New approaches to speed up secure land reform

A radical redistribution of land in Namibia could lead to disinvestment and undermine economic growth, a new study has warned. Land reform in the southwest African country has re-emerged as a political hot potato since last year. Frustrated by the slow pace of transferring commercial farmland from white to black Namibians, the government announced that it would accelerate the land reform process by expropriating property. However, Prime Minister Theo-Ben Gurirab said the country would not abandon the existing "willing-buyer, willing-seller" policy in favour of expropriation and both interventions would work concurrently. Since independence in 1990, the government has managed to acquire 829,486 hectares - far short of the land resettlement target of nine million hectares. "Rethinking Land Reform in Namibia: Any Room for Economics?", a study by the Windhoek-based Institute for Public Policy Research, argued that while expropriation was needed to accelerate land reform, "the absence of clear criteria" would create uncertainty and insecurity among farmers and the business and investor communities. The authorities have so far remained tight-lipped about exactly when and how expropriation would be undertaken. "By setting clear targets and policy criteria, this uncertainty can be minimised. Thus government should clearly state the end-point and the intended speed of the land reform process," the study recommended. Much could also achieved by broadening existing policies, such as the Affirmative Action Loan Scheme (AALS), which grants subsidised Agribank loans to full-time and part-time communal farmers with more than 150 large stock or 800 small stock. The subsidy element of the loan is financed by central government, through transfers from the Ministry of Agriculture, Water and Development, for which provision is made annually in the national budget. Loan recipients have to have a track record of livestock farming, but can choose which farm they wish to buy, and receive title to the land. Borrowers have a strong incentive to repay the loan from either farming or non-farming income. AALS is a market-based mechanism in much the same way as a secured bank loan, and is associated with property ownership and incentives to perform. Compared to the National Resettlement Policy (NRP), which involves "lengthy bureaucratic procedures", the report recommended that policy emphasis should go into upgrading and broadening the AALS, which would allow smaller-scale black farmers to enhance the benefits from the farms they selected and owned. Under the NRP, all farmers wishing to sell their farms first have to offer them to government, which can then decide whether or not to purchase the land at the quoted price in the "willing-buyer, willing-seller" process. If the government decides not to purchase the farm, the seller is then allowed to sell the farm to any buyer. Most farms bought by the government are advertised and interested people apply to be resettled. After a "screening" process, conducted by the National Resettlement Committee, successful applicants are resettled and have a 99-year right to use the land. But often it takes time before people who comply with the requirements for specific farms are identified, thus delaying the transfer of land to those who need it. Also, under the NRP, settlers do not own the land they farm and share facilities and resources with other settlers. "The AALS and the NRP can be viewed as representing two contrasting approaches to land redistribution: one based on clear property rights and individual choice, responsibility and incentives; and the other based on less clear property rights and greater bureaucratic allocation and support," the researchers explained. It was proposed that the government introduce long-term land bonds to finance the accelerated land reform process, with the resulting revenues accruing to the Land Development Fund rather than the State Revenue Fund. "Government could offer long-term bonds to land sellers, in exchange for land at discounted prices to the market price. Donors and international lending agencies would be requested to contribute to this fund for the purchase of land," the study suggested. A further recommendation was that commercial farmers to make a "meaningful contribution" to the land reform process. "A select band of profitable farmers could club together to purchase and transfer a defined area of land, to show that all parties are bearing a certain amount of pain in order to reach an acceptable outcome," the report concluded.