economics – Menge Media

Mitigating commercial farm Land-grabs

In his 12 October 2026 newsletter, President Ramaphosa announced that government is making approximately 2.5 million hectares of state-owned agricultural land available to black farmers, complete with title deeds. The initiative aims to address the historical imbalance in commercial agriculture, where black farmers currently account for only around 10% of production. The government also intends to support emerging farmers through mentorship, training and blended financing arrangements involving the Land Bank and commercial lenders. The broader objective is to expand agricultural production, improve food security, create employment and develop a new generation of black commercial farmers.

What interests me particularly is the transfer of title deeds, rather than merely leasing the land. While this gives emerging farmers the opportunity to build equity and access financing, it also raises important questions about what happens to that land when farmers default on their loans or decide to sell.

I genuinely hope that this initiative comes with safeguards against the sort of oligarchic land grabs we saw in Russia following the collapse of the Soviet Union. The privatisation of state assets there is a rather good example of how something intended to broaden ownership can end up concentrating wealth in the hands of a very small group of people.

Consider what happens when one of these emerging farmers needs financing. The land becomes collateral, which is a good thing, because access to capital is one of the biggest obstacles facing emerging farmers. But what happens when the farmer defaults?

If the lending institution can simply auction the property to the highest bidder, we could quite easily end up with established farmers, wealthy investors and politically connected individuals buying up land that was originally intended for redistribution.

I would argue that the transfer of these properties should come with conditions. If a farmer decides to sell, or the property is repossessed by a lending institution, the state or other qualifying farmers on the waiting list should have the first right to purchase it at a fair valuation. Perhaps a dedicated state institution, working alongside the Land Bank, could oversee this process. We need to ensure that farmers can still access finance and build equity without creating the conditions for the land to become concentrated in the hands of a few again.

Frankly, I also question the assumption that all this land should necessarily be used for large-scale commercial agriculture. Why not allocate a significant portion to smallholdings and homestead development? There is a lot to be said for giving people the opportunity to establish a home, grow some of their own food and develop small agricultural enterprises. Not everyone needs to become a commercial farmer.

I think we need to consider what we actually want to achieve through land reform. Is the objective simply to create more black commercial farmers, or should we also be looking at how land can be used to give a much larger portion of the population some degree of economic independence?

Both are worthwhile objectives, but they don’t necessarily require the same approach.

economics, philosophy, politics

Was Adam Smith a Socialist?

It is my realisation that, through reading “The Theory of Moral Sentiments,” in addition to “An Inquiry into the Nature and Causes of the Wealth of Nations” through synthesis, that Adam Smith was a Socialist.

What do I mean by Socialist? Not the American assumption of command economy. It may conform to the generally accepted definition of a system where the means of production is owned by the people. In a way, through Moral Sentiments one can see that in a society in such a perfect equilibrium the tendency will be towards a scenario where the means of production is owned by the entirety of society.
Albeit, what I mean by Socialist is the belief that the needs of society as a whole takes precedence over the needs of any particular individual. What Smith argued was that in a society that is moral, where ethical checks and balances are in place, the needs of society can be fulfilled through the individual’s pursuit of self-interest. The premises of Smith’s argument is the existence of an egalitarian society with moral checks and balances.

For many outside of Africa, and some in Africa, it is strange that Africa is predisposed to socialism in the Marxian perspective. To me this makes perfect sense for various factors, but paramount among them is the affects of colonialism.
Societies were turned into extractive vassals in the service of imperial servitude. Through colonialism the pre-existing society with its moral and ethical sentiments were disrupted to near annihilation. The end of colonial rule did not decolonise the continent. The same patterns of extraction exist and they keepo existing because there has been no mending of the moral checks and balances. How can there be ethical equilibrium, when the west has not mended or changed its unethical behaviour?

If the west wants to see an Africa that embraces Smith above Marx, it will need to make reparations and end its extractive view of Africa.

economics

Every Table Funding Model

I watched this vid from FreeThink on Youtube. The funding model is pretty inspirational. Here is why I think it can work very well.

In financing, profit is made from gathering information. Firstly gathering information about new loan candidates and secondly through monitoring borrowers. This means you need to look out for two thing: Moral Hazard and Adverse Selection. As long as you can control for those two you make buckets. Adverse Selection has to do with the fact that people who are least likely to pay-off loans being the the biggest demanders of loans making the screening process difficult. Through the foundation and this franchise system where they screen the potential franchisees in the process they described with Dorcia (existing hard working employees) you are able to control for Adverse Selection. Moral Hazard is the risk associated with actions someone takes once you have given them the loan, like making risky business moves instead of what the business loan was intended for. This is controlled for through restrictive covenants (the items in a loan agreement that you’re not allowed to do or have to do while paying off a loan) and collateral (things you can lose if you don’t honour the conditions of the loan). The franchise acts as collateral and the more work she puts into it the more valuable it becomes, making her less likely to participate in actions that can be regarded as moral hazard. The key here is that the franchise setup and processes are fairly restrictive and enables the granter of the loan monitoring capacity.

If loan providers have the confidence that they are choosing the right people and that their debtors will keep paying, loans will be available. For poor communities the problem is usually collateral. Because information gathering and monitoring is so expensive, collateral is used. This is an instrument that decreases the need for spending too much on monitoring and enforcing restrictive covenants, because the desire to protect your collateral acts as a built-in enforcer. A funding model like this, the collateral is generated by the success of the franchise.

This kind of funding is what small local banks use to do efficiently. When the banker knew the people personally, or the town was small enough that they (singular) could phone around to make sure they were avoiding adverse selection, “riskier” loans could be made. In the modern era of big banks everyone is a profile and the information gathering and approvals are done through credit scores. This means people like Dorcia, and me, are less likely to get a bank loan. Or if we do, the interest payments are prohibitively high. Foundational funding like described in the video is an excellent way to mitigate this.

economics

Crypto and the end of stability

If crypto ever replaced FIAT (without ceding some form of input on supply to monetary policy agencies) the instruments used to keep recessions from wiping out the economies of entire nations will be gone. So will the instruments that countries going through what Japan is going through now (fully industrialised country going through a population collapse) needs to keep their economy going. In favour of a crypto future, I can see a scenario where crypto was plugged into credit markets, stock exchanges, employment data and a host of other econometric data. Then it might work . However, we (economists) don’t know enough yet to make a magic algorithm. We will need maybe another century of data with various policy option being followed before this can be attempted. Plus, it leaves little space to innovate. Such a crypto will then have to be country or region differentiated, and demand that a regional/country/state/nation-state government obeys by the recommendations of the algorithm of the crypto. This will be needed to help struggling regions become more competitive and recover from recessions. The crypto will then determine and create government bonds too. Governments will only be able to spend what the crypto states. Governments will probably try to game the system. The same with certain investors. So basically, the entire economy will need to be run by an algorithm?