SA could model its land re­form on the suc­cess achieved in South Korea

The Star Early Edition - - INSIDE -

ECO­NOMIC devel­op­ment has be­come one of the key is­sues in South Africa, par­tic­u­larly with the fi­nan­cial down­grades by Fitch and S&P Global Rat­ings. The Na­tional Devel­op­ment Plan (NDP) is a so­cio-eco­nomic pol­icy pro­gramme that pro­jects a long-term vi­sion as well as ac­tion plans for a sus­tain­able and in­clu­sive devel­op­ment path for South Africa by 2030.

The key ar­eas have been listed through­out the 15 chap­ters of the NDP. This ar­ti­cle, in par­tic­u­lar, places “an in­te­grated and in­clu­sive ru­ral econ­omy” (Chap­ter 6) at the cen­tre of the anal­y­sis, and out­lines the im­por­tance of land re­form and ru­ral devel­op­ment as an eco­nomic growth tool.

Con­sid­er­ing that a large pro­por­tion of South Africa’s pop­u­la­tion has been sub­jected to racial dom­i­na­tion and racial dis­pos­ses­sion, ac­cel­er­at­ing land re­form is per­ti­nent to achiev­ing so­cio-eco­nomic trans­for­ma­tion, in­clud­ing elim­i­nat­ing poverty and re­duc­ing in­equal­ity.

How­ever, the gen­eral con­sen­sus is that the progress of land re­form has been slug­gish and the im­pact has been min­i­mal. The slow process has of­ten be­come a de­par­ture point for politi­cis­ing and for pop­ulists to ad­vo­cate­harm­ful in­ter­ven­tions, such as land con­fis­ca­tion. While land has been highly politi­cised, the im­por­tance and ef­fects of land re­form have been largely over­looked.

South Korea presents a suc­cess­ful case of land re­form. Land re­form was launched there in the 1950s and con­tin­u­ously im­ple­mented in line with their Five-Year Plans, a se­ries of five-year eco­nomic devel­op­ment plans for­mu­lated by the South Korean govern­ment since 1962. South Korea’s land re­form is re­garded as one of the most suc­cess­ful, mak­ing large scale land re­dis­tri­bu­tion pos­si­ble within a short pe­riod.

It made a di­rect im­pact on agri­cul­tural pro­duc­tiv­ity, which later sus­tained poverty-re­duc­tion. In the broader so­cio-po­lit­i­cal con­text, land re­form re­dressed the colo­nial legacy of dis­pos­ses­sion by erad­i­cat­ing the long-stand­ing land­lord sys­tem, and land own­ers and large-scale land­hold­ers were vir­tu­ally elim­i­nated. This pre­empted the con­flict be­tween land­lords and ten­ants, which might have led to po­lit­i­cal tur­moil in the state-build­ing process dur­ing the post-colo­nial and post-war pe­riod in South Korea.

Land re­form had a larger im­pact with the in­tro­duc­tion of the Sae­maul Un­dong (or New Vil­lage Move­ment) in the 1970s. The Sae­maul Un­dong was spawned in or­der to im­prove ru­ral econ­omy, both ru­ral in­fra­struc­ture and in­come; the govern­ment re-or­gan­ised ru­ral ar­eas into smaller units and dis­patched govern­ment of­fi­cials to carry out the var­i­ous pro­jects, pro­vid­ing credit and ed­u­ca­tion among oth­ers.

Govern­ment of­fi­cials and lo­cal lead­ers filled the vac­uum that was cre­ated af­ter the abol­ish­ment of the land­lord sys­tem. And in­de­pen­dent small farm­ers cre­ated by the land re­form made this move­ment suc­cess­ful. Dur­ing its first (1962–1966) and sec­ond (1967–1971) Five-Year Eco­nomic Plans, the ru­ral econ­omy in fact did not ex­pe­ri­ence re­mark­able growth rates.

But the govern­ment ex­panded its in­vest­ment in agri­cul­ture, aug­mented by “in­creas­ing price sup­port and the avail­abil­ity of in­puts such as fer­tiliser to en­cour­age ex­panded pro­duc­tion in the early 1970s”. These ef­forts re­sulted in rapid in­creases in yields, agri­cul­tural out­put and farm pro­duc­tiv­ity.

Agri­cul­tural trans­for­ma­tion pow­ered the state in util­is­ing a large sur­plus from agri­cul­ture and trans­fer­ring it to fi­nance in­dus­tri­al­i­sa­tion. Land re­form trans­formed the pre­vi­ous land­lord class into in­dus­tri­alis­ers. At the same time, poverty-re­duc­tion in ru­ral ar­eas pre­vented the rapid in­flux of mi­grants to the ci­ties; it con­trib­uted to­wards re­solv­ing poverty in ur­ban ar­eas, pre­vent­ing rapid/un­planned ur­ban­i­sa­tion. For those who mi­grated into the in­dus­trial sec­tor, govern­ment and busi­ness were able to keep main sta­ple food prices and in­dus­trial wages low.

