Compensation is a settlement 43 km north-east of Durban, on the route to Umhlali-Tongaat. The area Compensation got its name from Compensation Farm acquired by Edmund Morewood in 1849, where in 1851 he produced the first sugar cane grown in Natal that was brought from Reunion Island. The area was acquired in the 1880s by Charles Mndaweni at a public auction of Crown Land. The Zulu name for Compensation is ‘KwaVulamehlo’ which literally translated means ‘eye opener’.
The land was bought by the apartheid state during the early 1960s and first used at the beginning of 1969 for the relocation of people from black freehold areas in the Underberg/Himeville area. That year, 1 400 residents were resettled in this area from black spots (freehold areas) in the Upper Mkomazi valley. However, the land remained in the Mndaweni family until April 1970. The area was expropriated that same year but the removals occurred in 1978. A landowner from the Swamp stated that in September “Europeans from Pretoria” had come to the farm and ordered residents to move, and declared that the farm was now a white area. On 6 December 1978 the Natal Witness reported that 84 squatters had been moved to Compensation and that more would be moved as well. According to the Natal Mercury in May 1979, some of 700 people were resettled at Compensation. They were then provided with tents for six months and instructed to build their own houses.
More removals occurred in 1980 as about 87 households arrived at Compensation from a single black spot known as The Swamp in the Underberg district near Pevensey, a small siding close to Himeville, some 50km from Compensation. The Swamp was the first ‘black spot’ to be removed in a cluster of several free hold areas (black spots) in the Pevensey area. The Swamp area was founded in 1978 on Trust land in the Mpendle district, about 70km west of Pietermaritzburg.
In July 1981, more tenants were relocated to Compensation from a black spot known as Kwapitela near the Sani Pass.