The lush, green hills seems to roll endlessly in every direction, making this some of the finest agricultural land in southern Africa. Some would say in South Africa.

That is the problem. For this is officially the Republic of Transkei, and depending on whom you talk to, it is or is not still part of South Africa, it does or does not exist, it can or cannot succeed and it should or should not survive.

What makes Transkei a controversy is that it is an integral part of South Africa's segregationist policy of separate development for blacks.

The Pretoria government insists that blacks are not just blacks, but members of tribal groups, and has assigned each tribal group to one of so-called 11 homelands.

Since the homeland policy is considered part and parcel of apartheid, not one country save South Africa has recognized Transkei's existence since Oct. 26, 1977, when it became the first homeland to get independence.

When Bophuthatswana becomes the second next month, it faces the same treatment.

THE PROBLEMS with South Africa's homeland policy is twofold. Apart from segregation of races, it divides the land heavily in favor of the white minority. The blacks, who comprise roughly four-fifths of the total population, would be given less than one-fifth of the land.

The other even more important problem, is that because of this distribution the black enclaves are unlikely ever to be able to feed their population, thus forcing the blacks to seek employment in urban white South Africa for decades to come.

The policy seemed designed to maintain large pools of cheap black labor for the white minority government without assuming social costs for the blacks and presumably avoiding social unrest. In effect, the policy allows the South African government to defend its deprivation of political rights for blacks within the republic since such rights are available to them within the homelands.

In Transkei's defense, it is the one place on what is or is not South African soil where the apartheid laws have been repealed. Blacks, whites, Indians and so-called colored (mixed race) use the same restaurants, rest rooms and hotels.

"At least I feel like a human being there," says Timothy Ndlovu, a young Transkein who works in Johannesburg. "I don't have to walk four blocks looking for a place to eat or go to the toilet."

Ashton Dunjwa, an official in the Ministry of Planning and Finance, lived in Cape Town for 25 years, where he was forbidden by law to buy land because he was black.

"It's miserable to live under those conditions," he says, "where you can't buy a house even if you have the money. Where yo can't sent your children because they can't go to a white school."

THERE ARE other points in Transkei's favor. In the last year and a half, more than a score of detainees have died in South African jails allegedly because of questionable police conduct. The chief of Transkei's national police, meanwhile, was convicted in an Umtata court of beating up a youth at a soccer match.

Critics notes that while the Transkeian government of Prime Minister Kaiser Matanzima repealed apartheid, it kept on the books the banning and detention laws that have caused such swirling international controversy over South Africa.

Consequently, a substantial portion of Matanzima's opposition is either in exile or in jail. In fact, Transkei may even have outdone Pretoria in establishing iron-fisted controls, since speaking out against the country can now theoratically bring the death penalty.

Further, while South Africa officially explains that Transkei is the homeland of 4 million Xhosa-speaking tribesmen, there are actually 13 ethnic groups, including whites. Although most speak Xhosa as a common language, Xhosa tribesmen actually make up the smallest group.

In fact, Transkei seems to be more of a linguistic grouping than a tribal one, and in rural southern Africa, where clannishness if not tribalism is still significant, a rivalry between groups could have damaging political side effects.

Further, of the 4 million blacks assigned by South Africa to Transkei, only 2 million currently live there, with the rest scattered about South Africa, mostly in urban areas.

MANY OF those have never been to Transkei, or have been so urbanized that they have no desire to return.

Many of those have never been to Transkei or have been so urbanized that they have no desire to return.

Even in the shops and restaurants of Umtata, where the clicking and popping sounds of the Xhosa language sometimes make a foreigner feel he is in the middle of a ping pong tournament, there is skepticism about Transkei.

"I am South African, not from Transkei," says Sandy, a truck driver. "I am not going to have my country taken away from me and be forced into some damn homeland. These politicians are all in it just for themselves."

For every Sandy, however, there seems to be a supporter of Tramskei.

"We are under a stigma," says a young lawyer. "Just because we got our independence from South Africa. If we had been like Lesotho or Swaziland and gotten it from the British, then everybody would be jumpimg to open embassies here."

Defenders of Transkei like to cite the historical similarities between their country and Lesotho and Swaziland, the two landlocked kingdoms that were kept from South African control by the British.

If the historical analogy is going to be strict, however, it is necessary to note that it had an independent Transkei had been granted all the land it traditionally covered, it would be half again as big as it is now. Instead, because of the way South Africa laid out the map, Transkei is actually three unconnected chunks of land separated by areas of white South Africa.

Inevitably, Transkei officials are bitter if not disappointed over the treatment they get from other ccountries.

"We are in a situation where South Africa is indicted and comvicted," says T. T. Letlaka, the finance minister.