1890s. Still, the disparities between blacks and whites fueled calls by Mugabe and others to return the fertile “stolen lands” to black Zimbabweans. 2
  • However, what many observers missed was that the fertility of the land wasn’t determined just by rainfall or quality of the soil. Although communal lands tended to be in drier areas, many were directly adjacent to commercial farms or in high-rainfall areas. In addition, there were commercial farms in very arid parts of Zimbabwe. Yet in nearly all cases, the communal areas were dry and scorched, whereas the commercial lands were green and lush. 3
The Disparity in Property Rights
  • Why the difference then? A good part of the answer lies in the difference in property rights between the two areas. Commercial farms had secure property titles that gave farmers large incentives to efficiently manage the land and allowed a banking sector to loan funds for machinery, irrigation pipes, seeds, and tools. Those institutions developed the most sophisticated water delivery system in Southern Africa (excluding South Africa). Of the 12,430 dams in this entire region, an astonishing 10,747 are in Zimbabwe. Although Zimbabwe has only 7 percent of the land area of the region, it has 93 percent of all the reservoir water surface area. 4 That gave the country a tremendous cushion against droughts. Large commercial farms also employed about 350,000 black workers and often provided money for local schools and clinics. Small-scale commercial farms, run by about 8,500 black farmers, had access to credit and were also productive.
  • Communal lands, on the other hand, were typically plagued by tragedy-of-the-commons types of problems, as the land became overused and greatly eroded over time. In addition, without property titles, there was often squabbling over land use rights between village residents and the village chief, since each village had complicated use restrictions on how the land could or could not be used.
  • Unfortunately, the vital role that property rights played in underpinning the Zimbabwe economy was invisible to most people. What was immediately apparent to any observer was the enormous and tangible contrast between the vast and lush commercial farms and the small and dusty communal ones. War veterans saw the commercial farms as a just prize for having supported Mugabe during the independence movement 20 years earlier, and they continued to clamor for the commercial farmland prior to the 2000 parliamentary election. Nevertheless, Zimbabwe’s constitution forbade the wholesale seizure of the land without proper compensation, and the law-abiding people of Zimbabwe supported that notion by and large. In early 2000, they rejected Mugabe’s attempt to broaden the state’s confiscatory powers in a voter referendum. In addition, in a 2000 poll by the South Africa–based Helen Suzman Foundation, only 9 percent of Zimbabweans said land reform was the most important issue in the election.
  • Some of Mugabe’s advisers apparently knew better than to upend property rights. In early 2000, Mugabe was handed a confidential memo from the Reserve Bank of Zimbabwe, the country’s central bank. The memo predicted that going forward with farmland seizures would result in a pullout of foreign investment, defaults on farm bank loans, and a massive decline in agricultural production. 5
  • I’m The memo would prove to be staggeringly prescient. Unfortunately, Mugabe ignored it. Between 2000 and 2003, his government went ahead and authorized the seizure of nearly all the 4,500 commercial farms. The official goal was to divide the farms into hundreds of thousands of small plots for traditional black farmers. In practice, most plots ended up in the hands of Mugabe’s political supporters and government officials, whose knowledge of farming was meager.
The Economic Implosion
  • The predictions of the central bank memo would come to haunt ordinary Zimbabweans. During the next four years, the economy began to implode with increasing speed. By 2003 it was shrinking faster than any other in the world, at 18 percent per year. 6 Inflation was running at 500 percent, and Zimbabwean dollars lost more than 99 percent of their real exchange value. 7 Today the economy continues its extraordinary freefall. Here are some other things that have happened since 2000:
  • Financial investors have fled, wondering if other businesses might be seized next. Foreign direct investment fell to zero by 2001, and the World Bank’s risk premium on investment in Zimbabwe shot up from 4 percent to 20 percent that year as well.
  • Because the government no longer enforced titles to land, there was far less collateral for bank loans. Dozens of banks collapsed; those that did not collapse refused to extend credit to farmers.
  • Commercial farmland lost an estimated three-quarters of its aggregate value between 2000 and 2001 alone as a result of lost property titles. That one-year loss, by my estimates, was $5.3 billion—more than three and a half times the amount of all the foreign aid given by the World Bank to Zimbabwe since its independence in 1980. 8 Without equity in the banking system, vast networks of economic activity collapsed across all sectors of the economy. Seven hundred companies closed by the end of 2001, as industrial production declined by 10.5 percent in 2001 and an estimated 17.5 percent in 2002. 9
  • The demise of the agricultural sector led to widespread famine, as the commercial farmers left for other African countries such as Zambia, Nigeria, and Ghana, taking with them their intricate knowledge of farming practices.
