Critical analysis of market-led land reform

Transcription

1 Term Paper (Essay) Critical analysis of market-led land reform -The case of Market Led Agrarian Reform in South Africa- Kyoko Tamada MA in Conflict, Development and Security School of Politics and International Studies, Leeds University 1

2 (1) Introduction Through the Conference on Hunger and Poverty in 1995 and the World Food Summit in 1996 organized by the International Fond for Agricultural Development (IFAD), the importance of securing access to resources especially land in terms of poverty reduction in rural areas has been recognized. (Moore, 2001) In 2001, the land distribution was once again the agenda and poverty reduction among the poor would require increased support from governments and aid agencies for farmland distribution to poor communities, households and women. (IFAD, 2001) However, the way of land reform has been conflicting between proponents of market-led land reform and proponents of state-led market reform. The proponents of state-led land reform say that to succeed in land reform, land redistribution is the integral part and has to be embedded in land reform. Since the relationship between peasants and landlords would change by land distribution and reduce influence and political power of landlords, land reform has to be a political process. (Barraclough, 1999) In contrast, to avoid the social and political cost of land reform, market-led land reforms were introduced as one of the Structural Adjustment Program by the International Monetary Found (IMF) in the 1980s in developing countries, emphasizing that the market can play a role in land distribution instead of states. 2

3 One of the recent examples of market-led land reform is the one called Market Led Agrarian Reform (MLAR) introduced by the World Bank in South Africa which has been implemented since By examining the characteristics and benefits which were discussed by proponents of MLAR, and comparing the outcome of MLAR in South Africa, it can be said that peasants are not benefited by it and MLAR blocked chances more radical expropriation redistribution by state. (Borros Jr, 2005) Even the government of South Africa explicitly stated in the position paper in 2005 that the failures of the land market reform, the limits of the market and the willing buyer and willing seller practices are acknowledged. The major problems behind this are that first, MLAR tends to ignore that land reform is political process (Borras, 2003) and treated land reform as technical issue (Borras, 2003, p24). The second problem is that MLAR is prone to dismiss the idea that land has multi-dimensional functions such as cultural and political values of land. (Borros Jr, 2005) In this essay, first, the importance of land reform in terms of reduction of rural poverty will be examined. Secondly, the precondition of land reform in South Africa where inequality was created by the apartheid policy will be discussed. Thirdly, the current MLAR of South Africa will be analyzed by comparing benefits raised by proponents of MLAR and the outcome. 3

4 (2) The importance of land reform First of all, the importance of land reform to reduce poverty in rural areas will be examined in this section by mentioning current situation on land issues, the definition of land reform, the justification of land reform and the current trend of land reform. Regarding the current situation, data on number of landless people in developing countries are lacking. However, according to the International Fund for Agricultural Development (IFAD), the number of landless increased from 171 million in 1980 to 180 million in The study also shows that in Asia, 37% of people in Philippines were landless, 36% in Indonesia and 55% in India. In Latin America, 37% of people in Mexico were landless, 39% in El Salvador and Brazil. (1992) The problem of lack of access to land is that it is associated with low income and rural poverty. First, 70% of people who consume less than one-dollar a day live and work in rural areas. Secondly, 70% of rural household income in Asia comes from farming, 60% in Africa and Latin America where farming is the most subjected to current sharp price decline of agricultural products. (IFAD, 2001) Another study shows that 70 % of those who can not meet food needs are rural people. (Moore, 2001) Since rural poor can not meet their needs, they are the most vulnerable to food insecurity even though they 4

