Land reform: The World Bank finally sees the light

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A new report by the World Bank, virtually ignored by the international media, categorically comes out in favour of comprehensive land reform in South Africa as the only means of reducing income disparities and promoting social cohesion. This is in stark contrast to a similar situation in Zimbabwe in 2000 when the Bank and Western nations punished the Southern African country for attempting to take back its land. Baffour Ankomah reports.

After nearly 20 years of opposing land reform in Zimbabwe and supporting stiff economic sanctions on the Southern African country, including the infamous denial of credit and debt postponement in March 2006, the World Bank has finally seen the light and is supporting land reform in South Africa, including even land expropriation without compensation. 

In a landmark report, the World Bank says “South Africa has come a long way since the advent of democracy, but its transition remains incomplete” because “the highly skewed distribution of land and productive assets is a source of inequality and social fragility, fuelling contestation over resources.”

On 30 April this year, the World Bank released a 147-page report titled An Incomplete Transition: Overcoming the legacy of exclusion in South Africa,which endorsed the South African government’s view contained in its 1994 Reconstruction and Development Programme (which it also quoted in the 2012 National Development Plan) that: “No political democracy can survive and flourish if the mass of our people remain in poverty, without land, without tangible prospects for a better life. Attacking poverty and deprivation must therefore be the first priority of a democratic government.” 

The contents of the report are so revolutionary and so contrary to what the Western world and the multilateral financial institutions they control did against Zimbabwe on account of its land reform programme, which started in 2000, that the West’s major TV channels and newspapers that were at the forefront of the propaganda war against Zimbabwe have refused to publish the report – except for the right-wing American TV channel, One American News Network (referred to as OAN).

On 30 April, when the report came out, the OAN, in line with its right-wing views, ran a story criticising the World Bank for “controversially” supporting an “anti-White” land-expropriation-without-compensation programme in South Africa that, according to OAN-quoted sources, would lead to “White genocide” in that country. 

So far, that has been about the only story on the report by a major Western TV channel or newspaper. The others have all chosen silence as a way of living with the embarrassment of unwittingly being told by the World Bank that they were wrong in fighting against land reform in Zimbabwe, a country where all the elements and factors that the World Bank now says justify land expropriation without compensation, were present. 

The report, which the World Bank calls a Systematic Country Diagnostic(SCD), was done in collaboration with the South African government. It virtually, though unwittingly, vindicates Zimbabwe’s much-maligned land reform programme and the man who led it, former President Robert Mugabe.

The epiphany

According to the report, the World Bank Group’s twin goals are to help countries to eliminate poverty by 2030 and boost shared prosperity (that is, reduce inequality). 

“These goals are also enshrined in South Africa’s Vision 2030 in the National Development Plan,” the report says. “The World Bank Group is preparing for its 2019–2022 Country Partnership Framework with South Africa, and drafted this Systematic Country Diagnostic (SCD) to strengthen its understanding of key constraints to achieving these twin goals.”

This SCD was led by Marek Hanusch (senior economist, World Bank) under the guidance of Paul Noumba Um (country director, World Bank) and Saleem Karimjee (country manager, International Finance Corporation).

The report was prepared under a memorandum of understanding in collaboration with South Africa’s National Planning Commission, in the context of the National Development Plan, and with a large number of government counterparts. 

“Although the views outlined [in the report] are those of the World Bank Group, they were formed in direct conversation with South Africans, including the National Planning Commission, government officials, the private sector, academics, young people, and members of trade unions,” the Preamble of the report reveals. 

“The broad policy priorities identified are expected to strengthen job creation, and reduce poverty and inequality,” the Preamble continues. “This compact is an essential foundation on which to build the country’s future. In this context, the private sector will have to play a more active role in shaping policy and creating jobs.”

Explaining further, the Preamble says the World Bank Group consulted widely for this SCD, which draws on a large number of background notes and aligns with the World Bank’s World Development Report 2006: Equity and Development and is anchored in South Africa’s NDP and its guardian, the National Planning Commission. 

“A broad range of stakeholders were [also] consulted, including various government departments (especially the National Treasury and the Department of Planning, Monitoring, and Evaluation), the South African Reserve Bank, and members of the diplomatic corps.” 

Remarkably, the report and the events leading to it were paid for by South Korea’s Ministry of Strategy and Finance through its Global Facility for Growth and Development. 

The summary

For Zimbabweans, whose country was so maligned and sanctioned by the West – sanctions avidly supported by the World Bank and IMF – for embarking on the same course of land reform to redress colonial sins and fight inequality, the sum of the World Bank’s new report makes unpalatable reading.

