Arguments that a moratorium on foreign land ownership will scare off investors are ”ideological and hysterical”, the chairperson of a panel of experts said on Wednesday.
”These accusations are not informed by an understanding of how foreign investors work,” said Professor Shadrack Gutto, chairperson of a panel appointed by Minister of Agriculture and Land Affairs Thoko Didiza.
He said the panel’s recommendation of a moratorium on the purchase of land by foreigners is important and informed by previous policy initiatives.
”We knew that once the report was made public there might be a rush by foreigners to grab land, which would exacerbate the problem,” Gutto told reporters at a media breakfast in Johannesburg.
The panel released its interim report last Friday. It described the impact of foreign acquisition and ownership of land and property.
Research on comparative practices in countries such as Brazil, Chile and Canada showed that a majority of countries had regulation of foreign land ownership, making it the norm rather than the exception.
”A lot of the debate is ideological and not based on empirical fact. These debates come from people who are just opposed to restriction on freedom of commerce. Foreign investors like security of tenure and predictability,” Gutto said.
He said if the restrictions were known, investors would still come to South Africa as long as they had security of tenure.
The Democratic Alliance’s agriculture spokesperson, Kraai van Niekerk, said last week that these restrictions would send up a red flag to investors.
He also said there was no empirical evidence that foreign ownership pushed up prices or restricted available land for land reform.
Gutto said another term of reference for the panel was to determine whether foreign land ownership contributed positively to the government’s policy of land reform through restitution and redistribution.
Rising land prices affected this, as the government often had to buy the land for redistribution. This put certain areas out of reach, making it difficult for the government to settle people for agricultural or residential purposes.
”Our findings clearly indicate that, yes, it has had an impact in raising prices in certain spots,” said Gutto, naming parts of Cape Town and George as examples.
This was merely a contributing factor to rising land prices, along with others such as the economic muscle of the emerging middle class.
Public hearings held showed unity among both whites and blacks — in George, specifically — who felt they were being made landless by foreign buyers.
In Limpopo, where foreign interests used local partners to register companies, well-established white farmers were also feeling the pressure, said Gutto.
The report dispelled the ”legend” that the state owns large tracts of land suitable for land reform.
The panel found the bulk of state land is already under occupation and use by Africans and coloured people who were previously merely tenants of the state. They will now acquire title to about 19-million hectares, which will dramatically shrink state land.
The other state land is divided between the defence force, public works, state-owned enterprises and conservation.
”Besides, large areas of state land are in poor ecological regions not suitable for immediate, low-cost, sustainable, productive development,” the report read.
The report found that roughly 1,5% to 2% of land is owned by foreign individuals — not corporate entities.
Discovering the extent of ownership by corporate entities is still continuing. However, Gutto feels this land is likely to be larger and more valuable than land owned by individuals.
The interim report has been given to Didiza and is going to the Cabinet as a ”matter of urgency”.
The panel hopes for a speedy decision by the Cabinet on whether to implement the recommendations. Gutto said the final report will be ready in April or May. — Sapa