Ruth Hall

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Financing Land Reform Budget Trends and
Priorities for the Future

• Ruth Hall
• Programme for Land Agrarian Studies, UWC
• Presentation to the Portfolio Committee
• on Agriculture and Land Affairs
• Parliament
• 11 March 2008

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Land Affairs budget 2008/09

• Restitution funding is slightly down for the
  second year in a row by 7 from last year.
• In contrast, funds for land reform have leapt
  up 70.
• DLA budget as a whole rose to R6.66 billion, up
  19 from last year.
• Note
• This analysis compares actual allocations over
  time, as well as comparing these with adjusted
  allocations (estimates with expenditure).

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Restitution

• Restitution has not got the windfall the
  Commission asked for just over R3 bill.
• absolute decline
• but R1 billion increase over MTEF
• The extension of budgets to 2012 confirms that
  restitution remains a long-term process
• the (shifting) deadlines have been unrealistic
  and early closure of the Commission would have
  probably further delayed the process
• with less than ½ the claims on farmland settled,
  the extension seems sensible.
• This suggests a continuation of the lifespan of
  the Commission.

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The future of restitution

• The approx 5,000 remaining claims are expected to
  involve substantial cost and time complex and
  large rural claims.
• no official estimates of what they will cost.
• initial analysis suggests rural community claims
  have cost in the region of R11.1 million, on
  average, each.
• Existing commitments for restitution exceed the
  budget provision by several billion
• future budgets will have to cover this, as well
  as new commitments.

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Land reform

• Under-expenditure on capital budget for land
  acquisition last year
• adjusted downwards - dramatically
• just 37.5 of allocation!
• Yet the allocation has risen this year
• 94 growth in capital budget for land acquisition
  
• now more than 5 times what was spent last year.

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Land reform

• The substantial shift in funds, from household
  grants to direct purchase of land by the state
  continues
• R853 million for DLA to buy land itself
• Funds for applicants to buy land are rising more
  slowly, to R1.7 billion.
• This suggests that the state itself is planning
  to become a bigger player in the land market.
• It also begs the question about how resources
  will be rationed a question of equity.

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Land reform

• This budget funds 2 programmes.
• competition for limited resources between vastly
  different purposes and unequal actors
• LRAD has received the lions share
• little to municipal commonage for small livestock
  owners
• Stagnant allocation for CLaRA
• suggests implementation will start in the MTEF
• but not be scaled up.
• This is the only dedicated budget for tenure
  reform.
• protecting and securing farm tenure rights
  requires skilled and dedicated staff
• yet ESTA posts have been phased out.

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Reality check

1. What can this budget buy?
2. What does this mean for LARP?
3. Can this budget be spent?
4. Do the Land Affairs Agriculture budgets tally?

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What can this budget buy?

• The potential to scale up land acquisition
• but not to meet targets in Strategic Plan 2008
  2011.
• Target of 2.5 million hectares this year
• about 1 mill through restitution
• 1.5 mill through redistribution / tenure reform
• Over R5.5 billion available, in total
• 1.7 million hectares _at_ R3,294 / hectare
• It cannot be expected that state land can make up
  the shortfall between budgets provided and
  targets.

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What does this mean for LARP?

• Do the numbers of LARP add up?
• 5 million hectares for 10,000 new farmers
• 500 ha each _at_ R 1.647 million (in 2008 Rands)
  initial capital cost each (excluding support)
• A cost of about R16 billion in the next two
  years.
• Is this really going to happen?
• LARP involves giving more public funds to fewer
  people
• More restrictive than the track record to date
• If targets were met, this would make a limited
  contribution to absorbing the livelihoods being
  shed from commercial agriculture through job
  losses and evictions.

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Can this budget be spent?

• Across the board, there is much less money to do
  the job of land reform.
• Current budgets to staff and run the institutions
  responsible have fallen in absolute terms by
• 38 for restitution and
• 22 for the rest of land reform.
• A matter of spend more with less?
• As DLA is known to suffer from weak capacity,
  vacant posts and high turnover, this is a major
  concern.

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Do the Land Affairs Agriculture budgets tally?

• The rise in funds for land acquisition is not
  matched by concomitant growth of agriculture
  budgets
• Key budget lines are static or in decline over
  the MTEF, while others are is rising slowly.
• While CASP budgets have been rising sharply, this
  is now to slow down a plateau.
• MAFISA is in decline and only funded over the
  coming 2 years of the MTEF
• Livelihoods Development Support fell to nearly
  half of last years budget after
  recapitalisation of the Land Bank.
• Good news extra 670 agricultural extension
  officers by 2011.

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Shortfalls

• The most urgent gap now
• the warm bodies (and skilled minds) to do the
  work
• The long term gap
• the capital cost of buying nearly a third of the
  country!
• The fungibility of the budgets especially the
  competing interests in farm tenure and
  redistribution programmes.
• But the cost of acquiring and developing land is
  contingent on policy choices.
• Shaping the market promoting availability and
  limiting the cost through market interventions
  (land tax, land ceilings, etc)
• Overriding the market through expropriation. If
  experience to date is indicative, expropriation
  will not bring down costs, though pending
  amendment to the Expropriation Act could change
  this.

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Conclusions

• This years land budget shows a continuation of
  the chronic mismatch between the ambitious goals
  of land reform and the funds and institutional
  capacity devoted to it.
• but there is more money to spend.
• who will spend it?
• if they did, it would not meet targets for land
  delivery
• so it seems this longstanding problem remains.
• This budget problem masks a more fundamental
  blockage demonstrated impact
• is more money the answer right now? Money for
  what?
• can one demonstrate impact and a reasonable
  cost-per-livelihood?

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Political oversight should focus on

1. Ringfencing resources for dedicated purposes,
   particularly farm tenure.
2. Investing in ME to determine impact, and in the
   long-term justify larger commitments to this
   purpose.
3. Attracting and retaining skilled staff.
4. Changing the ratio of capital to current budgets.

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Thank you for your attention