Land restitution is far more complex than simply resettling dispossessed communities on restored land. If beneficiaries are to prosper and sustain livelihoods from the land, they need to develop viable commercial partnerships.

When people were dispossessed of their land, following the 1913 Natives Land Act, they lost much more than the land. They lost access to skills, markets, finance, and the institutions needed to make land productive. Returning land alone is insufficient. Without sustained investment and technical support, productivity collapses, leaving land reform beneficiaries unable to develop sustainable livelihoods.

Approaches to the post-settlement problem in land reform

Several approaches have been developed to address this. Government-funded training, technical assistance, and grants often fail to materialise. Contracted managers and mentors are paid regardless of outcomes, while communities carry the risk. Land lease agreements transfer operational risk to the lessee, reducing the risk of asset degradation but not guaranteeing the required investment. Joint ventures (JVs) and share-equity schemes enable private partners to leverage their market position to mobilise finance, provide technical expertise, and support market access. However, without their own capital to invest, communities depend on loans from their partners, who earn management fees, loan repayments, and a share of profits. In contrast, communities’ returns are limited while they repay the loans from dividends.

Community-private partnerships (CPP) allow community objectives to drive the relationship. Private partners typically raise finance and manage operations, while communities contribute land and receive rental, employment, and dividends. The model aims to reduce risk, attract investment, and create more sustainable incentives for both parties.

Risks of commercial partnerships

The most persistent critique of commercial partnerships in land reform is that they reproduce pre-existing power relations: strategic partners retain effective control over management, finance, and market access, while community beneficiaries remain passive shareholders or wage labourers. Financial structures that include management fees, debt obligations, and deferred dividends disadvantage communities, who bear significant risk yet receive limited returns. The Presidential Advisory Panel on Land Reform and Agriculture (2019) questioned whether such arrangements genuinely advanced redistribution or merely stabilised commercial agriculture.

Recent case studies

Case studies were undertaken between 2018 and 2025, drawn from partnerships supported by the Vumelana Advisory Fund. They focus primarily on agriculture and tourism in Mpumalanga, the Eastern Cape, the North West, and Limpopo. The communities lost their land between the 1920s and the 1970s, typically following the arrival of white settlers who used discriminatory legislation first to reduce former occupants to labour tenants and ultimately to remove them from the land. Restitution claims followed the 1994 democratic elections, and the government returned land between 2006 and 2014.

The restored land area ranged from 639 to 26,000 hectares, and the government’s cost of acquiring the land ranged from zero (where the claim was on state-owned land in a former homeland) to over R1-billion (for land in a private game reserve). At the time of settlement, community sizes ranged from 117 to 1 615 households. All were represented by communal property associations, none returned to the restored land, and all were poor, with the majority living below the poverty line.

The commercial partners included family-owned businesses and multi-billion-rand global enterprises. Partnerships were based on long-term leases of 23 to 49 years, most with share options enabling communities to acquire a 49% equity stake. In agricultural projects, assets remained with the community landowner; in tourism projects, assets were to be returned to the community at the end of the lease.

Rent earned by the CPAs (Communal Property Associations) ranged from R750 000 to over R10-million per annum. Dividends and fees earned by the CPAs ranged from R800 000 to R12.2-million per annum. By far the greatest community benefit came from salaries and wages, which in many cases accounted for over 80% of the direct financial benefit. Communities also benefited from training and procurement opportunities.

Cost-benefit analysis showed that the net present value of benefits favoured the community partner, partly because the Government carried the land acquisition cost. The Government also benefited from taxes earned and avoided recapitalisation costs of failed projects.

Household surveys indicated that partnerships significantly improved livelihoods. The income of community members who found employment and received other financial transfers increased by 30% to 90% compared with those not employed in the projects. Access to financial assets such as bank accounts, credit facilities, and life insurance also increased, as did access to housing, washing machines, cars, laptops, and other physical assets. Beneficiaries were more likely to be members of a stokvel, a farming group, or other community association. Participation in the projects also improved access to education and skills, reduced dependence on social grants, and significantly reduced the need to withdraw children from school or skip meals when funds ran low.

The projects did not employ everyone who needed work, and the CPA’s rent and dividends were not always transparently converted into member income. However, the cases reviewed show that, when appropriately structured and maintained by well-governed CPAs, commercial partnerships can be life-changing for beneficiaries.

Lessons

CPAs with clear constitutions, transparent financial management, legally separate entities for commercial and community purposes, and regular member engagement were better placed to negotiate favourable agreements, manage partner relationships, contain internal conflict, and sustain partnerships over time.