5 produce food products. (Moore, 2001) The lack of access to land also causes food insecurity which causes high level of malnutrition. The infant mortality is much higher than among the landed. (IFAD, 2001) The lack of access to land is not only associated with rural poverty and high level of malnutrition, but also the cause of land conflicts such as Zapatista movement in Chiapas, Mexico and Movimentodos Trabalhadores Rurais Sem Terra (MST) 1 in Brazil resulting in 73 deaths in 2003 alone. (Journal do Nikkei, 2004/12/7) To benefit the rural poor and to realize equal distribution of land without resulting in causing violence like MST, land reform necessarily includes redistribution of rights to land from large landlords by providing the poor with more equitable and secure access to land by state participation. (Barraclough, 1999 p1) What redistribution of rights means is that land reform must change the existing structure of ownership of land by distributing rights to land to the landless and increase their ownership over the land. (Borros, Jr, 2005) Borros (2005) also mentioned that degree of redistribution of rights to land should be analyzed as well, because traditionally land reform includes the compensation to landlords who lost their land and the payments by peasants who gained the land. To benefit the rural poor, the compensation to landlords should be between zero or 1 According to the official homepage of MST ( it was established in 1984 to achieve land distribution to the landless through occupying land and as a result of this movement, MST won land for families and 1600 settlements so far. 5

6 below the market price, whereas payments by peasants should be between zero or below the acquisition cost of the market price. The land reform introduced as the Structural Adjustment Program (SAP) by the International Monetary Found (IMF) was the case that landlords were paid with higher than the market price and peasants paid higher than the acquisition cost of market price. To benefit the rural poor, states not the market should be the central figure to realize land reform which distributes rights to land by changing the relationship between landlords and peasants. This implies the reduction of economic and political power of landlords. Therefore land reform must be a political process where states promote social change, especially change in relationship between peasants and landlords. (Barraclough, 1999) Ghimire also emphasized the importance of the role of sates regarding not only in land reform itself but also in extensive services (p16) which provide peasants with credit and goods for farming after the reform was done. (2001) In terms of the role of states, the cases of Egypt and South Korea show how difficult or easy to promote land reform. In Egypt, 0.1% of landowners owned 20% of total land before the land reform was conducted in 1952 and 1961 by Nasser. After the state-led land reform succeeded in distributing one-seventh total land to the landless, it eventually helped reduce poverty and promote growth. 6

7 However, besides the economic slump in Arab world in the 1970s and the 1980s that reduced investment by the sate in agricultural sector, Nasser did not succeed in undermining the interests of big landlords by remaining the ceiling on landholdings high. Thus, Sadat, the successor of Nasser overturned the land reform in 1952 and 1961 easily and reinforced the economic strength of large landlords by enacting law 96 in (Bush, 2002) In contrast, South Korea succeeded in distributing land to the landless with the support of the United States after the World War. Before the land reform in South Korea, the richest 4 % owned 50% of land and 20% of land was owned by Japanese government. Since new government of South Korea had little tie with large landlords who were sides of Japanese government during the World War, government of South Korea succeeded in change in the distribution of land ownership where full tenancy were fell from 48.8 % to 7.2%. (Griffin, 2002) There are other reasons for South Korea to succeed in redistribution of land ownership such as state received 20% of land that was occupied by Japanese government as a windfall gain when Japanese colonists regime collapsed after the Word War or tenure reform was introduced before the land reform was introduced. (Griffin, 2002) 2 Law 96 in 1992 promoted the application of market land values and annual rents. This law enabled landlords to sell their land at the market price and evict tenants and retake their land through land market. (Bush, 2002) 7

8 However, besides the historical factors that helped South Korea to succeed in land reform, the cases of Egypt and South Korea show that unless states determined to promote land distribution by reducing political and economical power of landlords, benefits of land reform will not last long. It can be seen in the situation of Egypt where Nasser could not break political opposition of landlords and resulted in reinforcement of their power by Sadat. (Bush, 2002) In addition to the significance of land reform in terms of redistribution of rights to land and the role of state to benefit rural poor, land reform is also important in the following four reasons stated by Ghimire. (2001) The first reason is that vast majority of the population in developing countries are near-landless, the landless and rural workers. According to the Food and Agriculture Organization (FAO) (1987), in the mid 1980s, there were 817million small holder and the landless rural labors in Asia, Africa and Latin America and the landless workers were among the social groups most vulnerable to hunger and poverty. Secondly, fertile land is held by small number of powerful landlords, and by reform, it is expected to improve social justice and equality. The third reason is that access to land by rural poor is essential human rights because with access to land, the rural poor have possibility of access to shelter, food and improved livelihood. The fourth reason is that by possession of secure land by 8

