19 November 2018

Namibia: How Alike Is Land Reform in Namibia and South Africa?

analysis

While land reform has dominated South Africa's headlines, it has also emerged as a major polarising issue in Namibia ahead of next year's national election. Populist pressure, fears around the trajectory of the economy and uncertainty about how the process will be administered in Namibia have raised alarm, particularly among investors.

With last year's rating downgrade to sub-investment level, and growth outlook depressed, the Namibian economy remains vulnerable. Jittery investors are now zooming in on two questions in particular - whether Namibia's handling of the land issue bears any similarity to South Africa's, and whether it merits the same level of concern.

First it is important to understand the similarities between the two countries. Both have segregationist history and inequality is still dominated across racial lines. Both countries have key elections in 2019 with incumbent governments facing dissatisfaction around the slow pace of transformation (much of which can be attributed to their own inefficiency rather than legislative prohibitions.)

It is in this context that the current clamour around the respective land debates needs to be understood. Current land policies have failed to launch in both countries - evidenced by land ownership statistics, which remain racially skewed.

In both countries, the issue is less about land and more about inclusion, dignity and general redress

In South Africa, according to the government's 2018 Land Audit Report, whites own 72% of farms and agricultural holdings, coloured people 15%, Indians 5% and blacks 4% (all individual ownership). These figures - and indeed the report - have been questioned. Commentators say the baseline measurements have been manipulated for political profit. However this doesn't change the underlying notion that the distribution of individual ownership is misaligned with the country's demographics.

Namibia is no different. According to the 2018 Namibia Land Statistics report, domestic and foreign white citizens own about 70% of commercial or freehold agricultural farmland.

In both countries, whites account for less than 10% of the total population. Statistics also show that despite commitments to transforming the nature of land ownership in both countries to better reflect population demographics, not enough has changed.

Land reform is not the only initiative that has failed to launch, but land dispossession was central to the segregationist policies that dominated both countries' pasts. Many of their ongoing socio-economic challenges can be traced to this. In both countries, the issue is less about land itself, and more about inclusion, dignity and the need for general redress.

Land is the lightning rod representing dissatisfaction with the status quo, and unhappiness with a lack of economic opportunities and the racialised economic structure of both economies. The issue also carries political currency in each context, particularly as elections approach.

However there are crucial differences in how land reform historically fits in to the ruling parties' discourse and the type of land that people want. In Namibia - much like Zimbabwe - a largely ethnically denominated liberation movement and now ruling SWAPO party fought a 'people's war' over land.

In contrast, given the multi-ethnic urban elitist composition of South Africa's ruling African National Congress (ANC), there was little mobilisation for a land-based people's war but rather for broader political and economic inclusivity, of which land was part.

Limited political pressure has allowed Geingob to skirt around contentious land reform measures

With roughly 50% of Namibia's population situated in rural areas, popular demand is mostly for rural land. In South Africa, almost two-thirds of the population live in urban settings, so there's greater demand for urban land.

The political pressures for reform also vary in intensity, which might explain the difference in approach, specifically towards expropriation without compensation. In South Africa, land reform has become a political football between the ANC whose grip on power is now less assured, and the rival leftist Economic Freedom Fighters (EFF), which sought to capitalise on land reform as an emotive electoral issue.

President Cyril Ramaphosa hasn't been helped by ANC cliques that, like the EFF, advocate for a more rigorous expropriative policy. This has required tactful manoeuvring by Ramaphosa in a bid to retain this electoral golden ticket, which if incorrectly pursued could have adverse economic and socio-political consequences.

The outcome has been evident in the firm commitments towards expropriation without compensation and a 'clarifying constitutional amendment' that effectively reclaimed the political discourse on the issue from the EFF. On 15 November, Parliament's Constitutional Review Committee adopted recommendations to change the constitution to explicitly allow expropriation without compensation. The proposals will now go before Parliament.

Namibia's President Hage Geingob, by contrast, faces no such pressures. Despite 2019 being an election year and land reform being high on the agenda, SWAPO controls 80% of the national assembly. The most vocal advocates for land reform are party insiders and civic society organisations such as the Landless People's Movement, around which SWAPO can manoeuvre.

Namibia - unlike South Africa - has made no firm commitment towards a constitutional amendment

This absence of political pressure has allowed Geingob to skirt around contentious measures like expropriation without compensation. As resolved during the 1 October land conference, Namibia will discontinue the willing-buyer-willing-seller principle in favour of an expropriative policy that is enabled by the existing constitution.

The government may also seek to redefine 'just compensation', but so far this will not necessarily include a denial of compensation. Although broached during the conference, Namibia - unlike South Africa - has made no firm commitment towards a constitutional amendment.

While there might be differences in the push for extreme measures, any such possibility is constrained in both countries by market-related considerations. In South Africa, a predominantly agriculture-driven technical recession renders any radical expropriative policy unviable, and would send negative messages to weary markets.

This is possibly why Ramaphosa has spoken against arbitrary land grabs and the nationalisation of land. Instead, he has maintained that his administration would undertake a considered approach that prioritises state owned land for redistribution.

Facing similar economic stagnation and an exacerbated climate-related threat to agriculture, Namibia has followed suit with its own 'considered' approach that seeks to minimise disruptions to the vital sector, albeit with some key differences.

For one, the government has pledged to pursue a 'one Namibian, one farm' policy that discourages the ownership of multiple farms by individuals. Also, foreigners will be prohibited from purchasing underdeveloped residential land. This won't include purchases for commercial and industrial use - testament to Geingob's cognisance of the potential backlash to an outright ban.

In both South Africa and Namibia, land reform is critical for socio-economic and political stability, but investors are anxious about how it will change the countries' landscapes. How both governments straddle appeasing investor concerns and rectifying historic injustices through equitable land redistribution will be key to the region's economic well-being and political stability.

For investors, an appropriate diagnosis of the issue is important to ensure that they don't panic or overreact. Central to this is an understanding of the drivers behind each country's land debate, the political considerations at play, and the significance of historical context.

Ronak Gopaldas, ISS Consultant and Director, Signal Risk and Menzi Ndhlovu, Signal Risk

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