SA could model its land reform on the success achieved in South Korea
Lawful land distribution and rural development are crucial economic growth tools for poverty-reduction, especially in the wake of the country’s recent ratings downgrades, writes Dr Kim Yejoo
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:
Key land stakeholders should enhance small farmers’ capacity through postsettlement support services. In South Korea, farmers and newly-owned land led to limited success in productivity until the government stepped in. Agricultural output can only grow from increased inputs and/or increased productivity. And technical and financial assistance, particularly for small farmers, is crucial.
In the policy-making and implementation process, participation of rural communities will facilitate socio-economic transformation and their involvement will draw policies that can be sensitive to local circumstances. In South Korea, the land reform emphasised community participation and grassroots movements. At the same time, capable government administrations associated with political leadership, with a commitment to rural development, should be placed at the centre of the land reform programme and the NDP.
Transferring land ownership is a lengthy process. In the meantime, a realistic action plan would be required to improve the conditions of those living in rural communities, ie by enforcing minimum wages or paying above the poverty threshold.
A further discussion on land reform takes place at the Economic Transformation of SA through the NDP: Experiences from South Korea Forum at the Sheraton Hotel in Pretoria on August 3.