9 rural poor, legal land titles encourages peasants to invest more time and resources in making land more fertile and productive which may lead them to adopt sustainable practices of agriculture and beneficial for environment protection. Moreover, distributing land to peasants increases productivity since small landholders often use their land and labors more intensively and efficiently than do large landholders. (Barraclough, 1999, p18) However, the current trend of land reform can be characterized as market-led reform rather than state-led land reform. Land Market Reform (LMR) was introduced as part of SAP by the IMF since the 1980s. It was also supported by the Secretary General of UN in the review and analysis of agrarian reform and rural development of 1996 (E/1996/70) stating that the majority of governments have recognized that the market is the most effective land distribution mechanism. It is seen as a vehicle for the reduction of unequal patterns of distribution and as a mean of reducing fragmentation and inefficient land use. Consequently, the policy on agrarian reform shifted from state-led land reform to LMR and emphasis was placed on capacity building of peasants not on the reduction of political and economical power of landlords. (Moore, 2001) The content of land market reform is that technical program of agricultural credit and legal procedure for land transactions based on the 9

10 dominance of private sectors which are free from price control by states. The consequence of this is that since the rural poor can not compete with speculators and landlords on land market, they can not afford the land. In addition to the liberalization of the land market, the governments cut spending on agriculture sectors as well as health and education as economic liberalization policies imposed by the IMF, poverty in rural areas increased. (Ghimire, 2001) The examples of effects of LMR can be traced in the following two different regions. First, in Sub-Saharan region, land titling was introduced to enhance economic efficiency. Because it was thought by economists that legal titles to land enable owners to use their land as collateral, increases access to scare finance and capital investment. However, land registration fees have been beyond means of the poor. The people who gained benefits from this land titling were landlords and created further inequality in distribution of wealth 3. (Griffin, 2002) Second, in Central America, even though land distribution by governments was achieved, after the liberalization of land market was introduced, states withdrew the credit support for farmers and cut spending in agricultural sector. Consequently, farmers sale their land to land market as a way to get quick money 4. (Ghimire, 2001) Bernstein stated following reasons to explain 3 In the case of Kenya, even though 90% of land was replaced with property rights by 1993, Kenya is now going back to communal land tenure. (Griffin, 2002) 4 In Honduras, peasants co-operatives were privatized through their sale to the giant 10

11 LMR was promoted. First, by claiming that land titling, privatization and decentralization have something to do with rural poverty, development agencies would be given the legitimate function to intervene and shape the state policy of developing countries. The development agencies can promote market-led land reform in the name of alleviating poverty. Second, providing property rights can do away with the complexity of land issue such as the circumstance where many people are claiming the same land. Third, by saying that objective of land reform is to increase productivity, it can resolve or pre-emptive the conflicts related to land. (2002) In short, the importance of land reform in terms of poverty reduction in rural area is recognized and the role of state in the distribution of land is emphasized by many scholars to benefit the rural poor. However, it can be seen that market-led land reforms are the current trend of land reforms. The market not the state is given a role to distribute land and this resulted in unintended outcome which is creation of further inequality in developing countries. (3) The precondition of land reform in South Africa One of the recent examples of market-led land reform can be seen in South Africa. Like most of the countries that have conducted land reform, the rural Chiquita Brands. (Ghimire, 2001) 11

12 poor in South Africa also suffered from lack of access to land. However, inequality between blacks and whites was extreme since it was created by the apartheid policy. Therefore, before the examination of the market-led land reform in South Africa, how inequality was created by the apartheid policy and economic situation when the apartheid policy was eliminated will be discussed to understand the necessity of land reform in South Africa. Among the laws that discriminated blacks, National Lands Act of 1912 was one of the most influential acts that promoted the deprivation of rights to access to land by blacks. This act prohibited the establishment of new farming operations, sharecropping and cash rentals by blacks outside the reserves which made up only 7.7% of the total land. Inside the reserves, an artificial form of tenure with limitations of holding sizes and restrictions of land transactions were imposed. In addition to this act, Black Spot Removal which was promoted from 1960 to 1983 worsened the situation. This transformed large majority of blacks, who had legitimately owned the land outside reserves, to homelands. The homelands can be characterized as tenure restrictions, high population density, lack of capital and these characteristics made commercial agriculture virtually impossible. (Since homelands were set up in remote and sterile region, blacks had to depend on income from working as migrant workers because the income 12

