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SA’s economy ‘has turned a corner’

By Jorisna Bonthuys

Economist Dr Roelof Botha is optimistic about investment and agricultural prospects in South Africa. “South Africa’s growth rate could pick up faster than expected if the correct structural reforms are in place,” Botha said. “Economic recovery beckons if the National Development Plan is implemented,” he said.

Botha, the economic advisor to the Optimum Financial Services Group, delivered an address at the recent annual congress of the International Prune Association (IPA). The IPA was established in 1990 and is the prune industry’s trade entity that represents the interests of prune growers and packers across the globe. The event, held in Cape Town on 28-29 October 2019, was attended by approximately 50 participants from the USA, France, Argentina, Italy, Australia, Chile, and South Africa.

Botha gave an overview of South Africa’s economic and market potential given current policy directions.

Agriculture is a ‘vital sector’

The estimated output of the agricultural sector in South Africa was R100 million in 2017. “It doesn’t seem much. But if you put the value of agriculture through the whole supply chain, the total linked turnover was R1,97 trillion,” Botha explained. South Africa’s primary agricultural trade balance grew significantly in recent years. The country had an R126 billion surplus since 2013, he pointed out.

From January to June this year, South Africa exported approximately 20,7% of its agricultural goods (valued at R65,6 billion) to Europe. South Africa is also a key food exporter to countries in Southern Africa. “Agriculture is the most diversified sector in our economy,” Botha said. “It remains a vital sector to enable economic growth and job creation.” Massive population growth is underway in Sub-Saharan Africa. The continent now has 170 million more people than a decade ago. “Africans are starting to eat more fruit and more protein,” Botha highlighted. “This opens up new opportunities for investors in the value chain.”

Angola is one of the countries holding “huge investment potential” linked to the agricultural sector, he said. Mauritius, Botswana, South Africa, Namibia, and Angola are at the top of the list of countries in the region with relatively high GDP per capita growth rates.

Dealing with land reform

Botha identified the land issue as a key factor for investment and growth in the country. “The big issue is land expropriation without compensation or comprehension. It is a shortcut to poverty,” he said. “If we do the land reform thing in South Africa, we need to do it smartly. The good news is that we won’t fall off a cliff. We have the most differential economy in the world.”

There are many examples across the globe of how important policy, especially about land reform, is to a country’s economic prospects. “Policy ruined countries like Venezuela and Zimbabwe, turning them into failed states in no time,” Botha said. “Luckily, the policies of President (Cyril) Ramaphosa and his predecessor Jacob Zuma differ like night and day.”

Botha said there are certain enabling factors needed to develop food and agriculture value chains. He divides these factors into three categories: “essential”, “important” and “useful”. The “essential” enabling factors include property rights, adequate infrastructure and supportive trade policy that does not compromise productive land for agriculture. “Important” enabling factors are standards and regulations, sufficient research and development, and access to financial services. The “useful” factors consist, among others, of ease of doing business and business development services.

‘Green shoots are appearing’

South African has had serious structural constraints to growth in recent years. Botha summarised it as follows: “The recession hit us, we experienced the worse drought in known history and we lost almost a decade because (of policy instability) under Zuma’s rule. Those structural constraints are, however, now behind us.”

Botha said the tide is turning in the economy. “We are seeing green shoots appearing.” More tourists have, for instance, started to visit the country again. South Africa’s imports and exports are also increasing. “Things are happening in this economy,” Botha said. “It is difficult not to be optimistic about South Africa at the moment.”

He predicted that South Africa’s economic growth will increase to 2,2% next year, saying the “Ramaphasa effect” is already improving the country’s investment prospects. Botha concluded: “The agricultural sector is a crucial job creator to ensure growth and job creation. We need to invest heavily in this sector.”

Caption: Ceres Grower Raymond Koopstad (pictured here with Maggie Jantjies) from La Vouere, is an example of ‘agriculture creating economic growth and jobs’. Koopstad recently planted an additional 17.8 hectares of nectarine varieties.

Lees ook: Landbou kan Afrika ekonomie omvorm deur Joylene van Wyk op

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