Right time to take land without compensation, says minister
The ANC decided to push for the right to seize land without compensation for redistribution to black citizens because it felt the time had come for the 24-year-old democracy to tackle an issue that divides the nation, a leading politician says.
An earlier attempt to take land without paying for it could have jeopardised investor confidence in the economy, while waiting any longer could stoke anger in a country where more than a quarter were unemployed and inequality rates were among the highest in the world, said Co-operative Governance and Traditional Affairs Minister Zweli Mkhize.
“You want to try a middle road. Today, if you don’t talk about land, you stand alone.”
Land and the access to it symbolise inequality in SA, where wealth and poverty are largely divided along racial lines.
Today white people own almost three-quarters of farm land, according to a land audit by farmers’ organisation Agri SA. That figure is down from 87% during apartheid.
“If we don’t raise it now, we’ll never have time to,” said Mkhize. Land ownership, healthcare and education were some basic things that people required and “if you don’t provide that, it doesn’t matter who you are, you get out of power”.
The ANC decided at its December elective conference to pursue expropriation without compensation to speed up giving black people more land.
In February, Parliament started the process to change the Constitution to allow for that. Public hearings on the matter kicked off last week.
“One mistake that we must never make is to trivialise the issue of the land and the sensitivity around it,” Mkhize said.
“The two biggest problems or threats this country has are white fear and black anger.”
The ANC will contest national elections in 2019 in the first ballot since the opposition won control of several key municipalities, including Johannesburg and Pretoria, in 2016.
Former president Jacob Zuma’s scandal-ridden nineyear tenure cost the governing party support. The decision to change the Constitution brings the ANC closer to the EFF, which has won support from young voters by vowing to nationalise everything from land to banks.
The ANC did not plan to put all land under the control of the government and believed in a mixed economy, Mkhize said.
President Cyril Ramaphosa has said land reform is urgently needed to address skewed patterns of ownership but must not harm agriculture or the economy.
The president hopes to raise $100bn in new investment over five years to boost economic growth and bring down a 27% unemployment rate.
“The land was taken through bloodshed,” Mkhize said.
“Redistribution must take place through the Constitution and the law.”
While the DA, farmers’ groups and ratings company Moody’s Investors Service have warned that uncertainty about the planned changes to the Constitution could deter investment, Mkhize said that the move would have the opposite effect because it ensured stability.
“We don’t want to sit here and get South Africans burning everything because they want issues resolved, but we are worried about an investor over there,” he said.
“You don’t help that investor if this country is burning.
“If you get to stability, every investor will come here. If ultimately someone can’t deal with us because they don’t like our Constitution, too bad,” Mkhize said.
THE BIGGEST THREATS THIS COUNTRY HAS ARE WHITE FEAR AND BLACK ANGER REDISTRIBUTION MUST HAPPEN THROUGH THE CONSTITUTION AND THE LAW
In April the National Association of Automotive Component and Allied Manufacturers (Naacam) released The South African Automotive Supplier Industry Benchmark Report 2018. An interesting finding was the increased interest in localisation from South African-based vehicle assemblers over the past year. The period reviewed coincided with industry stakeholders taking part in a consultative process to shape the framework of automotive policy support post-2020.
This is exactly the kind of value chain stimulation Trade and Industry Minister Rob Davies would have been hoping for when he mentioned earlier in 2018 that the Department of Trade and Industry (DTI) was “more or less at the point where we will take a decision as to what the government programme will be. There will be some changes to the present programme, such as deepening the incentives on component manufacturing, though it will build on the present framework.” The SA Automotive Masterplan 2035 reflects this by having a target of 60% local value addition for the sector.
The DTI’s current flagship support programme for the sector, the Automotive Production and Development Programme, and its predecessor, the Motor Industry Development Programme, have done a great job at maintaining and growing a post-crisis vehicle assembly base to levels seen before the economic crash.
Recent expansions and new investment by all the domestic original equipment manufacturers, including the 2018-launched Isuzu investment in Port Elizabeth and the entry of assembly operations by BAIC and Mahindra, bears testament to this.
But vehicle assembly alone is not the golden egg of a statesupported automotive sector. That sits within the supply chain of locally manufactured materials, components and subassemblies. It’s known that economic benefits such as job creation, new business opportunities, currency risk mitigation, technology transfer and skills development all emerge when an assembly base is supported by a deep and capable supply chain. Thus any government looking to sponsor vehicle assembly within its borders seeks ever increasing levels of localisation.
One can contextualise this by observing the disappointment of the South Korean government over the announcement earlier in 2018 by General Motors (GM) that it was closing its Gunsan plant. Not only does GM Korea employ nearly 16,000 workers, but it supports another 140,000 jobs in its supply chain. That alone explains the dismay of the Korean government.
The SA Automotive Masterplan has other key underpinning objectives. Certain quarters of the industry have been sceptical about the objective of doubling direct employment in the sector by 2035. This certainly won’t happen in the assembly space given the trend towards higher plant automation levels. However, Naacam feels the target is realistic if viewed in tandem with the other objective of achieving a 60% local value addition metric by then.
Over the period reviewed in the supplier benchmark report, the sample showed average employment levels (including permanent and contract employees) having increased by 8.7%. More importantly, it reflected workplace productivity gains of 9.8% over the same period. Commitment of local employees, as measured by the absenteeism rate, dropped by 14.2%, outperforming other benchmark countries. Clearly, gains in localisation are proving to be positive both in the quantum and quality of work within the sector. Suppliers, in turn, need to increase their levels of investment and sublocalisation in preparation to accept greater opportunities from assemblers’ demand.
If early results are indicative, it appears SA can look forward to leveraging greater economic development gains post-2020 under an automotive policy framework that equally recognises the value of highvolume assembly plants with deeply localised supply chains creating quality jobs and business opportunities across all tiers of the auto industry.
SUPPLIERS, IN TURN, NEED TO INCREASE THEIR LEVELS OF INVESTMENT AND SUB-LOCALISATION IN PREPARATION TO ACCEPT GREATER OPPORTUNITIES