13 from farming was not enough to make ends meet.) The labor laws also contributed to successive evictions of large parts of blacks from white farmers and employed them as tenants. These laws discriminated against blacks in favor of whites and generous capital subsidies to the white farmers were given. (Deininger and Binswanger, 1993) As a result of these laws and the government policies, extreme poverty and inequality among blacks were created. At the beginning of the 1990s, 87% of South Africa s land resources were owned by whites who represented only 12.6% of the population. The land for blacks was limited to the remaining 13% of land in the homelands. (Adams, 2000) Even though these policies allowed the country to achieve self sufficiency in food since white farmers have modernized their farms aided by subsidies from government, the costs, in social as well as economic terms of doing so have been very high. (Deininger and May, 2000 quoting Wilson and Rampele, 1989, p4) The environmental impacts also called for an urgent policy change because white farmers used fertilizer and chemical products aided by government subsidies led to serious soil erosion. In addition, modernizing the farms to realize less labor intensive farming contributed the high unemployment rate of blacks. (Deininger, 1999) When the new government was formed in 1994 and abandoned the 13

14 apartheid policy, land reform was one of the main reforms not only to redress the injustices of the apartheid policy but also to alleviate poverty in rural areas. (DLA, 1996) The Constitution of Republic of South Africa sets out the legal framework of land reform, especially in Bill of Rights to address the equitable access to land for all people. Under the Constitution, Department of Land Affairs was given a major role to play in land reform to conduct reform nationally. (4) The current MLAR of South Africa The Constitution of Republic of South Africa promised equitable access to land for all. To achieve this goal, national land reform was proceeded to alleviate poverty in rural areas and extreme inequality between blacks and whites which were caused by the apartheid policy mentioned in section three. The African National Congress set out for land reform called Reconstruction and Development Programme (RDP) in 1994 with major role given to Department of Land Affairs (DLA), one of the national ministries. RDP has three components, all of them are provided for in the Constitution. (Adams, 2000) In this section, to understand the current debate about land distribution of South Africa, framework of RDP will be explained first. Secondly, current Market Led Agrarian Reform (MLAR), which is one of RDP programme of land distribution in South Africa, will 14

15 be analyzed by comparing the outcome and benefits of MLAR raised by proponents of MLAR. Regarding the framework of RDP, the World Bank s target to distribute 30% of the country s land during 1994 to 1997 was adopted. RDP is consisted of three different reforms which are restitution, tenure reform and redistribution. In following paragraph, each reform will be examined in order. Regarding the restitution, Restitution of Land Rights Act of 1994 provided the legal basis for establishing Commission on Restitution of Land Rights (which is under control of DLA) and Land Claims Court. These institutions investigate claims and provide land or compensation if claimant was dispossessed of a right to land after 1913 as a result of discriminatory laws. The respondent of all the claims are the state not the actual landowners. By 2003, total settlements are cases and equivalent to ha of land since The current problems are late lodgment of claims, difficulties in rural claims because of the high rate of illiteracy among the rural poor, uncooperative white farmers and high cost since the price of land is currently high. (DLA, 2003) According to the official website of DLA, the mission of land tenure reform is to provide security of tenure and access to land on an equitable basis to the previously disadvantaged person or communities. Regarding the legal basis, 15

