Plotting against landlessness
There is immense pressure on the Namibian government, especially after neighbouring South Africa's parliament voted last year to change that country's constitution so that land can be expropriated without compensation.
Namibia finds itself at a very important juncture. Following the land conference held towards the end of last year, interpreting and implementing its resolutions optimally remains a challenge.
Land is a contentious and emotional issue, specifically so because of our past and the dispossession of indigenous peoples' land in favour of settlers of European descent.
Namibia faces a multitude of social and economic challenges, not the least of which are very high levels of poverty, lack of access to proper housing, sanitation, healthcare and education, and gross unemployment. According to the Namibia Statistics Agency (NSA), joblessness stood at 37.3% in 2017 and of that figure, 43.4% are the youth.
The country's agricultural sector has remained one of the mainstays of the economy and, by its very nature, is labour intensive, creating more jobs than most other industries. Its multiplier effect is said to stand somewhere between N$3 and N$4 per N$1 invested.
But pressure has been mounting on the sector. Its contribution to GDP has declined since 1991. According to figures provided by the NSA, the sector contributed 5.7% from 1991 to 1996. This figure declined to 4.7% from 2007 to 2011 and then showed a further decline to 3.9% from 2012 to 2017.
The importance of agriculture to Namibia's economy cannot be overemphasised. The sector invests in rural areas and keeps rural economies alive in a variety of ways.
Jobs created by tourism and agriculture are immense. According to World Bank figures, in 2017 agriculture supported just over 20% of the workforce in the country, down from just over 31% in 2010. In the same year, tourism supported 14% of the workforce. Many, if not most, of these jobs are in rural Namibia.
But, after three decades of independence, many have grown impatient with the slow pace of change. Radicalism has increased and calls for radical change are growing louder, more so following the South African parliament last year voting to change that country's constitution, so that land can be expropriated without compensation.
The second land conference was held last year to address these needs. The resolutions adopted at the conference appear to respond more to the emotional needs of the landless and are vague at best.
According to independent agricultural expert Wallie Roux, “most of these resolutions were accepted in line with the expectations of the landless,” adding that the resolutions are designed to meet socio-economic needs and are not considerate of true economic principles.
Economists are also worried, saying that without property rights secured, investors will be scared off. There is also concern about a decline in agricultural production.
The expropriation of land without compensation, essentially the nationalisation of large tracts of farmland, has been shown to prove disastrous to the economies of nations who employed it. Research performed by leading economist Dr Roelof Botha for the South African scenario lists examples of gross economic failures in Portugal, Spain, Romania, Vietnam, Venezuela, and Zimbabwe.
In all these countries, the ratio of capital formation, (net capital accumulation during a financial year in a country), to gross domestic product (GDP) declined sharply and those which reversed these policies showed an increase in the ratio, which occurs after the incentive for productive economic activity, inherent in private property ownership, is restored.
While expropriation without compensation is all but impossible in Namibia with the protection offered, even to amendments to Chapter 3 of our constitution, the matter of 'just compensation' in the case of expropriation, is a concept that brings concern. It is also yet a concept that requires defining.
It implies that farmland can only be owned for as long as the government deems it fit and moreover, the land will not have an open market price with the government's regulation of land prices. Economists agree that the primary incentive for production, entrepreneurship and economic initiatives is based on economic systems where private property ownership is guaranteed and protected by law.
The Fraser Institute, which conducts economic freedom surveys globally, ranked Namibia 113th (out of 167) in its 2018 report with data from 2016.
The institute underlines private property ownership and individual choice above government decision-making as a pillar of economic freedom and thus, economic growth.
“Protection of persons and their rightfully acquired property is a central element of both economic freedom and civil society. Indeed, it is the most important function of government,” the institute says.
As it stands, the resolutions of the land conference seek to replace the willing-seller, willing-buyer principle with 'alternatives'. The only alternative discussed is the expropriation of land with just compensation. It is not clear whether the first right of refusal by government will still apply, parallel to expropriation.
