Land reform flux hits sector investment
Players in the agricultural sector including farmers are “becoming more reluctant” to invest in the field amid growing uncertainty over land reform.
The agriculture business chamber (Agbiz), an organisation that represents commercial farmers and agribusiness enterprises nationally, said on Monday the rise of “radical economic transformation”, alongside controversial land reform statements, had lessened prospects for investment in the sector.
Its latest survey showed that confidence regarding capital investment among agribusinesses declined 13 points from the previous quarter to 56.
A reading above 50 indicates expansion in domestic agribusiness activity. The broader agribusiness confidence index improved two index points to 57 in the first quarter of 2017, according to the survey by Agbiz and the Industrial Development Corporation.
The index has been in expansionary territory for at least the past three quarters, signalling an improvement in agribusiness conditions following the crippling drought.
On Monday, Wandile Sihlobo, the head of economic and agribusiness research at Agbiz, said the survey did suggest that industry players were holding back in terms of long-term investments in the sector because of the controversial statements on land reform.
The government is under pressure to complete its landreform programme amid growing fears that Zimbabwestyle land grabs might become the order of the day.
On Friday, President Jacob Zuma contradicted his own party when he repeated his earlier statement that the government would undertake a “precolonial” land audit and change the Constitution to facilitate expropriation without compensation. The president said the principle of willing-seller, willing-buyer was not effective.
In Parliament last week, the ANC shot down the EFF’s calls for expropriation without compensation. The ANC said doing so would be unconstitutional.
The governing party said the expropriation bill stated that property may be expropriated only in terms of the law of general application for public purpose and in the public interest, subject to compensation that must be just and equitable.
The EFF, which has long called for expropriation without compensation and for its supporters to occupy land, offered the ANC its 6% representation in Parliament, which would give the governing party the required two-thirds threshold to amend Section 25 of the Constitution, or the property clause. But the ANC rejected the offer outright.
THE SURVEY DID SUGGEST THAT INDUSTRY PLAYERS WERE HOLDING BACK IN TERMS OF LONGTERM INVESTMENTS IN THE SECTOR
“We are not going to see serious long-term investments in the agricultural sector unless there is more clarity on land reform,” said Sihlobo.
He said the private sector supported land reform, but wanted it to be done within constitutional parameters.
Ben Cousins, from the Institute for Poverty, Land and Agrarian Studies and a senior professor at the University of the Western Cape, said it was it was the business community more generally that was feeling uncertain about land policy and the security of property rights in the country.