Will it work or will we be worse off?
The financial exclusion is a global problem with over 1 billion having no access to formal financial systems. But what does ‘formal financial system exclusion’ mean exactly? If people are choosing to hide their money under the mattress rather than bank it, it is perhaps understandable. Many governments have used socialist arguments to seize control of banks. This never goes well, and people lose their savings and investments. The banks are then very poorly run, bank staff are laid off or don’t get paid, and the institution ends up closing, at least to public access.
This is likely the way forward for South Africa in the long term since the government has taken serious steps to end private ownership of land. Recent developments may seem like a benign concession intended to help the poor, but history has shown over the past 200 and more years that these government policies always leave the poor in a worse off position. Government officials’ greed knows no bounds in such situations. Access to citizens’ banking system is a massive risk, and it is inevitably next on the agenda once land expropriation has been perpetrated.
The people of Russia and other Slavic nations, and many African nations struggle to this day because of these exact types of policies. Recently, Venezuela has tried to warn South Africans not to proceed with land expropriation because it leads to economic hardships, but politicians are about to get access to our land, and there seems to be nothing we can do to stop them. If they can change our Constitution once in this way, we can expect that politicians with divisive agendas will continue to do so, and we are on a road to losing more of our hard-won rights.
International community has tried to warn us but politicians are deaf
In 2009, Venezuela began what South Africa is doing now, land grabs, but Venezuela’s situation only got worse and in a very short time. One problem Venezuela had at the outset was that it imported food rather than producing enough. It was believed that by getting land into government hands, it could then be given to the poor who would then grow more food. This sounds good in theory, but in practice, it is disastrous for many reasons.
Venezuela soon began buying even more food into the country than before. This sounds a lot like what has happened in Zimbabwe. Those with knowledge of history and foresight are worried about what is about to happen in South Africa. Experts even now feel that Venezuela is too far gone and a ‘lost cause’. Its poor are starving, and its labour skills have been drained as thousands have immigrated.
Among the reasons why Venezuela failed in this endeavour was poor planning and decision-making. Farming is a complex, labour-intensive, and often highly specialised affair. If you have ever lived on a farm you will know this. It’s not a matter of sending cows off to graze in a meadow and milk flows abundantly, or of throwing seeds on the ground and returning a few months later to reap piles of food. Profitable or sustainable farming requires day and night vigilance, careful planning, intensive monitoring, and quick action at times to save cattle and crops. It often requires enormous investment which will not see a return for years, sometimes even decades, or it develops into very unfortunate and painful losses despite best efforts put in.
But the idea people have is that land access is a quick fix. Land somehow equates to wealth. This is not true. So much depends on what land and how it is cared for. Some land is not being used because it is unsuitable for farming, and thus people incorrectly think it is going to waste. Some is protected for wildlife – which we need far more than we think (for example, where do bees come from to pollinate our crops?).
Being given land, even with buildings on it, can even become a major burden. South Africa needs to do much more than simply give away land. We must very carefully prepare, select, train, and equip the right people to farm. Otherwise it will be disastrous. Not everyone is suited to the demands of farming or similar endeavours. We have a large urban population (65%) who is not actually keen on making a living that way.
Farming can certainly bring prosperity, but for some, it feels like a curse. In the UK, for example, some people have inherited large estates which have been in the family for generations, but it becomes a massive burden. They cannot sustain it, so they abandon it. Likewise, in many cases where people have won lavish homes, they cannot pay the electricity, water and taxes on the house and it also becomes a greater burden than their previous situation. Why not just sell it then? It’s not so simple. There isn’t always a market for it, and some laws bind a family to a property. Moving to a farm also makes great demands on individual families, sometimes ending in divorce as well as child labour.
This is not to say that poor people shouldn’t be helped, including with land ownership. But we must be smart about it and ensure it is not a sunken investment which leaves South Africans worse off. Start-up funding and skills are just as important, probably more so, than land ownership. It is more important that people be trained and that any endeavour be meticulously planned with the help of experts. Will this happen?
Corruption will strangle hopes of land ‘reform’
Corruption also happened in the case of Venezuela by favouring candidates for land ownership who were politically aligned and had some sway over voters. This only perpetuates the exclusion of the poor and is likely to happen in South Africa too.
Venezuela was once the wealthiest nation on the South American continent. South Africa is also the wealthiest and most advanced nation in Africa. But this may not last. Land expropriation has greater negative consequences than we people want to believe. Venezuelans soon found themselves queuing for six hours a day to get food.
In the coming years, we could slip down to being one of the poorest nations in Africa, importing food at high prices, with unbearable inflation. The poor just surviving on handouts from richer nations, and a massive brain drain the like of which we have never seen before, leaving us bereft of enough people who can try to clean up the mess. This does, however, leave some politicians in a very powerful and comfy position. A poor, hungry nation depending on food rations and without skills is easily controlled. This is a long-term political strategy which has worked very well for governments in the past. This all may sound quite foreign to some. Not in South Africa, that won’t happen…
A colleague of mine out-sourced some work to a man from Kenya a while ago. When it came time to pay him, he sent an urgent email asking not to be paid yet. The bank he was with had just been seized by the government, supposedly for ‘national interests’. He could not access his account and the branches were closed. His savings were out of reach including the money he put away for his children’s school fees. What could he do? The money was paid into a friend’s bank account and immediately withdrawn. A relatively small amount to try keep the family going until the next job came along.
If we think we as South Africans are somehow above such things, we are far too overconfident or naïve. What is perhaps most sad about this situation is that no independent banks means that we cannot conduct international trade. Online businesses will not be able to operate in such an environment. EFT payments are impossible, let alone forex trade, and what will we revert to? Cash and cheques perhaps, or some say cryptocurrencies like Bitcoin, which are not particularly safe options. The Internet has been opening up many opportunities for the unemployed youth, and we are giving those away before they really have a chance to establish themselves.
Devan Moonsamy, is the CEO of ICHAF Training Institute, a Seta-approved training and development company. ICHAF offers NQF levels training in business, computer skills training, and soft skills development, among other programmes.
Devan specialises in conflict management and diversity management, and he regularly conducts seminars for corporates on these issues. He recently authored a book on handling diversity in the South African workplace, including managing disabilities on the job.
His book Racism, Classism, Sexism, And The Other ISMs That Divide Us is available from the ICHAF Training Institute.