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Land Redistribution in KwaZulu-Natal, South Africa: Five Census Surveys of Farmland Transactions, 1997-2001

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Lyne, M.C.; Darroch, M.A.G. (2004). Land Redistribution in KwaZulu-Natal, South Africa: Five Census Surveys of Farmland Transactions, 1997-2001. BASIS CRSP (Broadening Access and Strengthening Input Market Systems Collaborative Research Support Program) output, University of Wisconsin-Madison. BASIS CRSP Management Entity, Dept of Agricultural and Applied Economics, University of Wisconsin-Madison.
Type working paper
Scope Post-1994 South African economy
Method descriptive quantitative
Period studied 1913–2002
Regions KwaZulu-Natal, South Africa
Themes agriculture land, transition post apartheid, origins segregation, bantustans removals influx, inequality poverty unemployment, macro fiscal finance debt, methods data sources
Citation key lyne2004

Argument

The paper assesses post-1994 land redistribution in South Africa. It compares government grant-financed purchases (SLAG) with private market purchases in KwaZulu-Natal, using annual census surveys of Deeds of Transfer for 1997-2001. It finds that disadvantaged buyers acquired only 2.3 per cent of the land available. Private purchases redistributed more land, of far better quality and about five times the wealth, than government-assisted purchases. The authors argue that the land market is constrained mainly by inflation-induced cash-flow problems on conventional mortgages and by subdivision and transaction costs, not by lack of demand. They recommend repealing the Subdivision of Agricultural Land Act, lowering inflation and statutory costs, and channelling finite, diminishing interest subsidies through commercial banks and the Land Reform Credit Facility.

Evidence and method

Annual census surveys of all Deeds of Transfer recorded in KwaZulu-Natal, 1997-2001. Transactions are stratified by buyer (white versus previously disadvantaged entrants, identified mainly from names) and by mode of finance (grant, mortgage, cash, non-market). Also used: government and donor programme documents (DLA, LRCF, LRAD), Ithala Bank and Illovo scheme figures, and secondary reports (Turner and Ibsen 2000, Nieuwoudt and Vink 1995, etc.).

Findings

  • Only 2.3 per cent of the land available for redistribution in KwaZulu-Natal passed to disadvantaged buyers in 1997-2001. (p. 5)

    historically disadvantaged people acquired a total of 121,484 hectares, or just 2.3 per cent of the 5.31 million hectares available for redistribution in the province.

  • National restitution plus redistribution transfers were very small relative to white-owned farmland. (p. 5)

    Together, land restitution and redistribution transferred one million hectares, or less than 1.2 per cent of the available area, to beneficiaries during 1995-2000.

  • Apartheid-era dispossession and displacement swelled the homelands' population. (p. 6)

    Between 1960 and 1980 the population of the former homelands increased from 4.5 to 11 million people (Turner and Ibsen, 2000:2).

  • The authors report anecdotal evidence that post-1994 tenure laws encouraged farm mechanisation and evictions of farm workers. (p. 8)

    Anecdotal evidence suggests that these Acts have damaged labour relations on many farms and, despite their good intentions, have encouraged commercial farmers to substitute machinery for labour,

  • Annual redistribution rates were low and a small share of all farmland transacted. (p. 15)

    Annual farmland transfers to the disadvantaged group ranged from 17,345 to 36,109 hectares per annum, representing between 5.8 and 11.8 per cent of the farmland transferred annually

  • The SLAG programme was approved for hundreds of projects but transferred modest area across many households. (p. 9)

    By the end of 2000, the Ministry of Agriculture and Land Affairs had approved 484 projects under the SLAG programme, transferring a total of 780,407 hectares to 55,383 households

  • Diminishing interest subsidies can solve the early cash-flow problem that a cash grant of equal cost does not. (p. 10)

    an interest rate subsidy that diminishes at the expected rate of inflation can completely eliminate cash flow problems in the first few critical years after entry, whereas a cash grant (drawing the same level of public funding) does not.

  • Private purchases redistributed several times more land wealth than grant-financed purchases. (p. 20)

    Private cash and mortgage loan purchases redistributed nearly five times more land wealth (R174.3 million) than did government-assisted transactions (R36.9 million).

  • Land bought with SLAG grants was of much lower quality, as measured by price per hectare. (p. 22)

    The weighted average farmland price for SLAG transfers during 1997-2001 was R833 per hectare, about one-half that for cash purchases (R1,615 per hectare)

  • Private purchases by disadvantaged buyers remained a tiny share of all farmland sales, indicating unrealised market potential. (p. 23)

    these purchases together (105,387 hectares) accounted for less than six per cent of the total area transacted (1,850,982 hectares).

  • Restitution accelerated after 2000 but mostly involved urban claims. (p. 7)

    By October 2002, more than half of the claims (35,173) involving 84,928 households had been settled