South Africa’s troubled economy and the country’s current fiscal position meant the government alone was unlikely to succeed in rebuilding the society and creating the jobs needed to improve the country’s standard of living, the Agricultural Business Chamber said yesterday. Picture: Henk Kruger/ANA/African News Agency
South Africa’s troubled economy and the country’s current fiscal position meant the government alone was unlikely to succeed in rebuilding the society and creating the jobs needed to improve the country’s standard of living, the Agricultural Business Chamber said yesterday. Picture: Henk Kruger/ANA/African News Agency

Challenge lies ahead to rebuild SA - Agbiz

By Given Majola Time of article published Jul 27, 2021

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South Africa’s troubled economy and the country’s current fiscal position meant the government alone was unlikely to succeed in rebuilding the society and creating the jobs needed to improve the country’s standard of living, the Agricultural Business Chamber said yesterday.

Agbiz chief economist Wandile Sihlobo said while the government would need to move quickly, not only with reform and security matters, but also reinforcing closer collaboration with businesses and other social partners, the business community could also play an important role.

“With the current fiscal constraints, the rebuilding process will likely have to be led by the private sector players as the state has limited financial muscle to do so. And this is where the challenge begins.

“For the private sector to increase investment, there needs to be quick reforms in the security cluster, providing evidence that the government is taking bold steps to ensure that a repeat of the chaos, looting and destruction of public and private economic assets is prevented going forward. Such security reforms, as well as finding and holding those responsible for the violence, will need to be done and communicated in a convincing manner in order to build confidence,” said Sihlobo.

“Overall, the recent unrest most likely has (its) political motives, which we are yet to understand fully. Still, the underlying structural challenges of high unemployment, especially in the wake of the pandemic, and inequality remain an ongoing vulnerability for the country, as Moody’s ratings agency also noted recently,” said Sihlobo.

The chamber said while there was no consensus about the motives behind the unrest and on whether these were centrally orchestrated or not, it was increasingly evident that high unemployment and inequality provided fertile socio-economic grounds for the disruptions. It added that boosting inclusive growth and job creation needed to be among the key response priorities for the country as it rebuilt KwaZulu-Natal and parts of Gauteng that were affected by the unrest.

Agbiz said the stakes were high for the agriculture and agribusinesses sector as this was a long-term investment sector. There needed to be an assurance of respect for property rights, rural crime had to be addressed and municipalities rebuilt in the small towns that serviced agricultural businesses.

The government could use its national structures of engagement with the business community in this process and also provincial ones, the chamber said.

“The agriculture and agro-processing sectors are labour-intensive and can absorb the least skilled South Africans. Notably, the provinces of KwaZulu-Natal, the Eastern Cape, and Limpopo have underutilised land ripe for expansion of primary agriculture. If such expansion would happen, it could be followed up with agro-processing to add value to the products produced and also provide further employment opportunities,” Sihlobo said.

He said that these ideas were highlighted as far back as 2012 in the National Development Plan. According to him, some were resurrected in the government's Agriculture and Agro-processing Master Plan, which they hoped would be launched in the coming months.

“Therefore, the Master Plan could in a way be viewed as a response measure to the recent disruptions and with a comprehensive view of ensuring additional growth in the sector,” he said.

Agbiz said that the organisation was yet to fully understand the impact and financial cost of the devastation from the recent incidents of unrest in KwaZulu-Natal and parts of Gauteng for the agricultural sector.

At a high level, it appeared that primary agriculture was broadly insulated from the direct damage.

“Still, the disruptions in various sugar mills, bakeries, egg businesses and milling facilities, among others, impacted primary agriculture by disrupting supply chains and slowing demand from these establishments. Small-to-medium-scale farms that directly supplied the retailers are also affected as their typical market channel vanished in a few days.”

Sihlobo said the Department of Agriculture, Land Reform and Rural Development, in collaboration with provincial departments and private-sector players, should assess the scale of this damage and devise potential response measures to sustain the agricultural sector in its robust form.

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