By Peter Setou
16 November 2023: Land Reform: South Africa – Many beneficiaries of the land reform programme often misconceive that good corporate governance is a luxury exclusive to large corporate organisations and irrelevant in the administration of their assets. While this view is fundamentally incorrect it is somewhat understandable, given the impact of dispossession and limited understanding of commercial principles among many members of claimant communities.
In light of the reported widespread failure of farms allocated to beneficiary communities under the government land reform project, primarily due to the lack of post-settlement support, it has become evident that maintaining the productivity of the land necessitates financial and other forms of support including collaboration with other players such as the private sector in order to tap on their expertise.
Communal Property Associations (CPAs), the landholding institutions established by law to acquire and manage beneficiary land, often grapple with effective management of restored land. They are often marred by infighting, factionalism, patronage, and a lack of accountability, resulting in mismanagement of restored land and misappropriation of funds. This is mainly due to a lack of good governance to guide the effective running of their land enterprises. It is therefore imperative to professionalise the management of land by beneficiary communities in order to instil confidence and attract much-needed investment to the land enterprise.
The private sector possesses the necessary skills, markets, and access to finance to help claimant communities sustain and scale their operations on restituted land. However, for land enterprises to attract such private sector support, they need to have effective governance structures in place. Investors require assurance that they will receive a return on their investment and that systemic risks will be mitigated.
It is therefore crucial for the CPAs entrusted with managing claimant land to enhance corporate governance in order to attract private sector investment to their land enterprises.
Over the last decade, the Vumelana Advisory Fund has learned that a successful land reform programme hinges on multi-stakeholder collaboration, the implementation of effective processes to govern the administration of land assets, and the adoption of good governance practices.
In pursuit of this goal, Vumelana has introduced the Communal Property Institution Support Programme. This intervention aims to develop well-governed institutions for the implementation of settlement agreements and to foster partnerships between beneficiary communities and private investors.
At their core, Communal Property Institutions must establish basic governance arrangements, including an up-to-date constitution, properly elected governing bodies and committees, independent financial auditing, and management of property and assets in line with agreed-upon policies. These fundamentals ensure the proper governance and administration of land allocated to communities through the land reform programme for the benefit of its community members.
Auditing and accounting firms can support in driving good land reform governance
Good governance has the potential to uplift beneficiary communities with expertise essential to achieve better outcomes. However, the government cannot do it alone. No sectors of civil society are isolated from South Africa’s socio-economic environment, which presents an opportunity for the private sector to contribute meaningfully to the country’s land reform programme.
Accounting and auditing firms, with their skills, intellectual properties, and resources, can assist beneficiary communities in their upskilling. This can help beneficiary communities implement processes to attract private investment, including improving business processes, defining clear roles and responsibilities, establishing structured decision-making processes, enhancing communication channels, and ensuring financial controls and oversight.
To enhance the overall management and performance of restituted land, auditing firms and other businesses could consider partnering with credible institutions with a proven track record working in the land reform space, such as the Vumelana Advisory Fund. These institutions could provide these services to beneficiary communities on a pro bono basis or at discounted rates, or as part of their corporate social responsibility. Such an initiative could begin to create opportunities for partnerships between land reform beneficiaries and private investors.
The reality is that government cannot do it all alone. All stakeholders have a role to play in transforming the current narrative of the land reform programme. By leveraging resources and skills, we can collectively make a meaningful impact.
Implementing sound governance in land administration goes beyond ensuring financial stability. It also involves promoting transparency, creating processes that enable the effective running of the land enterprises with honesty, integrity, and accountability, and fostering ethical values among land reform beneficiaries. This straightforward approach, though seemingly uncomplicated, remains a hindrance to the success of the country’s land reform programme and to efforts to drive the productive use of land.