16 many laws were enacted such as the Labour Tenants Act of 1996, the Extension of Security of Tenure Act of 1997, the Transformation of Certain Rural Areas Act of 1998 and the Communal Land Rights Act of These laws were enacted to protect and strengthen of the rights of residents of privately owned farm and state land. These two reforms have relatively minor effects in land reform. Because the government has not implemented land tenure laws effectively (Lahiff, 2003) and the number of people who gained access to land under the restitution program are relatively small 5. To benefit the rural poor, the privately owned land must be distributed, (Adams, 2000) because the potential beneficiaries are estimated at nearly one million landless workers and tenants. (El-Ghonemy, 2001, p121) Before examining the characteristics of land redistribution, the definition of redistribution should be mentioned. The redistribution reform has been achieved through Settlement and Land Acquisition Grant (SLAG) which grant R16000 to the people whose income is less than R1500 a month. Since 2001, the Land Redistribution for Agricultural Development sub-programme (LRAD) was introduced to deal with distribution of land especially large land for commercial 5 By the end of 2002, a total of ha was distributed to households (Hall, Jacobs and Lahiff, 2003) under the land distribution program whereas ha was distributed under restitution program by (DLA, 2003) 16

17 agriculture use. LRAD does not have income limit for people to receive grant like SLAG. Therefore, Market Led Agrarian Reform (MLAR) in terms of land distribution in South Africa means both of SLAG and LRAD since both of programmes are based on the same principles with different scale. The characteristics of redistribution of land can be seen in the process of access to land and the post land purchase developments. In the process of access to land, first major characteristic is the negotiated land reform which promotes land transactions in the land market through the willing buyer and willing seller. The voluntary landlords sell their land at the full market price. It is believed by proponents of MLAR that the negotiated land reform is needed to maintain public confidence in land market and to affirm the government s respect for individual property rights. (Deininger, 1999) This characteristic can also be said as demand driven approach which also promotes voluntary exchange of willing buyer and willing seller in the market. The benefit of this approach raised by proponent of MLAR is that beneficiaries can themselves compete for available land on the land market (Neto, 2004 p53) which lead to higher production because land is transferred to most skilled farmers. (Neto, 2004 p53) It is argued that expropriation of land done by government often decided in political ground and will result in inefficient production. (Neto, 2004) In addition, the 17

18 program of financing through SLAG is considered as one of factors to help market-led land reform work effectively because with grant given by government, the peasants are expected to go for the best bargain for the grant. This will result in financially cheaper than state-led agrarian reform. (Deininger, 1999) The second characteristic of MLAR is the decentralization and increase role of private sectors. Because the decentralization is regarded as a useful mean to achieve speedy transactions since bureaucracy of government is considered as a problem to slow the efficiency of MLAR. (Deininger, and Binswanger, 1999) In the process of post land purchase development, the land titling is considered as a major characteristic of MLAR. The land titling is regarded as a way to enhance economic efficiency because it encourages the owners to use their land as a collateral to access to credit and eventually wide spread of investment in land market can be achieved. (Deininger, 2003) If MLAR can achieve efficient land market, productive land and financially cheap reform, it would not have been said in the position paper 2005 by the South African government that the willing buyer, willing seller approach needs to be tempered by the reality of land market failure [where] markets by themselves do not redistribute land at scale, of quality, at location, and price; from 18

19 rich to poor, from white to black. The government also stressed the role of state in land redistribution by saying markets need reform, assistance, and direction from the state. Regarding decentralization promoted by MLAR, various explicit and implicit subsidies were withdrawn which resulted in curbing the entry of emerging black farmers into the market outside of government land reform programs, or leads people into a debt trap by forcing them to buy land in excess of what they need. (The government of South Africa, 2005) The South African government stated in conclusion that they need to move on to more pro-active [by state], supply-led approach to land reform not the market-led land reform. (2005) Since MLAR has not been successful as the South African government hoped, the problems of MLAR should be examined. The first major problem of MLAR is that it ignores that the land reform is a political process by promoting demand driven approach and reducing the role of state. Since the land distribution includes change in relationship between peasants and landlords which implies the reduction of political and economical power of landlords, it must be a political process. Therefore, it has to be dealt by state that can face the opposition from landlords. According to the proponents of MLAR, the state-led approach is an 19

