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Belinda Jacobs opens proceedings

Last week we attended a viewing of and discussion on the annual budget speech given by the South African Minister of Finance, Mr Tito Mboweni. The event was hosted in Sandton by Absa Agribusiness and steered very ably by Dr Tobias Doyer. The quests would hear a panel discussion by prominent agricultural economists and role players, prior to watching the Minister’s speech on a big screen, followed by an analysis by the same.

The speech was viewed as a rather-you-than-me by many commentators as they viewed the country’s economic condition [low growth and a subsequent drop in tax collected; and a crisis in the state energy provider (Eskom) among the issues]. The Minister also had to balance what the market and rating agencies wanted against the demands of the trade unions and the government’s pro-poor constituency. He appeared with a horticultural prop, an aloe vera (a succulent plant with ornamental and medicinal value).

The speech has come and gone, along with a plethora of comment (three appropriate ones are listed at the end of this blog). The issues raised by the panel remain, and we hold them up here as a yardstick to measure what transpires during 2019 and beyond.

Dr Tobias Doyer keeps the audience part of the discussion.

 

Grow the markets

Deal with the restraints. Get growth and investment happening in agriculture. Sort out market access issues: make trade easier. When trade happens, you (government) get more taxes. Export-led growth is the way to go. It makes for a healthy trade balance and creates jobs.

Biosecurity

Dr Tinashe Kapuya provides his analysis. To his left is Dr Langa Simela.

This is a trade issue. The challenge here is to increase the capacity of staff responsible for biosecurity and the efficacy of vaccines. The importance of zoning and compartmentalisation means that the integrity of agricultural operations is maintained.

Small business development

Dr Tinashe Kapuya catches an audience’s attention by saying that the USA supports failures. And then makes his point. Quoting statistics that show the high percentage of new businesses that fail, he says that to keep going despite failure increases the chance of success; that the door must not be closed.

For small holder /new farmers, security of tenure and developmental finance are crucial.

Research and development

The 4th industrial revolution (4IR) requires a science-based education. Education in the country — particularly basic education — needs upgrading, attention and resources.

The country will succeed in the 4IR if the private sector is included and assisted. A member in the audience motivated strongly for creating a platform for overseas-based and other businesses to do research and development here.

Dr John Purchase (Agbiz) and Mr Wessel Lemmer (Absa)

Energy

Energy is probably the single biggest issue facing economic growth. Changing the regulatory environment will allow changes in Eskom. This does not equate to privatisation (anathema to the unions) but will make it easier for private providers of energy to supply the grid. These providers have already created jobs and massive investment.

Social stability

Agriculture makes social stability possible but also depends on the same social stability. Maintaining the funding of education, health and grants keeps the crisis of poverty and inequality in check, but must be balanced with growth.

Water

There was not much on this at all in the budget speech — unless you take into account capacity building measures for local government (who are perhaps the biggest threat to water quality in the country)! Irrigation agriculture, as the country’s largest user of water resources, recognises that more must be done with less. The quality of water though is as important as water demand management.

 

Some budget commentary:

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