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SA draft land policy to limit ownership

South Africa's government has drafted a new land policy that proposes limits to land ownership by its own citizens and foreigners, its Rural Development and Land Reform Minister says.

Land reform remains a sensitive issue in South Africa nearly two decades after apartheid ended in 1994, with the white minority holding about 87 percent of commercial farm land while blacks only own 13 percent. The new policy, expected to go before Parliament next month, proposes a three tier land tenure system, including private land ownership "with limited extent", Reuters reports.

Foreign land ownership would also be tied to "productivity and partnership models with South African citizens," minister Gugile Nkwinti told parliament. "We have not spoken at all about any nationalisation of land," he said.

But the opposition Democratic Alliance did not accept that argument, arguing it was nationalisation by stealth and “indicative of the [ruling African National Congress'] ANC’s continued attempts to infringe on the Constitutionally guaranteed right to private land ownership.

“The plan will be set out in a green paper in April and proposes qualified freehold for private land, leasehold for state land and precarious tenure for foreign ownership of land, DA land spokeswoman Annette Steyn said.

“Not only is the institution of a land tenure system that would qualify land ownership unlikely to stand constitutional muster, it will also be disastrous for South Africa’s economic growth. It is common cause that successful economies are built on the foundation of the protection of private property rights. Zimbabwe is a perfect example of a country where the lack of secure property rights led to a destruction of the economy following disinvestment. Investors are of course also less likely to invest in countries with unsecure property rights. The South African economy is already fragile and we cannot take this risk,” she says.

Nkwinti said the policy was part of plans by the government in Africa's biggest economy and largest maize producer to resuscitate its flagging land reform programme, under which it had hoped to transfer a third of all farmland to blacks by 2014. Nkwinti said it would cost an estimated R72 billion to transfer the remaining 19 million hectares of land by this date, money the government did not have.

The state has been purchasing land as part of a "willing-seller, willing-buyer" scheme, but this is being reviewed because negotiating land prices has proved problematic. The government has admitted that its land reform programme has failed, and that the initial 2014 target will now be impossible to meet. It now planned to acquire and redistribute another 900 000 hectares of white-owned farmland by 2014, depending on the budget. "I have to acknowledge that the land reform programme implemented to date has not been sustainable and has not provided the anticipated benefits," Nkwinti said.

The land issue has been brought into sharp focus by the decline in agriculture in neighbouring Zimbabwe where white commercial farmers were often violently evicted by President Robert Mugabe's government. Pretoria has vowed that its own land reform will be orderly, but critics say many of the same problems faced by Zimbabwe, including lack of proper support for new farmers and inadequate farming skills, are likely to stymie South Africa's programme.

The draft policy is likely to attract heavy criticism from farmers and opposition political parties, who were last week angered by the Land Reform department's proposal to nationalise all farmland in order to speed up the process of handing over farm land to blacks. That plan was opposed by farmers and opposition political parties, who said it could dent both foreign and local investment and food security in one of the continent's most developed farming sectors.

Nkwinti said his department would spend about 900 million rand in the 2010/11 financial year to refinance the land reform programme, boost food security and create jobs.

Manwhile, two South African asset management firms have launched a R3 billion rand farmland investment fund that is expected to help boost agricultural development in Africa's biggest economy. The Futuregrowth Agri-Fund, launched by Old Mutual South Africa unit Futuregrowth Asset Management and UFF Asset Management, plans to tap institutional investors for the cash, which will be invested in farms in South Africa.

"Typically, the fund will purchase a farm, retain the workforce and appoint a professional operator with a strong marketing and distribution network," Erwin Bouland, Investment Manager at UFF Asset Management said in a statement. "Access to working capital will be sourced by the operator."

South Africa has one of the continent's most developed agriculture sectors and is Africa's top maize producer as well as the third largest wheat grower. The companies said the fund will invest in farmland, agri-businesses and farming infrastructure related to the land. "In addition, the fund has a strong socially responsible component. Benefits to farm workers and the broader rural community include employment, skills transfer, healthcare, education, access to services and housing," Futuregrowth Fund Manager, James Howard said.

He said the fund would target local and international state-owned and private pension funds as well as local development institutions. "It will provide access to stable, long-term returns within the context of continuing development in the agricultural sector," Howard said. Investors have taken a keen interest in farmland across Africa since food shortages in 2008 triggered global food price spikes. Interest in farmland investment has also been spurred by losses incurred by money managers during the financial crisis of the last two years.


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