THE last thing on the minds of Diepsloot residents, as they dodged rubber bullets and fought running battles with police in the crowded Johannesburg informal settlement last week, was the raging debate about the right of foreigners to own land.

But the debate on foreign ownership formed the unlikely backdrop to the Diepsloot drama, with the ruling African National Congress (ANC) worried that foreigners were pushing up prices with their hard-currency purchases and undermining the willing-buyer, willing-seller ethic.

In particular, too much foreign-owned agricultural land lies fallow, when it could be used to grow food or settle the landless.

But, for the landless people of Diepsloot, it is cold comfort to hear talk of a plan to limit foreign land ownership. Pushed from pillar to post in the past decade, even an unfounded rumour about their relocation is enough to ignite the tinder, as the country witnessed last week.

The Diepsloot scenario is relevant to the debate on foreign land ownership, not only because it calls into question the relevance of the property-buying habits of foreigners to SA’s troubled land reform process, but because it is a powerful portent of the risks inherent in the failure to manage land reform efficiently.

Few in government, or on bodies such as the Commission on Restitution of Land Rights, would admit to severe shortcomings in the ambitious land reform programme, but there is no gainsaying that it has not lived up to expectations.

The three legs of the land reform programme restitution, redistribution and tenure reform were set out in the 1997 white paper on land policy, with the first two being the main tools for handing land to the dispossessed and the landless.

The restitution programme deals with claims lodged under the Restitution of Land Rights Act, which allows those dispossessed of property after June 19 1913, because of racially discriminatory laws such as that year’s Native Land Act, to lodge a claim for the restitution of their property or for financial redress.

By the cut-off date for applications in March 1999, more than 67500 claims had been received. About 80% were urban claims involving about 800000 potential beneficiaries, while the rural claims involved about 3,6-million people.

The land rights commission says 36686 of these claims were settled between the 1996-97 and 2002-03 fiscal years, leaving almost half to be dealt with by the 2005 target date for completion. Little more than 400000 people have benefited from the successful claims, mostly in urban areas, with the value of awards totalling R1,9bn.

The redistribution programme, on the other hand, aims to give land to black people for residential or farming purposes through a grant of R16000 per qualifying household to purchase land from willing sellers.

Although this programme has delivered the most land to the most people, it has also had only limited success about 2,7% of land has changed ownership since 2000, a long way off the goal of transferring 30% by 2015.

So what, if anything, does the ownership of land by foreigners have to do with the slow pace of land reform, and why the sudden focus on foreigners, who account for a small fraction of the property transactions that take place every year?

Observers across the spectrum such as the Democratic Alliance (DA), which encourages a measured approach to land reform, and the National Land Committee, which would like to see a more aggressive attitude agree it is a factor with only a limited effect on the bigger picture.

Even official documents do not finger foreigners for contributing to the log-jam, despite the fact that their interest in the South African property market has been growing exponentially since 1994, and the current price boom has been a fact of the property market for several years now.

In a document published in May last year, on the challenges and achievements of the restitution programme, chief land claims commissioner Tozi Gwanya lists the late lodging of claims; “exorbitant land prices and uncooperative white farmers”; administrative bottlenecks; and protracted negotiations, disputes and mediation as being among the challenges facing his commission. The lack of funding was crucial, with R701m available for the settlement of claims in 2003-04, compared with the R1,2bn needed.

Despite these more pressing problems some of which are out of government’s hands, some not the ANC has chosen to shift the attention to foreigners buying land in SA.

Land Affairs Minister Thoko Didiza put the issue back in the foreground recently, when she floated the idea of 99-year leases for foreigners during a parliamentary briefing. President Thabo Mbeki rose to criticism from the DA with a spirited defence of his minister, insisting that the issue would be dealt with regardless of the opposition party’s concerns.

But when the claimed link between foreigners and problems in the land reform programme is put under a microscope, cracks start to appear, giving credence to the cries of “red herring” that have reverberated recently.

Pam Golding Properties, which has a large international client base, has been quite outspoken about government’s proposal, warning that it comes at a most inopportune time.

Its Western Cape MD, Mick Boyce, says the debate comes when “confidence in the country is at a high. Other government departments have done an enormous amount in terms of creating the right environment for foreign investment, particularly around tourism.”

He points to the irony that high property prices, not to mention foreign investor interest, are directly linked to government’s sound economic management: “It’s almost like they’re a victim of their own success in that sense.”

