JOHN WEBB: Want to save the GNU? Try solving the nation’s problems

SA faces critical questions over its ability to finance public expenditure and address historical inequalities in land distribution.

The budget impasse and unexpected intervention of the US government in the land redistribution debate have worsened the need to urgently address these issues before they spiral out of control.

The DA has withheld its support for the 2025 state budget on the basis that the draft bill will not support economic growth, create employment or reduce the overall tax burden and wasteful expenditure. So far, so good.

However, if the party does little more than obstruct legislation proposed by the ANC — even if the grounds are valid — this will ultimately encourage the ANC to look elsewhere for parliamentary support.

The only alternative is to offer concessions to the EFF or MK, both of which propose more radical reforms that could upend the GNU and SA’s fragile economic prospects.

The DA needs to work harder to bridge the divides between the GNU partners and not simply try to stare the ANC down at every turn.

The ideological preferences of the major political parties were litigated and decided at the 2024 election, where the DA enjoyed marginal growth in its overall public support while the erosion of the ANC’s support was largely taken up by MK.

If the DA is to grow its constituency and demonstrate that its participation in the GNU is worthy of continued public support, it must find a new, more creative way of addressing the twin issues of land reform and public financial management. It’s not enough to trot out the same talking points from last year’s election. That debate is done and dusted, and we all know the result.

As for land reform, there are two mutually opposed starting points to this debate, both of which enjoy some merit. It is the job of political leadership to bridge the gap between the two, rather than to entrench themselves on one side or the other.

The first starting point is that land distribution in SA needs to change. A statistic widely circulated online is that 72% of privately-owned agricultural land is owned by whites, who make up only 8% of the population. Given the racial tension that has characterised SA’s political landscape for decades, if not centuries, this is untenable.

Since the adoption of the 1913 Land Acts, successive governments, right up to the 1960s, confiscated land from black communities and awarded them to white communities. Many of these efforts reside within living memory. With the onset of democracy in 1994 it is only natural that many black communities cannot tolerate any further delay to a lasting remedy for these past injustices.

The second starting point is that SA needs to feed itself. There is an abundant record of poorly constructed land redistribution policies elsewhere in Africa that have led to severe economic collapse and grave food insecurity, including horrific malnutrition and even starvation. The stakes could not be higher.

Meanwhile, the snail-paced efforts over the last 30 years to address land reform have now stalled altogether. The Commission on Restitution of Land Rights reported in 2023 that under “the current budget allocation and settlement rate, the commission will need about 30 years to settle claims at a cost of R172bn”.

Major constraints to the restitution process include controversial land valuations and a refusal by current landowners to accept settlement offers. That said, the legitimacy of claims have, in thousands of cases, been determined even if land valuations and settlement offers have not.

To obviate the crises that affected land reform in countries such as Zimbabwe, Mozambique and Tanzania, we can learn from how those crises were eventually resolved. After major upheavals, including hyperinflation and the collapse in food production, farmers with technical skill and access to capital, many of whom happened to be white, have now been invited back to those countries, no longer enjoying legal title but entitled to farm the land under contract.

These “contract farming” arrangements have already been adopted on a limited and voluntary basis in SA. It is inescapable that this is where land reform efforts in neighbouring countries eventually lead. SA is in a position to skip the intervening crises that have been so calamitous for its neighbours and head straight to the finish line.

Herein lies a workable strategy to bridge the mutually opposed starting points. Litigants at stalled proceedings before Land Claims Courts ought to be invited to consider a mediated settlement as follows:

• First, land title is transferred to legitimate claimants for no compensation.
• Second, a right for the existing occupant to use the land for commercial purposes is registered against the title as a right in rem.
• Third, an agreed portion of the land is set aside for occupation by the land claimant.
• Fourth, a royalty is payable by the existing occupant to the claimant and the quantum thereof is adjustable in proportion to how much land is set aside for the claimant’s occupational rights. The larger the claimant’s occupational rights, the smaller the royalty.
• Fifth, to avoid burdening commercial farmers with additional overheads, the royalty is tax deductible. This invites the state to play a role in the final resolution of the matter between the claimant and the existing occupant.

Something new and creative must be done. The DA is the only party to demonstrate that the impasse in the land reform crisis in SA can be broken.

As for the current 2025 budget debate, if not properly resolved it stands to quickly spiral out of control. The ANC is placed in an unenviable position entirely of its own making. It either lurches to the left, which proposes nationalisation of private economic assets. Or it lurches to the right, which proposes privatisation of state-owned economic assets.

The middle road of trying to extract revenues from a near-exhausted and stagnant economy, like squeezing blood from a stone, is no longer available to the ANC since it lost its parliamentary majority.

The DA needs to do a better job at persuading the electorate that privatisation is preferable to nationalisation. It is not self-explanatory. Billions of rand are expended every year in propping up failing state-owned enterprises (SOEs) which in turn are inefficiently run and incapable of properly supporting the infrastructural and economic needs of the country. This is an untenable state of affairs.

The obvious objection to privatisation originates in the trade union movement, which expresses legitimate concern over job losses.

While laws are in place to protect the accrued rights of employees before, during and after a corporate takeover, more can be done to protect their interests and to placate the objections of the trade unions.

One option is for government to agree to continued subsidised funding of redundancy benefits for affected employees, namely those retrenched during a reorganisation by a new private owner

The sale of SOEs will provide an immediate and significant shot in the arm for the public fiscus, more than enough to cover the costs of subsidised, extended redundancy benefits to a few thousand employees who stand to lose their jobs.

Furthermore, enormous savings will also be realised by ending continued bailouts of perpetually failing enterprises. From 2020 to 2023 the National Treasury allocated R325bn to shore up SOEs in debt distress, as well as additional loans to support their operating expenditure.

More needs to be done to convince the country that a lurch to the left by the ANC would have a ruinous economic impact on the country and that there are creative ways of addressing crucial challenges.

There is a danger too that embracing the intervention of the US government in these matters will blow up in the DA’s face. It smacks of neocolonialism and that, as every politician in SA should know, is electoral suicide.

If the DA wants to preserve the GNU and demonstrate that it offers a better alternative to its opponents on the left, it must rejuvenate its message and find a more innovative role for state intervention in resolving long-standing grievances.

A tax-deductible land use royalty and extended funding of redundancy benefits for retrenched employees of privatised SOEs are but two examples of how it can inject dynamism back into old, increasingly sluggish debates.

• Webb is a lawyer and author.