Michael Lyne, Paul Zille and Douglas Graham (2000) 'Financing the Market-Based Redistribution of Land to Disadvantaged Farmers and Farm Workers in South Africa: Recent Performance of the Land Reform Credit Facility'
Sociological Research Online, vol. 5, no. 2, <http://www.socresonline.org.uk/5/2/lyne.html>
To cite articles published in Sociological Research Online, please reference the above information and include paragraph numbers if necessary
Received: 2/8/2000 Accepted: 30/8/2000 Published: 6/9/2000
|Farm characteristic||Government - assisted||Private mortgage||Private cash||Inheritance and donations|
# of transactions
|Total market value of land (R million)||14.38||2.24||33.87||16.74||5.21||7.88|
|Total area of land|
|Weighted land price (R/Ha)||1,196||510||5,243||2,907||1,608||1,196|
|Government-assisted projects||Private transactions||F-statistic for group means|
|Tenure security (parcel index score)||22||47||73.0**|
|Agricultural credit (R/Ha)||18||3,853||27.8**|
|Land value with improvements (R/Ha)||1,728||8,882||413.9**|
|Crop inputs (R/Ha)||293||945||5.8 *|
|Crop sales (R/Ha)||22||4,718||79.9**|
|Extension contact (visits in past month)||0.04||0.78||10.2**|
|Parcel area (Ha)||2.5||61.6||39.4**|
|Nominal NCF before loan repayment||Conventional loan repayment||Nominal NCF after loan repayment||Loan with deferred repayment||Nominal NCF after loan repayment|
2 In South Africa, mortgage loans are usually amortized with constant repayments of interest plus principal. If nominal interest rates change following a change in the rate of inflation, amortization schedules are adjusted yielding a new, constant level of remaining repayments. It is important to note that these changes in nominal interest rates represent relatively small changes to the existing (high) level of inflation. As a result, the cost of servicing debt diminishes relative to borrowers' income, which grows at the full rate of inflation.
3 Lyne and Graham (2000) used the theoretical framework proposed by Place et al (1994:20-22) to construct an index of tenure security measuring the breadth and assurance of property rights to land.
4 The DLA imposed five criteria to promote outreach, empowerment and tenure security among land reform beneficiaries. For lenders financing land purchased by aspiring farmers: (a) the purchase price of the real estate and farm assets must not exceed R600,000 per beneficiary (valued in 1999 Rands) and (b) the land price must not be less than one-tenth of the Rands borrowed. Similar conditions apply to intermediaries financing equity-sharing schemes except that the purchase price of the real estate and farm assets must not exceed R400,000 per beneficiary. In addition, (c) venture capital investors should not own more than 50 per cent of the equity in these schemes, (d) the equity purchased by workers in aggregate should exceed their annual wage bill, and (e) worker-shareholders should at least be offered long-term rental contracts for residential sites on or nearby the company farm.
COCHRANE, A. (2000) Personal communication. Agricultural Advisor, National Department of Land Affairs, Pretoria, South Africa.
DEININGER, K. and BINSWANGER, H.P. (1992) Are large farms more efficient than small ones? Government intervention, large scale agriculture, and resettlement in Kenya, South Africa and Zimbabwe. Unpublished World Bank policy working paper, Washington, DC.
DLA (1998) Feasibility study for the support of commercial land transfer projects. Unpublished report, National Department of Land Affairs: Redistribution Policy, Pretoria, South Africa.
DLA (2000) The commercial farmer programme: A component of an integrated land redistribution programme of the Ministry of Agriculture and Land Affairs. Unpublished policy document, draft 2.7, National Departments of Agriculture and Land Affairs, Pretoria, South Africa.
ECKERT, J.B., HAMMAN, J.N. & LOMBARD, J.P. (1996) Perceiving the future: Empowering farmworkers through equity sharing Development Southern Africa, 13(5), 693-712.
GRAHAM, A.W. (2000) Land redistribution in KwaZulu-Natal: An analysis of farmland transactions recorded in 1997 and 1998. Unpublished MSc(Agric) thesis, Agricultural Economics, School of Agricultural Sciences and Agribusiness, University of Natal, Pietermaritzburg.
GRAHAM, D.H. and LYNE, M.C. (1999) The cash flow problem and land redistribution in South Africa: Broadening the land market and economising on government's role. Agrekon, 38(Special issue):343-352.
LRCF (1999) The Land Reform Credit Facility: Project Status Report at 16th August 1999. Khula Enterprise Finance Ltd., Johannesburg
LRCF (2000) The Land Reform Credit Facility: Progress report for the period 4th November 1999 to 27th January 2000. Khula Enterprise Finance Ltd., Johannesburg
LYNE, M.C. and ORTMANN, G.F. (1996) Estimating the potential for creating additional livelihoods on commercial farmland in KwaZulu-Natal. In M Lipton, F Ellis & M Lipton, (eds.), Land, Labour and Livelihoods in Rural South Africa: Volume 2 KwaZulu-Natal and Northern Province. Indicator Press, University of Natal, Durban.
LYNE, M.C. and GRAHAM, D.H. (2000) The impact of land redistribution on tenure security and agricultural performance in KwaZulu-Natal. Unpublished paper submitted to World Development.
NIEUWOUDT, W.L., SCOTT, T.G., SIMKINS, C.E.W. and VINK, N. (1994) Financing land redistribution in South Africa: Putting theory into practice. Proceedings of the Land Redistribution Options Conference, Land and Agricultural Policy Centre, Johannesburg.
NIEUWOUDT, W.L. and VINK, N. (1995) Financing of land purchase by small-scale farmers. Development Southern Africa, 12(4):509-17.
PLACE, F., ROTH, M. and HAZELL, P. (1994) Land tenure security and agricultural performance in Africa: Overview of research methodology. In Searching for Land Tenure Security in Africa, ed. J.W. Bruce and S.E. Migot-Adholla. Kendall/Hunt, Iowa.
SIMMS, P. (1997) Land redistribution in South Africa - some practical lessons. In Proceedings of the 11th International Farm Management Congress, Vol. 1, ed. L. Bauer. International Farm Management Association and The Canadian Farm Business Management Council, Olds, Alberta, Canada:
SPP (1999) An examination of the impact of share equity schemes on beneficiaries in the Western Cape and Mpumalanga. Unpublished report prepared by the Surplus Peoples Project, Cape town, South Africa.
WORLD BANK. (1993) Options for land reform and rural restructuring in South Africa. Unpublished World Bank Report, World Bank, Southern Africa Department, Washington, D.C.
WORLD BANK. (1994) Summary: Options for land reform and rural restructuring. Proceedings of the Land Redistribution Options Conference, Land and Agricultural Policy Centre, Johannesburg.