The case for increasing the flexibility of the program is also supported by evidence from KwaZulu Natal where recent research shows that land transactions outside the government program have, between 1996 and 1998, transferred more land from formerly advantaged to disadvantaged households than did government schemes (Graham and Lyne 1999)." This illustrates the economic potential of land reform - the private land purchasers are able to use the returns generated to pay off a loan and sustain their familyas well as the fact that the land reform program in its present form may be less responsive to beneficiaries' needs and desires than would be hoped.

Finally, "high revenue" projects are found to also be significantly more likely to have obtained a group loan to complement public grant resources. This suggests that many land reform beneficiaries are able to combine the land reform grant with other sources of credit.<sup>14</sup> It may illustrate the scope for private sector lenders to complement -and eventually substitute for- costly and bureaucratic efforts to "pick winners" and assess projects' viability ex ante that are currently carried out by government. Receipt of a loan is likely to indicate examination and continued outside monitoring of the project by the private sector and might, at least in the long term, offer to replace present procedures, which are often ad-hoc and bureaucratic, with more transparent, predictable, and quick approval processes.

# 5 **Conclusion and policy implications**

In contrast to most past discussions of redistributive land reform, this paper has provided empirical evidence on actual implementation. Although many of the projects are still in the early stages of implementation, the data suggest that land reform was able to target the poor. Moreover, the fact that economically successful projects reached significantly higher levels of poor people suggests that increased access to productive assets could be an important avenue for poverty reduction. Given the imnportance of developing a diverse and less subsidy-dependent rural sector, a suitably adapted land reform could play an important role in the restructuring of South Africa's rural sector.

At the same time. the limited progress under the current program suggests that much of this potential is, as of yet, Linrealized. Our analysis points towards a number of clear lessons with respect to program design, as discussed earlier. Probably the most important conclusion is to increase beneficiary awareness and participation. Doing so would include shifting from a bureaucratic and centralized approval structure specifically designed for land distribution towards a more integrated vision that takes account of other

> '3 It would be very interesting to use the sample of private land transactions for case studies to illustrate specific factors that could act as barriers to entry into the land market - and ways in which institutions and capacity building efforts may be aligned to reduce their impact.

> _14_ Even though some of these credits may have been designed to complement government programs, the private sector takes some risk and therefore performs an important monitoring function in all of them.

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