Land Reform – This month, on 27 April, South Africa will mark the 28th year commemoration of Freedom Day. This historic day marks a turning point in the history of South Africa, when the country averted a potentially devastating racial warfare and negotiated a relatively peaceful democratic transition in 1994.
While the new political dispensation ushered in a new era where human rights were enshrined in a new Constitution, the land question has remained largely unresolved. Land reform was identified as one of the key programmes by the democratic government to address legacies of the past. Soon after 1994 an ambitious programme was developed and gradually implemented. A plethora of policies and legislation were developed to support this process with mixed results. Several studies were undertaken by various parties, including NGOs, the business fraternity, and academics alike to determine the impact of these interventions. More recently the High-Level Panel on the Assessment of Key Legislation commonly referred to as the Motlanthe Report and the report by the Presidential Panel on Land Reform and Agriculture also identified a number of shortcomings which require urgent attention. While government has a leading role to play in addressing these shortcomings, both the private sector and non-governmental organisations have a critical role to play if we are to make any meaningful progress.
In 2012, the Vumelana Advisory Fund, a non-profit organisation was established as part of efforts to support land reform beneficiaries to use the restored land productively, to create much-needed jobs, income and skills. Vumelana’s inception was informed by the lack of post-settlement support for land reform beneficiaries, which resulted in widely publicised reports of allocated land falling into disuse due to lack of post-settlement support. The organisation introduced the Community private partnerships (CPP) model to the land reform process – to facilitate mutually beneficial partnerships between land reform beneficiary communities and private investors.
Community private partnerships (CPPs) are established between communities that acquire access to land under the land reform programme and private parties. Typically, the communities bring their land and labour, and the private partner brings capital, skills and access to markets to the partnership. CPP contracts are structured to ensure that the partners are able to meet their obligations and exercise their rights in a manner that supports the profitable operation of the business venture they enter into.
Ten years on, as Vumelana celebrates the contributions made through the CPP model, the organisation has facilitated 23 deals between communities and private investors, have mobilised R1 billion in private investments, putting over 70 000 hectares of land to productive use and benefiting 20 000 households across 18 communities throughout the country.
Since its inception, Vumelana has maintained that partnerships between beneficiary communities and the private sector and commercial farmers are crucial to ensure that land is utilised productively.
Vumelana’s CPP model has shown that South Africa can achieve success in land reform, through a partnership-driven approach.
“It has taken us 10 years to prove that partnerships can drive the success of land reform. This is the time for the government to actively support this and encourage all role players to explore this model at scale to ensure that 10 years from now, our report on land reform is better than what we have seen over the past 28 years,” says Peter Setou, Chief Executive of the Vumelana Advisory Fund.
Some of the successes achieved through the CPP model include:
Ebenhaeser CPA
The conclusion of the partnership deal between the Ebenhaeser CPA and Stellar Organics. This is one of the biggest land claims in South Africa, on approximately ±18,283 hectares of land near Vredendal in the Western Cape. The Vumelana facilitated partnership has opened export opportunities for the local community, creating employment for community members and a source of income for beneficiary households. The community has entered into a 20-year agreement with Stellar Organics and has a management contract in place for the group to buy its entire vineyard production at competitive rates. Through the partnership, the Ebenhaeser CPA has secured a deal to export pumpkins to the Netherlands market. The partnership has also enabled the community to produce cash crops, which include tomatoes and beans, for the local market.
Barokologadi CPA
Another case in point is the Barokologadi CPA, where Vumelana supported the community in identifying a commercial investor for the development of tourism lodges on the land adjacent to Madikwe Game Reserve. To ensure better access to the “Big 5” environment inside the reserve, the CPA agreed to incorporate the development area, which covers over 5 800 ha, into Madikwe Game Reserve. The Land Use Incorporation Agreement has already been entered into between the CPA and Northwest Parks Board (NWPB) for the first phase, which covers more than 4 000 ha. While there have been delays, the project has already yielded 30 permanent jobs, over 60 part time jobs, 30 learnership opportunities targeting the youth. During Covid 19 lockdown food parcels to the tune of R800 000 were distributed to the communities by the Barokologadi CPA, supported by the investors, to cushion the community against the hardships associated with the pandemic.
Prudhoe CPA
Mostly recently Vumelana provided transaction advisory support to support the community in the development of its properties that had been held in State custodianship since about November 2017. Vumelana supported in facilitating a partnership agreement between the Prudhoe Community Trust and Mahala X who have entered into a 49-year lease agreement on the Fish River properties that have now been transferred to the Prudhoe community. The private investor has undertaken to plough an investment of half a billion rands into the partnership to support in the development of the properties. The community will receive rent for its Fish River properties. The investor will also employ all staff to help in running the hotel and the grounds. The hotel that had shut down, is now likely to open soon, thanks to the private partnership agreement. The deal will benefit over 350 families that make up the Prudhoe Community.
Giba CPA
Vumelana also played a crucial role in identifying a commercial partner for the Giba CPA. As a result, the Giba CPA entered into two lease agreements with W van R Schmidt for the lease of 24 hectares of land for the development of a ginger farm over a 10-year period, with the option to renew at the sole discretion of the CPA, and for the second lease of 103 hectares for the development of a macadamia farm over a 22-year period. From this partnership, the Giba CPA will receive income generated from the two lease agreements and will gain critical skills as the community will be involved in the business administration of the venture. An estimated R25 million was allocated as an investment to cultivate crops and improve infrastructure on the land under lease, and an estimated 130 permanent jobs are envisaged to be created for the community.
Mswati CPA
In 2018, the Mswati CPA entered into a 23-year lease agreement with Selde So (Pty) Ltd through a partnership deal facilitated by Vumelana. In terms of the agreement, the CPA will receive income generated from the lease agreement. The lease fee is based on a combination of a fixed annual rental fee that will increase by CPIX on the anniversary of the agreement, as well as a variable rental that is based on 5% of the operating margin. The objective of this type of structure is to ensure that the CPA is guaranteed a fair rental fee, regardless of how the business performs, while also being able to benefit if the business performs well. An estimated R30 million was allocated towards investment to cultivate crops and the rehabilitation of all farm infrastructure on the land under lease, and approximately 75 permanent jobs were realised from this partnership agreement.
Setou argues, “These are among the 23 projects that have been successfully finalised under the CPP model and prove that this model can be used as a viable model to drive a successful land reform programme. If government is to meet NDP targets of creating a million new jobs in agriculture by 2030, then it’s about time the CPP model is explored at scale.”
“Partnerships are more important than ever considering the declining budgetary allocations to fund land reform. The private sector has the requisite finance, skills and resources that can benefit beneficiary communities to ensure productive use of the land.”
“The active participation of the private sector and mutually beneficial partnerships between investors and the beneficiary communities is a prerequisite for a successful land reform programme, we have seen that these partnerships work, now we need government support to explore these partnerships at scale,” notes Setou.
