Can South Africa avoid spinning into post-colonial chaos that has engulfed the continent?
 There are times when driving through South Africa one might think one was roused from a snooze while travelling in a mountainous or arid region of America or China.
Not so much for the landscape, but rather the scale and modernity of its infractructure - its butter smooth black top, well-marked highways with all the features of a modern road network.
The question on which so much depends is whether South African can cling to its cloverleaf highway heaven in the face an immediate desire of blacks to take lands from white farmers on the assumption they can run farms better when overwhelming evidence points to the contrary.
While elements of the government are determined to pursue "land reform", knowing that there is no need for such measures, and if executed, a likelihood that they will do more harm than good. Yet they press on for ideological reasons that dominate the humanities of today's university campuses.
This is not to the seizure of property to meet any practical need. Nor is it to sate a land hunger among the dispossesed. For this, there is much available land, previously acquired through voluntary sales, 30 per of which remains unclaimed. The object of the current drive is not to repossess, but to dispossess. Not to make the poor richer, but make the rich poorer.
Black South Africans already have access to land restitution through the Restitution of Land Rights Act. This entitles all who had land forcibly taken from them to have it returned or to be compensated. According to the World Bank, by 2016, more than 80 per cent of claims were finalised, and 90 per cent of the time claimants chose compensation.
Reminded of this, the American rightist Cato Institute warned South African President Cyril Ramaphosa to stay away from implementing any laws that would erode property rights. It also warned that such policies would likely result in something like a Zimbabwean land grab of the 1980s and '90s, which ended in national economic collapse and social tyranny. Towards the end of the currency's life, Zimbabwe was printing one trillion Zimbabwean dollar notes before the Zimbabwean dollar fell from use in 2009.
“Ultimately, South Africa should heed the warning provided by their neighbour’s near-total implosion. The economic consequences that flow from a policy of land seizures are as disastrous as they are unavoidable,” said the Cato think tank scholars.
“This scenario is likely to repeat itself in South Africa. An attack on property rights will result in the destruction of South Africa’s farming community, a dramatic reduction in agricultural productivity, and mass unemployment,” they said.
Liberal critics of this view put much stock in the differences between former Zimbabwean President Robert Mugabe’s decision not redistribute land to "war veterans", who seized it from the farmers and instead hold it in a national land bank.
This differs profoundly they say, from what President Ramaphosa intends. As the constitution has some restraint on expropriation without compensation, unless it is done to “redress past racial discrimination” the government is mostly free to do as it chooses. Thus, it is argued, Ramaphosa has a legal mandate Mugabe did not have. Such logic may go some way to convince an court of the African National Congress (long a Communist Party front), but the argument is less than persuasive to foreign direct investors, fearful of similar treatment even if things go well.
China has a lot of money at stake on South Africa's civilised behaviour and is not without recourse if it is disappointed. Its natural resource investments require continuous inflows to keep engines running and Africans employed across the continent. Africa now receives half of all Chinese aid, and trade between the two comes to US$200 billion.
More importantly, China has not only become the lender of last resort for more advanced African nations, in lieu of more stringent loans and terms by lenders such as the International Monetary Fund or World Bank, but also the lender of first resort for many more, underserved nations.
The People’s Republic of China has steadily grown in influence across the African continent, partly because it has a revolutionary history and much experience with low-compensation land reform schemes. In Africa, China was part of broader anti-colonial, pro-communist movements, eventually becoming a more conventional provider of foreign aid.
In 1999, China took a new direction with its “Going Out” strategy that encouraged Chinese enterprises to invest overseas. Since 2000, Chinese economic growth in Africa has taken-off exponentially: imports to China from Africa have increased 20 fold.
The success of the “Going Out” strategy was further propelled by incorporation of the signature 2013 economic Belt and Road Initiative. As part of the initiative, China has raised a significant share of financing for the $4.5 billion Ethiopia-Djibouti Railway, the $600 million Doraleh Multipurpose Port in Djibouti, the $3.2 billion Mombasa-Nairobi Railroad, among other projects in east Africa alone.
While it is hard to piece together all the thousands of projects and investments made by China across the continent, the American Enterprise Institute estimates there have been over $298 billion in private and public loans in various sub-Saharan African countries since 2005.
US President Trump came into the land grab debate with his "tweet heard 'round the world", when he announced that he had asked Secretary of State Mike Pompeo to study the “land farm seizures and expropriations and large scale killing of farmers.” It was a typical Trump alarm. There had been no "large scale killing of farmers", an error the media seized upon, but in doing so, only spread his message more thoroughly.
The news of US presidential interest in the matter was focused on the Africa Growth and Opportunity Trade Act (AGOA) that gives sub-Saharan Africans sweetened US market access - if they make continual progress towards establishing market economies that protect private property, incorporate an open rules-based trading system and minimise government interference, subsidies and state ownership of economic assets.
Soon there was wide speculation that Mr Pompeo, and US Trade Representative Robert Lighthizer were considering removing South Africa from the AGOA.
In addition, South Africa’s own Land and Agricultural Development Bank warned that a standard clause attached to its loans amounting to $2.8 billion requires it to repay everything immediately if the government begins expropriations without compensation - which would force it to default.
A World Bank report advises that weakening property rights and institutions were behind an increase in capital flight, social fragility, and pervasive corruption.
So to keep everything within the hallowed phrase of "rule of law", President Ramaphosa initiated the process of having the Parliament amend the constitution to more clearly allow expropriation without compensation. But by making it constitutional, keeping such matters within the realm of "rule of law".
In any case, it seems the land reform programme has already begun as two game farms were given notices of an audit after the owners refused offers one tenth of their value. All expected economic consequences are coming true very quickly.
As it stands it seems more likely that external actions on the FDI and trade deals will likely be based on what actually happens diplomatically, that his actual land seizures, giving some time for President Ramaphosa to educate his revanchist brethren on the facts of international life. Yes, you can have it your own way - but at a very high price, is the lesson he must convey. |