“All countries are products of their history,” the World Bank now concedes without any trace of irony or embarrassment. “Race-based exclusion is a defining feature of South Africa’s history. [As such] South Africa is a highly diverse country marked by inequality. [And] given the extent to which exclusion in South Africa is linked to land, it is unsurprising that land reform remains an emotional topic. In rural areas, advancing land reform remains critical.”

All these factors and elements were present in Zimbabwe. But the report goes on: “Land redistribution [in South Africa] has been slow and the impacts on poverty are unclear; yet it is important for social sustainability. But the legacy of exclusion in land, labour, capital, and product markets hampers growth. Undoing the legacy of exclusion is a long-term process, and expectations need to be managed carefully.” And not only that: “Property rights are critical for all South Africans to leverage their assets in support of economic growth, household incomes, and jobs,” the report continues. “Despite some progress, wealth and land ownership remain highly concentrated. [Though] poverty has declined significantly since 1994, inequality remains extremely high. [Yet] calls for land expropriation without compensation and aspects of the third Mining Charter fuel concern over property rights.” 

As a result, the World Bank says “more needs to be done to achieve South Africa’s Vision 2030”, explaining that “South Africa’s transition remains incomplete, as – notwithstanding considerable progress in advancing the Freedom Charter’s historical goal that ‘the people shall share in the country’s wealth’ – the legacy of exclusion persists: too many historically disadvantaged South Africans remain disadvantaged today, chronically poor, without land or property, and without tangible prospects for a better life.” 

Moreover, “employment among historically disadvantaged South Africans remains relatively low and entrepreneurs face many obstacles. This makes it more difficult to strengthen South Africa’s democracy and its underpinning social contract.

“Overall, inequality has risen since 1994 – and in some cases, policies adopted by the government have inadvertently helped entrench it further. According to World Bank Group data, South Africa remains the world’s most unequal country.”

And then comes the rub – something that will dismay patriotic Zimbabweans who have seen their country and their own lives destroyed by economic sanctions imposed by the West and supported by the World Bank and its sister organisation, the IMF: “Land reform in South Africa,” the World Bank now says, “represents an attempt to undo at least some of the legacy of segregation and apartheid. The stated goal is to transfer 30 per cent of land to historically disadvantaged South Africans [meaning black South Africans whose ancestors were robbed of their lands by white settlers].

“As highlighted in the NDP, greater tenure security, a third pillar of land reform in South Africa, is critical to strengthening property rights and fostering investment in the former homelands, which are dominated by communal land.

“Agriculture only accounts for 2.5 per cent of national GDP, but it is an important source of jobs and incomes in rural areas. [Therefore] better support should be given to small-scale farmers.”

Zimbabwean wounds

As if to rub more salt into the wounds of Zimbabwe, the World Bank goes on to explain that “Democratic South Africa inherited an economy that made it difficult for historically disadvantaged entrepreneurs to accumulate wealth by competing in the country’s rigid product markets.”

It emphasises that although two of the first three clauses of the governing ANC’s Freedom Charter, the historic 1955 document setting out the central objectives of the democratic movement – which said that (i) the people shall govern; (ii) all national groups shall have equal rights; and (iii) the people shall share in the country’s wealth – have largely been achieved since the first democratic elections of 1994, “historical disadvantage remains a determinant of income, wealth, and opportunity, notwithstanding some progress. As such, the economic transition from a system of exclusion under segregation and apartheid remains incomplete.”

To complete the transition, a new social compact, according to the World Bank, will require greater certainty about what will be redistributed – and how this will take place – while ensuring that secure property rights provide a sustainable platform for investment. 

“Although 80 per cent of land claims had been settled by 2016, the amount of land transferred is still small. The target of transferring 30 per cent of arable land to black landholders by 2014 was not achieved, and there is limited information on the current level of transfer.”

Going forward, the report says “quickly resolving issues around land reform in a way that redresses historical injustices without undermining livelihoods of rural communities is a critical challenge for South Africa – both to reconcile with past injustices and to promote greater certainty around ownership so as to encourage much-needed investment in agriculture.

“Many of South Africa’s contrasts have an economic dimension. It is an upper-middle-income country on a much poorer continent, with rich citizens living next to much poorer ones, separated by high walls and electric fences in many places, such as its urban hub Johannesburg, which attracts both the region’s talents and its refugees. 

“As much as South Africa has reason to celebrate its diversity, wealth inequality poses a challenge to the cohesion of its society. Poverty and inequality, rooted in the historical legacy of exclusion, concern all South Africans.”