The conference also resolved to “regulate agricultural land prices”. The impact of this on financing from commercial banks, the value of collateral to those banks, could deal a heavy blow to those indebted at market prices.
Economists have also expressed their concern.
Says Robert McGregor, an economist of Cirrus Capital: “In order to attract investment, which would revive growth and see job creation, a business-friendly environment needs to be nurtured. In this case of Namibia, this requires entrenched and secure property rights.”
He continues by saying that the “wider policy environment and uncertainty are not doing much to attract investment. Rather, uncertainty and insecurity around property rights (not just land but private ownership as well) … and the rhetoric around land expropriation without compensation drive away investment.”
Namibia's capital formation (referred to locally as Gross Fixed Capital Formation) was a meagre 16% in 2017, falling from 22% in 2016 and 33% in 2015.
“In the absence of adequate levels of capital formation, current and economic growth is curtailed, which compromises fiscal stability via below-optimum taxation revenues. Furthermore, employment growth is also restricted and the government's ability to provide basic services to a growing population and to maintain infrastructure is diminished,” says Botha.
“Foreign investors would rather invest elsewhere that does not threaten to erode property rights and offers a better return. We must remember that they are under no obligation to invest in Namibia, we are competing with other nations to attract investment,” says McGregor.
“The lack of economic principles as a basis for the conference's resolutions sends out a negative message in terms of investment into agriculture where the economic principle of 'return on investment' determines whether or not the risk is worth it or not,” Roux argues.
Experts agree that empirical research is required to assess and evaluate our situation, and plan our path to achieve our national goals.
The priority must be to increase agricultural production, they say.
“Capital, which is an indispensable prerequisite for economic development, job creation, and growth, acts like a gazelle in the African bush - if you scare it, it runs away,” says Botha.
There is no doubt that Namibians need dignity and security, but maybe, as one farmer suggested, there is not really a hunger to farm per se, but rather a need for access to a piece of land with a title deed which brings security and can be traded or passed on to the next generation, a home on that piece of land, running, potable water with proper sanitation, an opportunity to work or do something entrepreneurial, and access to good medical care, education and affordable transport.
YANNA SMITH
Land is a contentious and emotional issue, specifically so because of our past and the dispossession of indigenous peoples' land in favour of settlers of European descent.
Namibia faces a multitude of social and economic challenges, not the least of which are very high levels of poverty, lack of access to proper housing, sanitation, healthcare and education, and gross unemployment. According to the Namibia Statistics Agency (NSA), joblessness stood at 37.3% in 2017 and of that figure, 43.4% are the youth.
The country's agricultural sector has remained one of the mainstays of the economy and, by its very nature, is labour intensive, creating more jobs than most other industries. Its multiplier effect is said to stand somewhere between N$3 and N$4 per N$1 invested.
But pressure has been mounting on the sector. Its contribution to GDP has declined since 1991. According to figures provided by the NSA, the sector contributed 5.7% from 1991 to 1996. This figure declined to 4.7% from 2007 to 2011 and then showed a further decline to 3.9% from 2012 to 2017.
The importance of agriculture to Namibia's economy cannot be overemphasised. The sector invests in rural areas and keeps rural economies alive in a variety of ways.
Jobs created by tourism and agriculture are immense. According to World Bank figures, in 2017 agriculture supported just over 20% of the workforce in the country, down from just over 31% in 2010. In the same year, tourism supported 14% of the workforce. Many, if not most, of these jobs are in rural Namibia.
But, after three decades of independence, many have grown impatient with the slow pace of change. Radicalism has increased and calls for radical change are growing louder, more so following the South African parliament last year voting to change that country's constitution, so that land can be expropriated without compensation.
The second land conference was held last year to address these needs. The resolutions adopted at the conference appear to respond more to the emotional needs of the landless and are vague at best.
According to independent agricultural expert Wallie Roux, “most of these resolutions were accepted in line with the expectations of the landless,” adding that the resolutions are designed to meet socio-economic needs and are not considerate of true economic principles.
