Tough rural decisions need more open debate

18 March 2010, Business Day
URL: http://www.businessday.co.za/articles/Content.aspx?id=103853

Johannesburg: Rural development now sits near the top of the official priority list and the government is taking decisive action: it’s drafting a green paper. So in a year or two we should find out just what the rural development strategy will entail, though the new Department of Rural Development has already piloted a Comprehensive Rural Development Strategy.

Still, there’s a persistent lack of consensus about what would constitute successful rural development. Reviewing the extensive academic literature provides a tour down memory lane: the same debates and insights have dragged on since well before 1994. Instead of resolving disagreements, it seems we muddle through, and then wonder that so little changes.

The core problem is that SA’s colonial and apartheid geography forced millions into labour reserves that were distant from employment opportunities, impoverished and overcrowded. They were largely in the north and east of SA, many in places too arid and far from the coast for much economic development. The repressive machinery of apartheid, from pass laws to forced removals, evolved to restrict people to these impoverished zones.

What should be the future of these settlements, which in many cases now survive mostly on social grants and migrant labour? In the long run, should the government expect most former bantustan residents to move to town, or should it try to create more economic opportunities for them around their current homes?

Many people have voted with their feet. The share of the African population in the former bantustans, estimated at about half in the 1980s, is down to under a third today. Since 1994, projections from Quantec EasyData suggest that while the total population has climbed by 20%, municipalities located mostly within the former bantustans have grown only 10% while the metropoles have expanded by 40%. According to the 2007 Community Survey, a third of Gauteng’s population and a quarter of Western Cape’s were born in another province. In contrast, a quarter of those born in the Eastern Cape and Limpopo now live in other provinces.

But the current process of migration does not have to dictate government policy. People’s sentimental, social and economic ties to their homes cannot be reduced to narrow economic sustainability. Besides, economic rationality doesn’t run only one way: absent improved conditions in the countryside, the cities will have to pay for housing, services and jobs for millions of new residents.

Land reform throws up similarly difficult choices.  SA’s commercial agriculture is an international powerhouse, able to feed the nation while rapidly expanding exports of wine and fruits. It is also dominated by a small number of large farms that feed into highly concentrated processing and retail chains.

The position of farmworkers points to the inequitable distribution of benefits from farming. Remuneration accounts for just over a third of the value added in agriculture, compared to half for the rest of the economy. According to the 2007 agricultural census, permanent farmworkers averaged only R1380 a month, while seasonal labourers received R330. A 2005 survey found some 2,4-million farmworkers had been evicted from their homes between 1994 and 2004.

Debates on land reform turn largely on how to balance the risk of destabilising commercial agriculture against the need for a more equitable rural dispensation. The state has already settled a total of 400000 households on estates it bought from farmers at market prices. But more radical land reform could cause a downturn in commercial agriculture. As it is, investment in agriculture dropped from 5% to 3% of the total between 1993 and 2009, while the number of commercial farms shrank from 60000 to 40000.

A second quandary for land reform is whether to allocate small plots to indigent households in order to ameliorate poverty, or to establish fewer but much better-off black commercial farmers so as to improve representivity in agriculture. In 2007, the government spent around R1,4-billion to settle some 15000 new farmers, at a cost of almost R100000 apiece. It has now raised its top land grant to R400000 per beneficiary. For comparison, the state provides just under R45000 for each new RDP house and R50000 for taxi recapitalisation.

The huge cost of overcoming apartheid backlogs imposes this kind of tough decision. To increase municipal spending per household in the former bantustans to the levels now enjoyed in the metropoles would cost about R15bn a year — and that would not address the shortfall in past investment. To raise social grants to the international poverty line of 2 a day for a family of four (around R1800 a month) would require another R15bn annually. To buy 30% of white-owned land for redistribution by 2014, in line with national targets, would cost close to R50bn.

From this standpoint, the debates on land reform boil down largely to conflicts over which social groups should benefit — and which wield influence as voters, lobbyists and investors. A more open national discourse about the hard choices could generate a more balanced outcome from the standpoint of society as a whole.

*  Neva Makgetla is lead economist for research and information at the Development Bank of Southern Africa.