Land reform as a basis for prosperity

The contents of the report and the passion with which the World Bank has defended it since its publication, especially on the OAN, have greatly exposed the error of the Western sanctions regime that brought Zimbabwe’s economy to its knees in the mid-2000s. 

For Zimbabweans whose analyses of their country’s economic troubles of the last 18 years have always stopped at the door of their beleaguered government, or those who have believed the Western propaganda that heaps the country’s economic implosion on the “incompetence” of the Mugabe government alone, the World Bank’s about-turn comes as a salutary lesson. 

The West, its media houses, and multilateral financial institutions always knew that in countries like Zimbabwe, South Africa and Namibia, where skewed land tenure systems were imposed by powerful minority groups on the powerless native majority, land reform was always a necessity for economic growth and general prosperity.

For example, when the Americans occupied Japan after World War II, they embarked on a land reform programme as a basis for economic prosperity. 

General Douglas MacArthur, the American five-star general and war hero who ruled Japan from 1945 to 1949, launched a land reform programme between 1947 and 1949 that saw approximately 4,700,000 acres (1,900,000 hectares), or 38% of Japan’s cultivated land, purchased from what amounted to feudal landlords, and 4,600,000 acres (1,860,000 hectares) resold at generous rates to the peasant farmers who had worked the land under the landlords. 

By 1950, 89% of all agricultural land in Japan was owner-operated and only 11% was tenant-operated. By then atomic-bombed Japan was on its way to the economic prosperity it is known for today.

With the success achieved in Japan, Gen. MacArthur was tasked to do the same thing in Taiwan (a former colony of Japan – previously known as Formosa – that was then occupied by America through its agent, Generalissimo Chiang Kai-shek and his Koumintang government). MacArthur’s land reform in Taiwan was as successful as in Japan and became the basis of Taiwan’s economic miracle.

Other countries in Southeast Asia and elsewhere in the world have used land reform as the foundation for economic prosperity, and the West knows this.  For them and their financial institutions to oppose land reform in Zimbabwe and embark on a regime change agenda to try to overthrow the government leading the Zimbabwean land reform was the height of hypocrisy and unreasonableness.

It is this hypocrisy and unreasonableness that the World Bank’s epiphany on land reform in South Africa tries to correct. 

No wonder, the World Bank now advances the argument that since the 2008 global financial crisis and the end of the commodity boom, the contestation over resources in South Africa has increased, while governance has deteriorated in some areas and progress in reducing poverty and inequality has stalled. 

“Bold reforms are needed to accelerate social progress and to counter the erosion in institutional quality,” the World Bank says. “Some people are calling for an ‘economic CODESA’: a social compact framing the progress of South Africa’s transition. This is a historical opportunity for President Cyril Ramaphosa, the architect of the original CODESA, which paved the way for democracy.”

This is necessary, the World Bank continues, because “land remains an emotional topic in South African politics and is seen as a way to overcome the country’s historical legacy.

“Accordingly, there is an argument that the ‘willing buyer/willing seller’ model – through which the government purchases land from willing sellers at market value for redistribution – is controversial because it conflicts with the idea that land reform is about justice and reparation.”

Slow progress

What is working against South Africa, according to the World Bank, is that “the land reform process is progressing slowly. As of 2016-17, only about 8.1 million hectares had been reallocated.

“The government makes land available through two separate processes: redistribution and restitutionLand restitution restores land or provides financial compensation to victims of land dispossession under separation and apartheid; land redistribution is a discretionary intervention whereby the state purchases land on behalf of previously disadvantaged individuals to enable them to farm – and reduce poverty in rural areas. 

“As of July 2017, the Restitution Commission had settled 76,139 claims, of which about 90 per cent had been settled by means of financial compensation, involving some 400,000 households in urban and rural areas. 

“Rural claims are particularly complex. Challenges include a lack of clarity as to exactly what land the claimants have a right, untraceable claimants, and competing claims for the same or overlapping land. 

“Yet farms successfully run by historically disadvantaged South Africans are important to heal the scars of history – and could play a greater role in helping alleviate poverty.”

Thus, in endorsing the South African government’s current programme to expropriate land without compensation, the World Bank insists that “strengthening land rights is critical for many South Africans, and it will be an important step in overcoming the legacy of apartheid and ultimately fostering investment by commercial farmers, emerging farmers, and households.”

What great relief this newfound perspicacity of the World Bank would have brought to Zimbabwe if only the Bretton Woods institutions and the Western governments they tend to support had seen the light earlier!

This article was first published by the New African Magazine