Partnerships can play a significant role in the success of the land reform programme, writes Peter Setou
Land reform in South Africa has long been a focal point for government, development agencies, donors, and for NGOs aiming to uplift communities and drive economic transformation.
It has, however, been challenging to achieve the aspirations of community members who benefit from land reform. Sustainable investment for commercial operations, regular revenue streams, job creation, and empowerment, have been difficult to come by. Various challenges, including insufficient funding for development, lack of technical knowledge, and limited access to affordable finance and to markets often hinder progress.
South Africa’s land reform program does, without a doubt, hold the potential to stimulate job creation, and economic growth, and to protect rural communities from food insecurity risks, among other things. However, large tracts of restituted land parcels in South Africa are not realising their economic potential, due to a lack of financial and other forms of support including limited access to markets.
To address these challenges, various approaches have been explored, with partnerships emerging as a crucial enabler of successful land reform. The Vumelana Advisory Fund’s Community Private Partnership (CPP) model is among the partnership models that have, without a doubt, shown promise in driving a successful land reform programme.
CPPs typically involve communities (the beneficiaries of the land reform programme) and private entities. In a CPP agreement, partnerships are structured to balance the sharing of resources, risks, and rewards. Commonly, communities contribute land and labour, while private sector partners bring capital and skills, access to finance, and markets, thus forming a symbiotic relationship aimed at mutual benefit and sustainable development. The model facilitates the mobilisation of finance, technical expertise, and skills development support, crucial for the success of commercial ventures on restored land.
CPPs differ from traditional management agreements, where the landowner bears all the risk, and from joint ventures that demand equal risk-sharing. Compared with other land reform approaches like collectives, lease agreements, and joint ventures, the CPP model stands out for its ability to address the pitfalls of these models, as it is a partnership-driven model in the true sense of a partnership. The CPP model recognise that partners may not be as capable of carrying the risk and that the balance of risks, resources, and rewards must be negotiated based on the specific circumstances of each case. By providing a structured and transparent partnership framework, the CPP model mitigates risks and enhances the chances of success for both communities and private investors.
CPPs leverage the strengths of both the communities and the private entities. They facilitate access to capital and expertise, promote sustainable development, create job opportunities, and empower communities to participate in economic activities. By sharing risks and rewards, CPPs align the interests of both parties and seek to promote the long-term progress of the land reform programme.
Despite its strengths, the CPP model is not without challenges. Disputes within communities, especially regarding benefit distribution and decision-making processes, can arise once financial benefits start flowing. To address these challenges, robust governance frameworks and community development strategies are essential. These frameworks can ensure transparent and inclusive decision-making processes, and foster trust and cooperation within communities.
The success of CPPs hinges on the careful negotiation and structuring of contracts to ensure that both parties can meet their obligations and exercise their rights effectively. These contracts address key questions such as the duration of the partnership, rent payments to the community, profit sharing, ownership of shares, capital investment, training programmes for the community, opportunities for community involvement in business operations, job creation, and the transfer of the business to the community at the end of the contract.
The CPP model has proven that South Africa can implement a successful land reform programme through a partnership-driven model. The model has been instrumental in promoting inclusive economic growth. Through this model as pioneered by Vumelana Advisory Fund, approximately 76 000 hectares of land have, to date, been put to productive use, attracting over R1 billion
in potential investment from private funders.
It is however important to note that for these partnerships to thrive and have the desired effect, they need to be taken to scale, and the government needs to establish an enabling environment that gives private investors the confidence to participate in the land reform programme. Greater incentives for commercial partnerships in land reform will further strengthen the process. It is also equally important to introduce independent transaction advisors in the equation in order to balance power relations between the community and the private parties. This however requires funding as it costs money to enlist the services of independent advisors. Both government and the private sector can play a role in funding these services in order to achieve sustainable partnerships for land reform.
Peter Setou is the Chief Executive of the Vumelana Advisory Fund (Vumelana) a non-profit organisation that was established in 2012 to help communities in the land reform programme to put their land to productive use through its Community Private Partnership (CPP) model. Vumelana funds advisory services to structure commercially viable partnerships between communities and investors that create jobs, income, and skills. Vumelana aims to demonstrate the value of partnerships as a means of fostering productive use of restored land, providing linkages to finance, skills and networks needed to make effective use of land, and at the same time encourage a more inclusive agenda for land reform. For more information about the organisation, visit www.vumelana.org.za. To contribute to Vumelana’s work, email info@vumelana.org.za
