This one is bound to have sent a few shivers down the overseas property industry’s spine. South African President Jacob Zuma is thought to be coming nearer to banning foreign ownership of land in the country. However, the ban may not be as alarming as the headlines read.
Land reform will now be based on the `deracialisation` of the rural economy, Zuma told a rally in the northern town of Polokwane today on the 99th anniversary of the founding of the ruling African National Congress.
‘In order to have more land available for reform and restitution, the government is looking at three forms of land holding,’ he said. These are state land, which can only be leasehold, limited freehold on private land and land leases for foreigners, though ownership will revert to South Africans, he said.
South Africa’s apartheid rule of fascism, racism, persecution, and prejudice against the majority black population, who were also kept from voting by the ruling minority white population ended in 1994.
Since then subsequent governments have been faced with the problem of bringing restitution for the years of mistreatment, one arm of which is give back any land illegally claimed during the abusive era; a target has been set to increase the amount of farmland owned by black farmers to 30% by 2014. The government doesn’t have the 11 billion it needs to meet this target, and a ban on sales to foreigners is looking likely.
Zuma first looked at such a ban in 2004, when a panel recommended suspending sales to foreigners until new laws could be drafter. Zuma held off on this after being warned that it would deter foreign investment. It is unlikely that these warnings have stopped, or that they have stopped being important to Zuma. However, Zuma is part of the voting black majority in South Africa. That is not to say that parts of the black population don’t care equally about ensuring the inflows of foreign investment.
So, what to do what to do… Well, one thing that would seem likely would simply be to designate large chunks of landscape as agricultural land and ban sales in these zones. This is a model tried and tested in former 3rd world countries that become noticed as emerging markets. And South Africa certainly fits that bill, in fact according to HSBC CEO Michael Geoghegan South Africa is to become one of the world’s fastest growing economies, as part of the CIVETS (Columbia, Indonesia, Vietnam, Egypt, Turkey and South Africa) grouping that is set to lead the global recovery.
Photo credits: Marc_Smith via Flickr