Converting Property Rights into Entrepreneurship – Rejoice Ngwenya

A brief history of property ownership in Central Africa

Thousands in volumes of books have been written, albeit through the colonial prism, on how we Africans ‘ceded rights to our ancestral land’ by conquest. One of the richest men in African history, Cecil John Rhodes, made his fortunes by buying and accumulating mining claims in the 1870s in South Africa and the 1890s in present day Zimbabwe. Occupation of Africa’s resources by foreigners did not start with British and Portuguese in the 19^th century. From 100 A.D. onwards, Roman occupiers of North Africa introduced a complex system of land tenure, which created a sub-culture of peasantry in local Berber communities, however enhancing agricultural output (Nothling, 1989). Centuries later in 1893, the Duke of Fife ‘predicted’ that the BSA Company would enrich British citizens who would occupy Southern Rhodesia (Willis, 1967). The colonialists plotted the idea of conquest long before entering into ‘concessionary agreements’ with Lobengula, because the modus operandi had worked in South Africa. This reflected their perception of the importance of titled ownership. However, they also misunderstood, or chose to ignore our spiritual connection to land even if we did not have written title, hence the wars of resistance. It is true that the Land Apportionment Act (1930) and the Native Land Husbandry Act (1951) became the focus of nationalist agitation for (Zimbabwe) independence But, by denigrating capitalism and markets as un-African and exploitative the narrative justified the state capture and control of commercial farmland for resettlement (Dore, 2012). This was done in the name of distributive justice.

The nature of  ‘property’ and the ‘right to property’

South African statues recognize the importance of constitutional rights to property (section 25) however with a ‘public interest’ exception nonetheless coming with equitable compensation. In the Constitution of Zimbabwe, section 71 purports to protect private property, but this right is annulled in section 72 when applied to agricultural land. Bastiat believed that the sole obligation of a legislator is to protectproperty, because property exists first, then law. He saw property as an extension of human nature i.e. man is born a proprietor.  Consequently, whenever the legal system that protects private property rights is weak, businesses react by reducing their activities.

The question of what really is property has been resolved since the inception of humanity. That is why slavery was/is illegal, since it deprives one of freedom. A human being is a resource, a factor of production but is/cannot be property (Boaz, 1998). John Locke agreed that there is no freedom without property ownership, while the poor have as much right to property as the rich. He insisted that it remains the duty of government to protect our right to property i.e. we only subject ourselves to government in order to protect our property. He saw an inextricable link between right to life and right to property. If therefore right to property is an integral aspect of liberal ideology, capitalism without property rights only becomes capitalism for the elite (Norberg, 2008) since every citizens deserves, and has a right to property.

Poverty and property ownership

Progressive capitalism respects the right to property, thus encourages productivity through entrepreneurship. Wherever there is sustainable entrepreneurship, chances of poverty are low. Moreover, free market competition, which generally puts resources into more efficient hands, respects property rights and encourages entrepreneurship. Therefore private property ownership channels resources and incomes to those that are productive. However, freedom is not the same as absence of poverty (Boaz, 1998) as we can see from postcolonial scenarios in Africa. The tragedy is that nationalist presidents recover slowly from liberation stupor. Democratic Alliance leader Helen Zille observed that 30% of the most fertile land in South Africa is in the former homelands of Transkei and Ciskei, where agricultural production is virtually non-existent, By government’s own estimate three quarters of restituted land is unproductive, despite state expenditure of R70-billion since 1995 (Saundersonmeyer, 2014). The Zimbabwe government's own land audit once showed that 2.8 million hectares of farmland lay idle (Dore, 2012). Three land audit reports on multiple but idle farm ownership by Mugabe’s cronies – the Utete Commission and the Buka Audit in 2003 and the SIRDC and Ministry of Lands and Rural Resettlement audit in 2006 – remain mothballed. The well-defined system of land administration, including cadastral survey records, land registries and surveyors (Rukuni, 2012) was sacrificed on the altar of political expediency.Bankers Association of Zimbabwe president Sam Malaba recently observed how direct annual cereal food imports average US$550, a cumulative total amount of US$3,3 billion since 2009. Zimbabwe was once a net food exporter, but President Robert Mugabe’s obsession with property expropriation has driven agro-sensitive Zimbabweans into a tailspin of poverty. His comical 99-year lease instruments have been dismissed as ‘unbankable’ by bankers – not good enough to finance agro-inputs for the three hundred thousand ‘resettled’ but title less small-scale farmers.

