The land question in smallholder development in South Africa - Institutional Constraints to Small Farmer Development in Southern Africa - page 184

9.3.5 The era of land reform and agricultural restructuring
Without an iota of doubt, realism had begun to dawn on the apartheid regime in South
Africa regarding the role the black population could play in the country's agriculture. Even
before democratic pluralism was ushered in, discussion has started on what the nature of
the rural restructuring would be (Van Zyl and Van Schalkwyk, 1993; Williams, 1993;
World Bank, 1993). According to Van Zyl and Binswanger (1996), the system of racial
discrimination was clearly unsustainable and was hurting the economy in very fundamental
respects. For one thing, the exclusion of a large segment of the population from meaningful
economic participation was preventing the emergence of entrepreneurship in the small scale
sector and within the rural economy. The development of such entrepreneurship would go
a long way in addressing employment creation and stimulation of the rural economy. In
the views of Van Zyl and Binswanger (1996), the political consequences would be quite
catastrophic if not addressed decisively and with the minimum delay. An urgent need to
restructure the agricultural sector and embark on a redistribution of land was identified
and seen as the way to avoid an imminent and 'debilitating pattern of civil disorder and
violence…' (Binswanger and Deininger, 1993).
The literature has extensively reported on the various twists and turns in policies and
strategies affecting the agricultural sector during the apartheid era (Van Schalkwyk et al. ,
2003) and changes that have taken place since the new regime in South Africa assumed
political power in 1994. Nothing better describes these changes more than Summers
and Vinod's (1993) assertion that 'communism is the longest route from capitalism to
capitalism'. As has been highlighted earlier, the move towards freeing up the sector pre-dated
democratic elections given the realization that the excessive regulation and paternalism
was costing the economy dearly. According to the World Bank (1994) and IMF (2000),
economic growth grew generally at around 1% per annum towards the end of apartheid
rule. Between 1986 and 1992, GDP growth rate averaged 1.03% while employment grew
at -0.23% (The World Bank, 1994). Since then, economic growth has averaged above 3%
per annum. While questions remain about what the ultimate lessons of the land reform
programme would be (Hart, 2003), there are indications from a number of macroeconomic
indices that conditions have been changing for the better over the years. For instance, in
the second quarter of 2005, the annualized rate of real growth stood at 5% (South African
Reserve Bank, 2005).
Bayley (2000) catalogued a number of the most obvious reasons for the deregulation of the
agricultural market of South Africa, including broader macro-economic reforms, especially
the financial sector reforms that took place in the 1970s, featuring the real depreciation of
the Rand in the 1980s and interest rates adjustments. In addition to these factors, Bayley
(2000) also highlighted the following developments: