Last week President Donald Trump made his first tweet that included the word Africa when he said:
I have asked Secretary of State @SecPompeo to closely study the South Africa land and farm seizures and expropriations and the large scale killing of farmers. “South African Government is now seizing land from white farmers.” @TuckerCarlson @FoxNews
The South African government responded on Twitter refuting the assertion made by Trump describing it as a narrow perception intended to divide the country and reminiscent of its colonial past. Trump followed up with several other tweets as he is wont to do, and I guess as far as him stirring up controversy there is nothing new here.
What to me was of interest was a follow up opinion piece by Bloomberg that was critical of Cyril Ramaphosa and his proposed land reform initiative. In summary, the Ramaphosa led ANC intends to amend the constitution so that the government can reclaim land without paying the current owners who are mostly white farmers. Although black people account for about 80 percent of the South African population they own only 4 percent farm land and agriculture holdings. And unfortunately, this did not just happen by chance or the choice of black people. Through the 1913 Natives Land Act, the minority whites in power then, banned the natives Africans from acquiring land. Hmm…doesn’t sound fair to me.
The Bloomberg article criticized Ramaphosa’s approach as being antithetical to his desire to attract foreign investment. According to the editors, pursuing these policies is all but certain to put foreign investors on edge, and hurt the very people they are meant to help. They then proceeded to describe and elaborate on South Africa’s current economic challenges which include high unemployment and widening budget and current account gaps. Basically, too many people don’t have jobs, the government can’t generate enough revenue and must borrow more, and the outside world is not buying as much of South Africa’s output.
Currently, the South African government has been reclaiming land through voluntary purchases and the Bloomberg editors encourage the South African government to rather focus on making this process work. Unfortunately, 70 percent of the land that has been repossessed so far remains unused and in many cases people who have lodged claims for restitution have asked the courts to give them cash as compensation instead of farms. So I guess the editors make a fair point.
This made me think, for most leaders whether in business or politics, they will face a situation for which there is no textbook solution or relevant precedent to learn from. Inequality in South Africa is a real problem – the World Bank in a 2017 study found it to be the country with the highest level of inequality in the world. The top 1 percent of South Africans owns about 71% of the nation’s wealth and this has tended to also follow racial lines. So clearly Ramaphosa and his government must do something.
The danger of inequality is that it becomes more likely that those left economically behind will reach out and drag those that are ahead downwards. Also, high inequality creates interesting results as the rich and the poor have to find a way to live together. For example, a study of high net worth individuals in South Africa showed that 66 percent owned or intended to purchase an alarm system in the next 6-12 months. Basically, they spend disproportionately more on security than the average South African.
Fajnzylber, Lederman and Loayza found a robust relationship between income inequality and violent crime and it’s no secret that South Africa has one of the world’s highest crime rates. So, if you live in South Africa, this is a real problem and you want your leaders to address or solve it. So regardless of what one thinks about what is being done it is at least easy to appreciate why this issue is being and should be discussed in the first place.
Put yourself in Cyril’s shoes considering the options of what he and the ANC must do. Tiruneh argues that revolutions are caused by either lack of economic development, regime type or state ineffectiveness. Ramaphosa is faced with the likelihood that two out of these three problems have occurred. Firstly, economic growth has slowed over recent years worsened by high income inequality. Secondly, South Africans are growing increasingly disillusioned with the government’s ability to address the country’s problems. The rise in popularity of Julius Malema’s Economic Freedom Fighters (EFF) provides testament to this.
I know, throwing in a revolution is a bit extreme but as they say a stitch in time saves nine. Malema used to sound crazy but amazingly his party has grown from strength to strength becoming the country’s third largest political party within 12 months of its formation. It’s performance in subsequent elections has also been improving with 25 seats held in the country’s National Assembly. This gives them a powerful voice to their hard-line stance on land restitution.
Whereas the Bloomberg editors advocate for resisting succumbing to populist demands which I can understand, I believe Ramaphosa and the ANC should be allowed to explore all their options including reclamation without compensation. The cost of the land reclamation initiative up to 2021 is expected to cost just under USD1 billion. It’s a small share of the national budget but regardless it is still a lot of money and I am not sure it is enough to achieve the equality that the government is targeting.
Anyway, I am not sure if cost should be the strongest consideration here and I am inclined to think not. Instead, I am reminded of a saying in business that culture eats strategy for breakfast and that any strategy that ignores the values and beliefs of the people it affects is bound to fail. I think Brexit and the election of Donald Trump provide an example of this at a national level. The almost self-destructive behaviour displayed by populace in these examples show that people will refuse what’s good for them simply because they don’t like it. I guess not too different from a child refusing his or her vegetables.
As a parent, you know it’s your responsibility to ensure that your kids get a balanced diet with a healthy dose of vegetables. There will be a lot of advice about how to do it and most of it will make sense. However, those people don’t know what Junior is like and they should regard themselves as fortunate to not be tasked with ensuring the little tyrant gets his daily requirements of roughage and vitamins. You may find that you have to invest in an Iron Man or Batman suit and devise an adventure in which Junior eating his vegetables is crucial to defeating the villain and saving the world.
Credit to Ramaphosa, he has continually stressed that he wants a solution that is amicable and avoids the path that Zimbabwe took. I suspect he is acutely aware of the challenges and implications of any decision that he makes. But unlike all of us, he actually has to make the decision. One thing is for sure, he can expect lots of advice, well-meaning and otherwise, including from people that suggest solutions whose consequences they don’t have to live with.