How is property converted into wealth?

In the late 1890s, ownership of mining claims by Rhodes and the settlers doubled gold production to half a million ounces (Willis, 1967). Nevertheless, such property value would not have been realised without labour, an integral factor in the matrix of entrepreneurship. Rhodes was dominant in the mining rights exchange market, because disposability of property is determined by exclusivity of ownership (Boaz, 1998). Armed with cash, he could invest in infrastructure and education. Property ownership allows us to pursue own interest (Boaz, 1998). It is the willful disposability of property that makes it an agent of entrepreneurship. Property is the basis for long-term reward, saving for future value (Norberg, 2008). De Soto’s ‘Dead Capital’ is an example on how small entrepreneurs in developed countries can use property to access credit. This is why I observed above that Zimbabwe’s so-called land socialism is the cause of widespread poverty and underdevelopment. Commercial farmers’ property rights were disowned by the Fast Track Land Reform Program introduced inMay 2000 through the Presidential Power (Temporary Measures) (Land Acquisition) Regulations. Without the right to buy, sell, rent or otherwise transfer land, and when land and other natural resources are free for all, the system becomes beset by market failure, perverse incentives, waste and environmental degradation (Dore, 2012).Wealth is not about land ownership per se but having title to that land and converting that title into disposable capital.For African countries like DRC, Sudan, Nigeria and Zimbabwe under the ‘Resource Curse’ spell, property rights are the panacea. Venezuela’s 100-billion dollar ‘returns’ on oil revenue has kept its citizens paralysed with poverty because of misguided statism, undefined, skewed or lack of private property rights (Roberts and Robinson, 2012).

Is there proof that property ownership fuels entrepreneurship?

Most liberal philosophers insist that property is the result of the pursuit of self-interest. Stability of property possession and transference by consent are fundamental rules of nature that promote peace and security.  This ‘possession and transference’ within the context of entrepreneurship creates wealth. For example, South Africa is a 3 000 billion Rand economy, most of this wealth fueled by manufacturing (13%) mainly because of its propensity to garner investment confidence of both locals (74%) and foreigners (42%) (Dimant, 2012). A country does not become a top recipient of FDI in Africa if it trashes property rights. Habitual property rights violator Zimbabwe calibrates its FDI in millions whereas African democracies that are more progressive do it in billions.  Constitutions that guarantee property rights incentivise economic activity. Such countries tend to have a high affinity with FDI, attracted by rule of law (Ibid). Thus, there is proof that African countries like RSA, Mauritius and Mozambique with higher GDP growth rates exhibit high property rights awareness. For example:

2013 Economic Freedom Rankings of Selected Countries*

*Adopted from 2013 Index of Economic Freedom, Roberts, J.M. and Robinson J.A. 2013

The Seymour Lipset Hypothesis also reflects this relationship between prosperity, growth and quality democracy.

·      Conclusion

Just like Cecil John Rhodes, there are Africans today that were once ordinary citizens like you and I but are billionaires now because of their intelligent exploitation of property rights, investment and shrewd entrepreneurship. Aliko Dangote, net worth 10 billion US$ (Nigeria), Mohamed Ibrahim, net worth 1.5 billion US$ (Sudan), Strive Masiyiwa, net worth 600 million US$ (Zimbabwe), Patrice Moetsepe, net worth 2.5 billion US$ (RSA), Salim Bakhresa, net worth 500 million US$(Tanzania) and many more – are a case in point. Sadly, there are Africans today whose income levels have been savaged by reckless property rights legislation. People like Mugabe still labour under a debilitating liberation war hangover, associating private property rights with colonial imperialism. Instead of learning from South Africa’s peaceful racial co-existence, PresidentRobert Mugabe accuses black South Africans of leaving their economy in the hands of what he terms ‘white minority’. His own brand of property rights indigenisation, black empowerment and land justice has driven millions of Zimbabweans into destitution, poverty, gross unemployment and despair. The African National Congress may not be as liberal as the Democratic Alliance, but they have a more progressive stance on property rights.  Designating farms for compulsory acquisition, nationalising natural endowments, and diabolic expropriation of shares from locally based multinational companies may get votes for Mugabeand fellow Stone Ager Julius Malema of the Economic Freedom Front, but it kills entrepreneurship. It is an indisputable fact that “the people of Zimbabwe must be enabled to re-assert their rights and regain ownership of their land”, however any subsequent law that violates the Bill of Rights and promulgates for property rights on the bases of race belongs to the medieval era. What happens to equality before the law?

