Private sector has vital role to play in land reform

23 Dec 2016

While in the past government alone has been expected to deal with the challenges surrounding land reform - these challenges include its slow pace and the fact that some transferred land has become economically inactive. There is now, however, acceptance by all stakeholders that the private sector has an important role to play towards achieving a successful land reform programme.

Private sector has vital role to play in land reform

“The challenges facing land reform warrant us to take a step back, reflect on what needs to be done by all role-players to ensure that land reform succeeds and serves the needs of South Africans,” says Peter Setou, chief executive of the Vumelana Advisory Fund. Vumelana is a non-profit organisation, established in 2012, to help beneficiaries of the land reform programme to develop their land in an effective and sustainable way.

Expedient and successful land reform is an important cure required for the national reconciliation project, considering South Africa's history of state-led land dispossession, says Setou.

He explains that one of the key lessons learnt is that the current pre-occupation in the land reform debate is the question of 'how can the state do more'. “We are advancing an alternative question that asks how land reform beneficiaries and private investors can be incentivised to do more for land reform to be successful.

Community private partnerships

“The creation of community private partnerships (CPPs), where sustainable partnerships are established between communities that acquire land under the land reform programme and private parties as investors, can be an immediate way of addressing the current challenges where there are limited public resources.

“Investor appetite in the land reform programme can be dampened by a range of factors, including intra-community conflict. Post-settlement support, particularly in the provision of administrative capacity and governance support, remains a crucial intervention. Vumelana’s experience in this arena demonstrates that, though conventionally viewed as a state responsibility, this role of institutional support can be fulfilled by other social actors.

Financing advisory services

“Vumelana Advisory Fund supports community private partnership by financing advisory services in order to structure commercially viable partnerships between beneficiary communities and investors so that much needed jobs, income and skills can be created. We work with skilled advisory teams who are assembled per project and include legal, deal structuring and community facilitation. The transaction advisory team is contracted to structure an agreement where the community makes the land available and the investor undertakes to finance and takes responsibility for managing operations. Transaction advisors procure and review proposals with beneficiary communities that show how the land will be developed to create jobs, income, skills and other benefits for the community. Once the agreement is concluded, the investor reimburses funds used to put the deal together. The reimbursed funds are used by Vumelana to further support the community over a period of two years to build administrative capacity and governance systems within the community structures.

“The CPP model should therefore be seen as one of a number of tools with which to resolve the complex challenges faced by interested and affected parties in the land reform programme, The growing number of successfully facilitated CPPs provides for a pragmatic review of possible solutions to the challenges currently being experienced by land reform beneficiaries, the state and the private sector,” concludes Setou.