20 approach of supply driven which results in the situation where productive farms are expropriated to less productive farms by peasants who have no potential to become efficient producers. (The World Bank, 2004) However, study shows that the rural poor use their land productively and resourcefully. What they are struggling to improve productivity is the economic constrains to participation in agricultural market dominated by large multi-national companies. (Hall, Jacobs and Lahiff, 2003) The outcome of demand driven approach is that the people who benefit from MLAR are landlords since they themselves become willing sellers and willing buyers. Especially under the LRAD since 2001, it can be seen that there is a huge gap in terms of land distribution between the wealthier beneficiaries and the poor beneficiaries. (Hall, Jacobs and Lahiff, 2003) According to the study, in West Cape Town, the average land delivered to well-resourced beneficiaries is 83ha whereas 3ha for those at the bottom of LRAD scale. (Hall, Jacobs and Lahiff, 2003) In short, small groups who have substantial resources gained benefits from LRAD. It can also be said that the concept of willing seller and willing buyer itself is the problem, because this concept allows landowners to make their decisions whether to sell or not by seeking the highest bidding. Thus, there are no willing 20

21 buyers because they are dependent on decisions of seller and willingness of state to approve their application to provide the grant. (Jacob, Lahiff and Hall, 2003) In addition, it is considered that the concept of willing buyer and willing seller slows the distribution and the transactions on land market. According to the South African government, only 1.65% of total target land was distributed and 2.5% of total target of rural poor gained land. (2005) The reason for this is that within the concept of willing seller and willing buyer, landowners are the one who influence the pace and the direction because they can make decision when and to whom to sell. Since most landlords will not give up their land voluntarily despite the attractive monetary value because land means not only material value but also political power, the pace of land transactions becomes slow. (Jacob, Lahiff and Hall, 2003) Moreover size, shape and infrastructure of current commercial land sold in land market are inappropriate for rural poor who need small scale farm. The information about land selling in land market is also out of reach from rural poor and tends to remain within the network of landlords (Hall, Jacobs and Lahiff, 2003) or land transactions were depended on uncoordinated negotiation between buyers and sellers (Lahiff, 2003 p28) In other words, there has been a shift from land reform as a program aimed at rural poor and landless to the one aimed at the 21

22 creation of new classes of commercial farms. (Hall, Jacobs and Lahiff, 2003 p32) Theses outcomes show that ignoring the nature of land reform as a political process and replacing the role of state with the market benefited the landlords. The market itself does not distribute land equally, rather it favors large landlords because under the concept of willing buyer and willing seller, landlords have the say about to whom to sell and when to sell. Not only the demand driven approach but also reduction of the role of state by promoting decentralization and increase of the role of private sector are problems of MLAR. The reason that the proponents of MLAR promote decentralization is because state-led land reform causes landlords resistance to reform and leads to legal battles which are waste of time. It is also said that the state-led land reform degenerated into political maneuvering and rent seeking. (Deininger, and Binswanger, 1999) However, this is the very reason that land reform has to be the political process led by state. The second reason for promoting the decentralization by the proponents of MLAR is that many states have failed to deliver support to the beneficiaries after the reforms were done because of inefficient and bureaucratic governments. However in the case of South Africa, land is unexpectedly high because of the liberalization of land market and there is nothing left in buyer s budget to buy 22

23 after care goods such as fertilizer. (Bernstein, 2002) In addition, the transparency is secured by work of the Monitoring and Evaluation Unit of the Ministry of Land Affairs in South Africa. (Ghimire, 2001) What considered to be the central problem of land distribution by 73 South African NGOs is that land reform is left entirely to the market not the corruption of the government. (Ghimire, 2001 p121) Regarding the reason for promoting active role of the private sector by proponents of MLAR, they consider that the private sector can provide more effective services and infrastructure after the land reform. Because peasants access to services and infrastructure after land reform have not been successfully implemented by states in many developing countries. The study shows that high profit can be achieved by giving the role to private sector and withdrawal of state intervention by cutting spending on agriculture sector. (Deininger, and May, 2000) However, it does not include the idea of equality to provide all the peasants with necessary services and infrastructure after the land reform. The benefits of the decentralization and active role of private sector needs close examination since it takes time to see whether it works or not. However, in the case of South Africa, it is moving toward state-led approach and the benefits raised by the proponents of MLAR do not apply for the case of South Africa. 23

