Small business development depends on getting ‘the land question’ right 


Martin van Staden | Executive Committee and Rule of Law Board of Advisors | Free Market Foundation | mail me |

Historical land dispossession has handicapped South Africa’s economic development, particularly of small businesses and small-scale agriculture. This, combined with continued restrictions on subdivision, lack of secure title, and threats to constitutional property rights, impede rapid land reform and economic growth.

This is according to the authors of Laws Affecting Small Business: Land, which is part of a series of research booklets published by the Free Market Foundation. The LASB booklets cover eight areas of government legislation and regulation that harms and hinders the establishment and growth of small enterprises in South Africa.

The authors make various recommendations to adequately answer ‘the land question’ in a way that paves South Africa’s way to prosperity and economic freedom for all.

The Constitution must be amended, not to undermine property rights, but rather to prevent future legislation from burdening owners from gaining secure title. Any new bills that potentially water-down ownership, like the new Unlawful Entry on Premises Bill, would then be subject to additional constitutional standards before they can become law.

Alongside this initiative, holders of informal land rights must be granted security of tenure. Small businesses owned by such holders, especially, require permanent security, so that they may access finance. The Interim Protection of Informal Land Rights Act, dating from 1996 which has been extended yearly, must therefore be made permanent. Owners must have the unambiguous right to hold, use and enjoy, sell, let, and mortgage their rights.

Small-scale farming must be made possible by repealing subdivision restrictions. Owners must not have to acquire permission from a minister to subdivide their land into smaller plots to sell off at affordable rates. For the rural poor, who wish to own property and prosper, a large supply of small and affordable units of land is urgently needed.

The authors recommend that public land not used for strictly governmental purposes be transferred to the homeless, in ownership, free of charge. This land is often owned by the departments of Public Works, Agriculture, Defence, and Water and Sanitation, and stands vacant. Provincial and local governments, and State-owned enterprises, also own much land around the country that is mostly unused. Transferring plots to the homeless could solve the problem of squatting and land invasions.

Naturally, the ‘dumping-grounds’ homelands strategy must be avoided – preference must be given to transferring desirable public land, likely closer to urban areas.

Additionally, the authors argue, it should not be necessary to use a conveyancer (expensive lawyers who charge by the hour) for routine property transactions. A simple transfer of ownership, or the registration or cancellation of a mortgage bond, should not require the involvement of lawyers, just like we do not usually involve lawyers when we sell expensive cars, jewellery, or machinery. The State’s gatekeeping on behalf of conveyancers – a huge financial burden, particularly to small business property owners – must end.

All remaining insecure forms of tenure that were implemented to make Apartheid possible (such as permissions to occupy and leasehold tenure in townships) must be replaced with full ownership. Apartheid made it impossible for black South Africans to own property in ‘white’ urban areas, even though they, in all but name, were in fact owners of said property. Much of this continues today, making it next to impossible for owners to use their property in financially beneficial ways.

Finally, the new Expropriation Bill must be brought in line with the Constitution and must recognise and respect the importance of secure private property rights.

Many in the commentariat errantly assume that property rights and land reform stand in opposition to one another. This is incorrect. Land reform is necessary because property rights were violated in the past in the first place. That is why land reform must complement – never infringe – upon private property. Once it infringes upon property rights, it is no longer land reform but rather nothing more or less than a continuation of the same dispossessory, anti-property mentality that characterised previous South African governments.

All South Africans’ private property rights must be recognised and respected, especially those who have insecure title despite being owners. Private property rights are crucial to any kind of economic development, as has been confirmed year on year by indices like the International Property Rights Index (Property Rights Alliance) and the (Fraser Institute).

These are only some of the recommendations made in the LASB: Land.

The LASB booklets represent one-third of the Free Market Foundation’s book, Radical Economic Transformation: The Legal Route to Economic Freedom, which proposes a comprehensive reform package that will get the South African economy prospering.


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