  • The Zimbabwean government has blamed the country’s peconomic collapse on a variety of external factors, including Western conspiracies and racism. Mugabe’s most potent excuse, however, proved to be the drought. As he reiterated at the United Nations summit in September 2005, Zimbabwe’s economy is suffering because of “continuous years of drought.” 10 In fact, dams in Zimbabwe were full throughout the economic downturn. 11 Unfortunately, irrigation pipes are no longer owned by anyone, so they are being dug up for scrap in a free-for-all. Some are even melted down to make coffin handles, one of the few growth industries left in the country.
  • Yet, some people seem to believe Mugabe. The 2001–02 drought, for example, was called one of the worst in the past 50 years by an IMF official. 12 In fact, after I analyzed the data from Zimbabwe’s 93 rainfall stations, it turned out that the 2001–02 “drought” came in 13th in the past 50 years, with rainfall in the 2001–02 planting year only 22 percent below average. Indeed, as Figure 1 shows, the close relationship between rainfall and GDP growth sharply disconnected in 2000, the first year of the land reforms. Subsequent years show above-average or average rainfall, even as the economy continued to plummet.
  • My econometric estimates indicate that the independent effect of the land reforms, after controlling for rainfall, foreign aid, capital, and labor productivity, led to a 12.5 percent annual decline in GDP growth for each of the four years between 2000 and 2003. 13 The drop in rainfall in the 2001–02 growing season contributed to less than one-seventh of the overall downturn. Without above-average rains, Zimbabwe’s economy would have been in even worse shape, hard as that is.

Zimbabwe thus provides a compelling case study of the perils of ignoring the rule of law and property rights when enacting (often well-intentioned) land reforms. We have seen how Zimbabwe’s markets collapsed extraordinarily quickly after 2000, with a domino-like effect. The lesson learned here is that well-protected private property rights are crucial for economic growth and serve as the market economy’s linchpin. Once those rights are damaged or removed, economies may be prone to collapse with surprising and devastating speed. That is because of the subsequent loss of investor trust, the vanishing of land equity, and the disappearance of entrepreneurial knowledge and incentives—all of which are essential ingredients for economic growth. I hope this lesson will not be lost on other countries that find themselves at the crossroads of land reform.

Notes
This bulletin is based on Craig Richardson, “The Loss of Property Rights and the Collapse of Zimbabwe,” Cato Journal 25, no. 3 (Fall 2005).
1 This excludes 1992, during which Zimbabwe experienced its worst drought in 50 years, causing GDP to drop by 9 percent. There were no other years of negative growth during the 1990s, except 1999, in which GDP declined by 0.7 percent.
2 Geoff Hill, The Battle for Zimbabwe (Cape Town: Zebra, 2003), p. 102.
3 This can easily be seen in satellite photos of Zimbabwe that show the stark differences in the communal versus commercial lands, even when they are directly adjacent to each other. See http://www.geog.umd.edu/LGRSS/Projects/degradation.html.
4 Veliyil V. Sugunan, “Fisheries Management of Small Water Bodies in Seven Countries in Africa, Asia, and Latin America,” FAQ Fisheries Circular, no. CMXXXIII, FIRI/C933, Section 2.3.1., 1997. See http://www.fao.org/documents/show_cdr.asp?url_file=/docrep/W7560E/W7560E02.htm.
5 Hill, p. 110.
6 Organization for Economic Cooperation and Development, African Economic Outlook 2003/2004—Country Studies: Zimbabwe (Paris: OECD, 2004), p. 357.
7 International Monetary Fund, Zimbabwe: 2003 Article IV Consultation—Staff Report (Washington: IMF, July 2003), p. 28.
8 Richardson.
9 “Bankers Slam Zimbabwe’s Policies,” BBC News Online, September 4, 2001, http://news.bbc.co.uk/1/hi/business/1524821.stm.
10 “Let Them Eat Potatoes, Says Mugabe,” The Star ( South Africa), September 19, 2005. See http://www.thestar.co.za/index.php?fSectionId=128&fArticleId=2881963.
11 For example, Andrew Natsios of U.S.AID reported at a foreign press briefing on August 20, 2002, that there was plenty of water in Zimbabwe’s dams at the height of the 2001-02 drought. Also, Zimbabwe’s Daily News reported on May 15, 2002, that, according to Peter Sibanda, Bulawayo’s director of engineering services, dams in the province of Matabeleland were 74 percent full. See http://www.zimbabwesituation.com/may16_2002.html#link14.
12 Ismaila Usman, “Statement by Ismaila Usman, Executive Director for Zimbabwe,” International Monetary Fund, Article IV Report, Zimbabwe, 2003.