24 The second major problem is that MLAR tends to dismiss the multi-dimension aspects of land by promoting property rights. In the context of MLAR, land is considered as one of a commodity to trade through land market. According to the proponents of MLAR, without proper assets ownership secured by property rights, owner can not use their land as collateral to access to credit and investment. (Deininger, 1999) Proponents of MLAR also referred that promoting property rights lead to the development of financial market, because using land as a collateral facilitates transfer of land through rentals and sales. This is considered to support the development of financial markets by helping land owners gain access to credit whereas expropriation type of reforms are inconsistent with property rights and regarded to cause irreparable damage to the private investment and the international confidence in market. (Deininger, 2003) The proponents of MLAR also mention that property rights enable peasants to control over land and land can be taxed by local government and consequently, peasants will have greater voice which will create basis for more democratic local governance. However, regarding the use of land as collateral, the formalization of property rights does not promote lending to the poor by banks because they fear that poor can not pay back or consider their land as low volume of assets. The 24

25 poor also acknowledge that if they use their land as collateral to access to credit, they would be likely to end up giving up their land because of their debt. Thus, they chose not to use their land as collateral to access to credit. The western capitalism of using land as collateral by promoting property rights and trade on land market does not apply to the countries where livelihood of people are based on land. (Jacob, Lahiff and Hall, 2003) Since property rights did not stimulate the use of land as collateral, development of financial market which proponents of MLAR proposed will not be likely to happen. (The land sold under MLAR in South Africa was marginal or in remote area, credit is unlikely to be forthcoming, either.) Having examined the benefits of MLAR raised by proponents of MLAR and compared with the outcome in South Africa, it seems that none of their benefits are realized in South Africa. In fact, the South African government stated in the Position Paper in 2005 that failure of market-led land reform should be recognized and state should be the central role to play in land distribution. The strategy of development by the World Bank can be summarized as the strategy to increase productivity by demand driven approach, decentralization and privatization and to increase efficiency by providing property rights. However, the outcomes of South Africa show that land reform must be a political 25

26 process by state to distribute land equally and land can not be treated as a commodity to trade through the land market because land has multi-dimension aspects to the people in developing countries. (5) Conclusion In conclusion, the market-led land reform has been introduced by the IMF and the World Bank to realize speedy land distribution for economic development in developing countries; however it resulted in widening inequality in rural area of developing countries. Even though the state-led land reform which includes land distribution to the landless is emphasized by many scholars (Borros Jr, Saturnino, Cousins, Jacobs, Lahiff), it has not been considered as strategy for rural development by the IMF and the World Bank because the state-led land reform generate political opposition of landlords class and land reform becomes no longer an economic agenda but a political process. One of the recent examples of Market-Led Agrarian Reform (MLAR) is Reconstruction and Development Programme (RDP) in South Africa. Since there is an extreme inequality in South Africa between blacks and whites which was created by the apartheid policy, the land reform was proceeded as one of the reforms not only to redress the injustices made by the apartheid policy but also to 26

27 alleviate poverty. To achieve these goals, restitution to restore the land owned by blacks taken during the apartheid and the land distribution to reduce poverty in rural areas under SLAG and LRAD programmes were conducted. The land distribution of South Africa is a good example that the market itself can not distribute land to the landless equally. The characteristics of MLAR can be categorized as first, demand driven approach under the concept of willing buyer and wiling seller second, reduction of the role of state by promoting decentralization and increase the role of private sector and third, promoting property rights to enable the owners to use their land as collateral on the land market. The problems of these characteristics are that first, MLAR ignores that land reform is political process; secondly MLAR tends to dismiss the multi-dimension aspects of land and considers land as one of commodity to trade through the land market. At the national land summit held in July 2005, Minister of Agriculture and Land Affairs acknowledged the failure of MLAR and the importance of role of state in terms of land distribution. However, little has been done in terms of creating overall strategy of the role of state in distribution of land in South Africa. Lahiff argues that selective expropriations [should be done] in areas where sufficient land is not coming onto market or where negotiations with landlords are 27

28 not fruitful rather than promoting overall expropriations. The future research should be placed on how state should play role in distribution of land and what extent expropriations of land should be done. References 28

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