References

·      Bastiat, Frederic, Selected Essays on Political Economy. de Huszar, George B. (ed), New York: Foundation for economic Education, 2006. (Pp 97-99, p 153, p178, p187)

·      Brittan, Samuel, ‘Capitalism and the permissive society’ in Boaz, David (ed), The Libertarian Reader, New York: Free Press, 1998 (p347)

·      Channing, Ellery, William, ‘A human being cannot be justly owned’ in Boaz, David (ed),  The Libertarian Reader, New York: Free Press, 1998 (P89)

·      Constitution of the Republic of South Africa Second Amendment Act, No. 3 of 2003

·      Constitution of Zimbabwe Amendment (No. 20) Act 2013

·      Den, Douglas, J and Ramussen, Douglas, B. ‘Ayn Rand on rights and capitalism’ in Boaz, David (ed), The Libertarian Reader, New York: Free Press, 1998 (pp173 and 178))

·      Dimant, Tamara in ‘South Africa Survey  2012’, South African Institute of Race Relations, Johannesburg: 2012 (pp97, 102, 108, 139, 143 and 153)

·      Garrison, William, Lloyd, ‘Man cannot hold property in man’ in Boaz, David (ed), , The Libertarian Reader, New York: Free Press, 1998

·      Dore, D. in the  opinion piece ‘A Law Unto Themselves (Part II) : The Rulings and Dissolution of the SADC Tribunal’, Zimbabwe Land Series , Sokwanele : 3 August 2012, from Zimbabwe (2003) Presidential Land Review Committee, Table 3, p42

·      Doré, D. in the opinion piece ‘The nationalist narrative and land policy in Zimbabwe’ Zimbabwe Land Series, Sokwanele, May 04, 2012, http://www.sokwanele.com/node/2373

·      http://www.herald.co.zw/grain-imports-chew-us3bn-banker/, August 30, 2014 

·      http://www.sunrise2all.com/2014/09/01/sa-fails-to-lead-au-development-by-leaving-whites-in-charge-of-economy-mugabe/

·      Hume, David, ‘Justice and property’ in Boaz, David (ed), The Libertarian Reader, New York: Free Press, 1998 (p135)

·      Locke, John, ‘On property and government’ in Boaz, David (ed), The Libertarian Reader, New York: Free Press, 1998 (pp125 and 132)

·      Norberg, Johan, In Defence of Global Capitalism, Lagos: AfricanLiberty.Org, 2008 (pp40, 54 and 61)

·      Nothling, F.J., Precolonial Africa: Her Civilisations and Foreign Contacts, Southern Book Publishers, Johannesburg: 1989 (p85)

·      Willis, A. J., An Introduction to the History of Central Africa, London: Oxford University Press, 1967 (pp127, 133, 194 and 195)

·      Roberts, J.M. and Robinson J.A., in ‘2013 Index of Economic Freedom: Promoting Economic Prosperity and Opportunity’, Heritage Foundation, Washington DC: 2013: (pp 42, 45, 48, 52, 71,)

·      Rukuni, M from the opinion piece‘My perspective on the on-going preparations for a National Land Audit’, Zimbabwe Land Series, Sokwanele,May 21, 2012, http://www.sokwanele.com/Zimbabwe_National_Land_Audit

·      Saundersonmeyer, William, ‘Farmers take the heat while the chiefs sit pretty’,  2014, http://www.thoughtleader.co.za/williamsaundersonmeyer/2014/07/05/farmers-take-the-heat-while-the-chiefs-sit-pretty/

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