Economists are also worried, saying that without property rights secured, investors will be scared off. There is also concern about a decline in agricultural production.
The expropriation of land without compensation, essentially the nationalisation of large tracts of farmland, has been shown to prove disastrous to the economies of nations who employed it. Research performed by leading economist Dr Roelof Botha for the South African scenario lists examples of gross economic failures in Portugal, Spain, Romania, Vietnam, Venezuela, and Zimbabwe.
In all these countries, the ratio of capital formation, (net capital accumulation during a financial year in a country), to gross domestic product (GDP) declined sharply and those which reversed these policies showed an increase in the ratio, which occurs after the incentive for productive economic activity, inherent in private property ownership, is restored.
While expropriation without compensation is all but impossible in Namibia with the protection offered, even to amendments to Chapter 3 of our constitution, the matter of 'just compensation' in the case of expropriation, is a concept that brings concern. It is also yet a concept that requires defining.
It implies that farmland can only be owned for as long as the government deems it fit and moreover, the land will not have an open market price with the government's regulation of land prices. Economists agree that the primary incentive for production, entrepreneurship and economic initiatives is based on economic systems where private property ownership is guaranteed and protected by law.
The Fraser Institute, which conducts economic freedom surveys globally, ranked Namibia 113th (out of 167) in its 2018 report with data from 2016.
The institute underlines private property ownership and individual choice above government decision-making as a pillar of economic freedom and thus, economic growth.
“Protection of persons and their rightfully acquired property is a central element of both economic freedom and civil society. Indeed, it is the most important function of government,” the institute says.
As it stands, the resolutions of the land conference seek to replace the willing-seller, willing-buyer principle with 'alternatives'. The only alternative discussed is the expropriation of land with just compensation. It is not clear whether the first right of refusal by government will still apply, parallel to expropriation.
The conference also resolved to “regulate agricultural land prices”. The impact of this on financing from commercial banks, the value of collateral to those banks, could deal a heavy blow to those indebted at market prices.
Economists have also expressed their concern.
Says Robert McGregor, an economist of Cirrus Capital: “In order to attract investment, which would revive growth and see job creation, a business-friendly environment needs to be nurtured. In this case of Namibia, this requires entrenched and secure property rights.”
He continues by saying that the “wider policy environment and uncertainty are not doing much to attract investment. Rather, uncertainty and insecurity around property rights (not just land but private ownership as well) … and the rhetoric around land expropriation without compensation drive away investment.”
Namibia's capital formation (referred to locally as Gross Fixed Capital Formation) was a meagre 16% in 2017, falling from 22% in 2016 and 33% in 2015.
“In the absence of adequate levels of capital formation, current and economic growth is curtailed, which compromises fiscal stability via below-optimum taxation revenues. Furthermore, employment growth is also restricted and the government's ability to provide basic services to a growing population and to maintain infrastructure is diminished,” says Botha.
“Foreign investors would rather invest elsewhere that does not threaten to erode property rights and offers a better return. We must remember that they are under no obligation to invest in Namibia, we are competing with other nations to attract investment,” says McGregor.
“The lack of economic principles as a basis for the conference's resolutions sends out a negative message in terms of investment into agriculture where the economic principle of 'return on investment' determines whether or not the risk is worth it or not,” Roux argues.
Experts agree that empirical research is required to assess and evaluate our situation, and plan our path to achieve our national goals.
The priority must be to increase agricultural production, they say.
“Capital, which is an indispensable prerequisite for economic development, job creation, and growth, acts like a gazelle in the African bush - if you scare it, it runs away,” says Botha.
There is no doubt that Namibians need dignity and security, but maybe, as one farmer suggested, there is not really a hunger to farm per se, but rather a need for access to a piece of land with a title deed which brings security and can be traded or passed on to the next generation, a home on that piece of land, running, potable water with proper sanitation, an opportunity to work or do something entrepreneurial, and access to good medical care, education and affordable transport.
YANNA SMITH
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