Independent transaction advisors appointed by Vumelana were critical for securing fair agreements. In one case, after a transaction advisor was introduced, the community secured a new investment of R70-million, rent increased by R80-million over the lease term, shareholding rose from 40% to 50%, and employment rose from 150 to 250. In another case, in which a renegotiation took place without independent advice, the community lost substantial contractual rights secured in earlier negotiations with an advisor’s support.

Several cases demonstrate the devastating cumulative effect of administrative delay in the restitution system. In one case, a claim lodged in 1998 and gazetted in 2008 was only finalised in 2024. Original claimants died before settlement. Communities endured a generation of uncertainty and foregone income.

These cases show that partnerships evolve. In some cases, early joint ventures that seemed to disadvantage communities were replaced by community-private partnerships that better suited community capacity. They also show the impact of different types of partners. Established corporate entities with strong balance sheets and global market access, and family-owned businesses with hands-on management and genuine commercial competence bring what the special-purpose vehicles that were the focus of earlier case studies (e.g. Lahiff et al. 2012) could not: real capital, real management, and real market access.

Overall, the cases show that commercial partnerships are hindered by the fragility of communal property institutions, the lack of independent transaction advice, and restrictions on using restituted land as collateral.

The case for publicly funded transaction advisory services

Although Transaction Advisory (TA) support can protect community interests, and help private partners structure viable projects, these services are not generally available. Deal sizes are too small to attract commercial advisory fees; the risk of failure is too high; community dynamics are too complex; and the pool of advisors capable of doing this work is limited. The market cannot close this structural gap.

Community-private partnership transactions typically take about 12 months to conclude and incur R1-million in professional fees. On a success-fee basis, if a deal closes, recovering R1-million requires a transaction value of roughly R33-million at 3% of the deal value. If one-third of deals close, which is more realistic for land reform projects, the break-even deal size is closer to R100-million if the cost of unsuccessful deals is to be covered by the successful ones. Land reform transactions are typically smaller than that, and when two-thirds of engagements do not generate a success fee, external funding must cover the gap.

There is a strong case for filling this gap with public funding, as transaction advice for land reform is more of a public good than a private service. Its benefits do not accrue only to the immediate parties to a deal: a well-structured partnership sustains rural employment, keeps land in productive use, and protects the state’s investment in acquiring the land. Where TA support is absent, and partnerships collapse, the costs resurface as unproductive land, unemployment, and renewed calls on the state for support, often at greater expense than the advisory cost would have been. Alternatives to public funding include private donations (which are uncertain) or no TA support at all. Thus, public funding of transaction advice is a necessary cost of advancing the state’s land reform commitment. Such publicly funded, privately provided services with appropriate accountability mechanisms are used in areas as diverse as investment promotion and infrastructure provision.

Removing barriers to raising capital

Even with sound transaction advice, access to capital remains a constraint on scaling land reform partnerships in South Africa. The Communal Property Associations Act requires Ministerial consultation and a 60%-member resolution before a CPA may mortgage its land. The indefinite and unpredictable approval process effectively rules out conventional debt finance as a capital source for community-private partnerships.

This leaves the CPA landowner dependent on its commercial partner for capital. To secure funding, the commercial partner must have sufficient resources to provide the bulk of the funding off its balance sheet, as few investors are willing to provide more than 50% of the required finance. Long development lead times and investment values that fall below the investor’s minimum thresholds ($10–15 million for international investment agencies) also limit access to finance.

The constraint on using restored land as collateral stems from a concern that foreclosure would reverse the restitution process. This risk is real, but the cost of capital starvation has been at least as substantial. Estimates range from ~50% (Cousins, 2018) to an unsubstantiated ministerial claim of 90% (Sapa, 2010). If 70% of the transferred land is unproductive, and consideration was limited to the 3.9-million hectares transferred under the Restitution programme, 2.7-million hectares may be lost to productive use. If the prohibition were removed, banks would still assess borrowers’ repayment capacity before lending. The risk of restitution being reversed through foreclosure would be less than the original policymakers feared, and far lower than the near-certain loss of productivity the current framework produces.

Conclusion

The case studies show that commercial partnerships work when independent transaction advisors support well-governed communal property institutions. Two changes would allow them to work more widely: public funding of transaction advisory services, so communities are not left to negotiate alone; and removal of the constraint on using restored land as collateral, so private capital can flow where it is needed. Commercial partnerships are not a panacea, but they are an avenue for confronting the post-settlement dilemma. The government could make this avenue more widely available by implementing the suggested changes.

Written by Brian Whittaker and Mazwi Mkhulisi, Econ3x3