A stronger market for international tourists has been one of the drivers behind the high levels of interest in property in SA, Boyce says. “From our experience, people come out, they have a holiday, they like the place, they identify with it, they come out again and they buy property. Then they come back and spend a lot of time and money here.

“Many of them are wealthy individuals. They begin seeing business opportunities and they become investors in the country. We can ill-afford to create uncertainty in the mind of even one of these individuals,” he says.

The DA’s Raenette Taljaard agrees. “Irrespective of whether it is about residential or agricultural land, the signal that will be sent to the market will be problematic,” she says.

“Whether we like it or not, we are bound by the perceptions. The reality is that the market will take a far bigger shudder from a South African pronouncement on limiting foreign ownership of land by virtue of being Zimbabwe’s neighbour than we would like to believe.”

Boyce admits that in any given area, the sale of a house at a particular price “might reprice the area. That’s looking at it from the seller’s perspective. A house is sold at 20% above market value and everybody else’s expectations go up immediately. By the same token, there is always the deal where the purchaser does well, and perhaps you don’t hear about those so often.”

“I think that’s a key issue: how often do foreigners come in and bid more than the asking price? The second question is how often that is happening in direct competition to a local. And that’s very difficult to ascertain. Once again, government does not seem to have done the research to get the empirical data to support the theory,” Boyce says.

An area in which Pam Golding does have some data at its disposal is the prevalence of foreign buying in SA among its own clients. Boyce says the group did about R1bn’s worth of sales to foreigners in the year to February this year about 10% of its total sales for the year. Given that Pam Golding has a market share of between 25%-30% in the areas favoured by foreigners, “we estimate that sales to foreigners in the current market are somewhere between 5%-8% (of the total). So, once again, is that level of foreign purchasing a concern?

“That is where government needs to complete its research into the position at a certain point in time, and then decide whether it’s a real problem,” Boyce says.

Taljaard has done some digging of her own, unearthing figures that show that since 1997 about 80000 of 4,5-million property transactions were conducted by foreigners, contributing just 0,5% of the R25bn turnover in the market during that period.

“I do think it might be a bit of a red herring,” Taljaard says. “But a convenient, rhetorical red herring in the context that there is going to be a lot of pressure when the land claims machinery starts to legally unwind and government has only achieved so much.

“It could be that with foreigners chasing up the prices in the market, government might be looking for scapegoats, to say willing-buyer, willing-seller is to blame for the slow pace of land restitution,” she says.

Fihle Mkhize, chairman of the National Land Commission and a director of the Association for Rural Advancement, shares the suspicion that government is looking for a scapegoat for the shortcomings in land reform even though he supports the move to review foreign ownership.

Not only is foreign ownership affecting prices and undermining the willing-buyer, willing-seller principle, Mkhize says, but foreigners often use their farmland for tourism ventures, depriving farm workers of jobs when the nature of production on the land changes. “But it could be a red herring. There are many other shortcomings. That’s why we are opposed to this piecemeal approach to trying to fix land reform. It needs to be overhauled completely,” Mkhize says.

“We can’t run away from the fact that there have been positives. There have been people who have acquired land, but it has been very slow and we feel it hasn’t been given the priority it deserves, if you look at the fact that the land reform budget for the past 10 years has been consistently less than 1% of the national land budget.”

In an international context, government is not necessarily on shaky ground, even if Mbeki was wrong when he claimed in Parliament that Canada was one of several countries that limited the foreign ownership of land without an adverse affect on foreign investment. There are other examples: India and Switzerland do not allow foreigners to own property at all, while Australia limits them to buying new residential properties, which they can then sell only to Australians.

Other countries protect land that has particular economic or cultural importance.

Unfortunately, government has chosen to start a debate on the issue without the wherewithal to defend its position.

“It is ill-informed because it’s not based on anything other than instinct, which seems to be misguided,” says Taljaard.

An audit of SA’s land ownership patterns aimed at finding out exactly how much land is owned by foreigners is under way, and land affairs department spokeswoman Nana Zenani says it will be completed by the end of the year.

But without hard evidence that foreign ownership of land is a real problem, government leaves itself in much the same situation as the angry residents of Diepsloot lashing out at those it sees as responsible for its problems, without anything more to go on than hearsay and rumour.

Source: AllAfrica.Com
URL: http://allafrica.com/stories/200407121012.htm…/p>