Con­se­quently, busi­ness could reap high prof­its by keep­ing wages low in the in­dus­trial sec­tor. South Korea’s suc­cess­ful land re­form be­came the foun­da­tion for their next Five-Year Devel­op­ment Plans. The South Korean case may, to a cer­tain ex­tent, of­fer some valu­able lessons for South Africa.

Among South Africa’s three “legs” of land re­form – re­dis­tri­bu­tion, land resti­tu­tion and land ten­ure re­form – land re­dis­tri­bu­tion tar­gets the “the dis­ad­van­taged and the poor such as labour ten­ants, farm­work­ers and new en­trants to agri­cul­ture”, and strives to pro­vide ac­cess to land and op­por­tu­ni­ties for par­tic­i­pa­tion in eco­nomic ac­tiv­ity in ru­ral com­mu­ni­ties. De­spite these in­ten­tions, the orig­i­nal tar­get of land re­dis­tri­bu­tion set by the govern­ment has al­ready been post­poned sev­eral times.

Over the past two decades, less than 10% of farm­land has been re­dis­tributed and this is too in­signif­i­cant to al­ter the ex­ist­ing struc­ture of agri­cul­ture and the ru­ral econ­omy. First and fore­most, land re­form re­quires the govern­ment’s ca­pac­ity to al­lo­cate re­sources such as fi­nance and skills sup­port, among oth­ers. Lack of fund­ing, for ex­am­ple, for land resti­tu­tion was one of the ob­sta­cles en­coun­tered by key land stake­hold­ers in South Africa.

The cur­rent bud­get for ru­ral devel­op­ment and land re­form can­not re­sult in de­sir­able so­cio-eco­nomic devel­op­ment. In 2017/18, the govern­ment’s spend­ing on agri­cul­ture, ru­ral devel­op­ment and land re­form will be R26.53 bil­lion, which only rep­re­sents less than 2% of to­tal govern­ment ex­pen­di­ture. The bud­get al­lo­ca­tion for resti­tu­tion in­creased by 2.5% – from R3.17bn in 2016/17 to R3.25bn in 2017/18 –while the funds for land re­dis­tri­bu­tion de­clined from R1.23bn to R1.19bn.

Another is­sue is that the cur­rent land re­form has been im­ple­mented in favour of large-scale, cap­i­tal-in­ten­sive com­mer­cial farm­ing. The prin­ci­ple of land re­form was to sup­port small-scale farm­ing house­holds, but the is­sue of elite cap­ture/dom­i­nance of agribusi­ness has arisen.

Un­der for­mer pres­i­dent Thabo Mbeki, the main con­tent of land re­form had al­ready shifted to sup­port cap­i­tal­ist farm­ers’ en­gage­ment in com­mer­cial farm­ing, which has not con­trib­uted to re­vers­ing the con­cen­tra­tion of land own­er­ship.

The large-scale com­mer­cial farm­ing sec­tor is al­ready well de­vel­oped and well in­te­grated into the global mar­ket, but it has less im­pact in achiev­ing so­cial devel­op­ment goals such as poverty-re­duc­tion and em­ploy­ment.

Agri­cul­tural em­ploy­ment, on a per­ma­nent ba­sis in par­tic­u­lar, has con­tin­ued to de­cline. In a num­ber of cases in Latin Amer­ica and South­east Asia where land re­form has failed, this has been largely at­trib­uted to land-based or landed elites’ re­sis­tance and dom­i­nance in pol­i­cy­mak­ing. The govern­ment’s sup­port for the ru­ral devel­op­ment pro­gramme should take place in a com­pre­hen­sive man­ner and this should be jux­ta­posed with the other goals of the NDP.

From a com­par­a­tive per­spec­tive, land re­form has re­solved so­cial con­flict through an in­crease in eq­uity in South Korea at the ini­tial stage in the state-build­ing process. The govern­ment’s com­mit­ment to the ru­ral devel­op­ment pro­gramme by al­lo­cat­ing fi­nan­cial re­sources and pro­vid­ing re­lated sup­port, and most im­por­tantly, plac­ing ru­ral devel­op­ment within the com­pre­hen­sive eco­nomic devel­op­ment plan, paved the way for South Korea’s eco­nomic devel­op­ment.

In South Africa, land re­form and ru­ral devel­op­ment have been stalled and their sig­nif­i­cant role within broader so­cio-eco­nomic trans­for­ma­tion has been largely over­looked. The fol­low­ing rec­om­men­da­tions are made go­ing for­ward:

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