The Native Lands Act of 1913 "prohibited the establishment of new farming operations, sharecropping or cash rentals by blacks outside of the reserves" where they were forced to live. "Land restitution" was one of the promises made by the African National Congress when it came to power in South Africa in 1994.
These property rights are extremely important as, not only do they empower farmer workers (who now have the opportunity to become farmers) and reduce inequality but they also increase production due to inverse farm size productivity. Farmers with smaller plots who live on the farm, often use family members for labor, making these farms efficient. Their transaction costs are less than larger plots with hired labor. Since many of these family members were unemployed it allows previously unemployed people to now participate in the economy and better the country's economic growth.
Despite this view, it is also argued by some that the opposite has happened. Many South Africans and foreign commentators have voiced alarm over the failure of the redistribution policy. Around 50% of farms are said to be failing, whilst the South African government has said the figure could be as high as 90%. Critics use these figures to suggest that the ANC government's current policy will be detrimental to the South African agricultural industry.
The Land Reform Process focused on three areas: restitution, land tenure reform and land redistribution. Restitution, where the government compensates (monetary) individuals who had been forcefully removed, has been very unsuccessful and the policy has now shifted to redistribution with secure land tenure. Land tenure reform is a system of recognising people's right to own land and therefore control of the land.
Redistribution is the most important component of land reform in South Africa. Initially, land was bought from its owners (willing seller) by the government (willing buyer) and redistributed, in order to maintain public confidence in the land market.
Although this system has worked in various countries in the world, in South Africa it has proved to be very difficult to implement. This is because many owners do not actually see the land they are purchasing and are not involved in the important decisions made at the beginning of the purchase and negotiation.
In 2000 the South African Government decided to review and change the redistribution and tenure process to a more decentralised and area based planning process. The idea is to have local integrated development plans in 47 districts. This will hopefully mean more community participation and more redistribution taking place, but there are also various concerns and challenges with this system too.
These include the use of third parties, agents accredited by the state, and who are held accountable to the government. The result has been local land holding elites dominating the system in many of these areas. The government still hopes that with "improved identification and selection of beneficiaries, better planning of land and ultimately greater productivity of the land acquired..." the land reform process will begin moving faster.
As of early 2006, the ANC government announced that it will start expropriating the land, although according to the country's chief land-claims commissioner, Tozi Gwanya, unlike Zimbabwe there will be compensation to those whose land is expropriated, "but it must be a just amount, not inflated sums."
Despite these moves towards decentralisation, these improved practices and government promises are not very evident. South Africa still remains hugely unequal, with black South Africans still dispossessed of land and many still homeless. The challenge for the incumbent politicians is to improve the various bureaucratic processes, and find solutions to giving more South Africans secure land tenure.
In South Africa, the main model of Land Reforms that was implemented was based on the Market-led Agrarian Reform (MLAR) approach. Within the MLAR, the strategic partnership (SP) model was implemented in seven claimant communities in Levubu in the Limpopo province. The SP model was implemented between 2005-2008 that ended up in a fiasco leading to creation of conflict between several interested parties.
Various researchers have identified various challenges facing land and agrarian reform in South Africa. The following are amongst the challenges as identified by (Hall 2004) and the Department of Rural Development and Land Reform (2008):
Unresolved land claims, which are largely rural claims, are mostly affected by a number of challenges such as:
The Financial and Fiscal Commission's 2016 report
As of 2016 the South African government has pumped more than R60bn into land reform projects since 1994. Despite this investment, the land reform programme has not stimulated development in the targeted rural areas. A report by the South African Government's Financial and Fiscal Commission shows that land reform as a mechanism for agricultural development and job creation has failed. A survey by the commission in Limpopo province, KwaZulu-Natal and the Eastern Cape found that most land reform farms show little or no agricultural activity; the land reform beneficiaries earn little to no income, and the majority of these beneficiaries seek work on surrounding commercial farms instead of actively farming their own land. Where farming is taking place on land reform farms, these farms operate below their full agricultural potential and are mainly used for subsistence agriculture. On average, crop production had decreased by 79% since conversion to land reform. In the three provinces surveyed, job losses averaged 84%, with KwaZulu-Natal suffering a 94% job haemorrhage.