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While the political future of South Africa remains uncertain, Agbiz’s leadership is ready to face the storm resiliently. This message was reiterated during the first day of the Agbiz Congress, held on 6 and 7 June, at Sun City.
Antois van der Westhuizen, the newly elected vice chairperson of Agbiz, said he recently spoke to a support personnel member of John Deere Financial Services (JDF), who assisted the South African JDF team in war-torn Ukraine. “It was incredible to hear her story of how they survive and find food and clothing. It is through their support structures.”
Van der Westhuizen, also the managing director of JDF, added that this same spirit of circumventing change through networks is also something that South Africa’s agricultural sector excels at. “South Africa does have a lot of challenges, but we also had problems ten years ago and yet we were able to grow despite those challenges. The collective minds in this room can weather any storm.”
Read more about the OSH Reinecke Frontrunner Award-recipient here.
Resilience and change
Francois Strydom, CEO of Senwes and Agbiz’s outgoing chairperson, underscored Van der Westhuizen’s sentiment. “Eight days ago, we voted and even now we are no longer where we were as voters. And that is what makes South Africa an amazing nation. We have a great genetic ability to move on and if a problem knocks on our door, we change it. That is why things will be okay. Of that, I am sure.”
Strydom said the one clear thing is the fact that South Africa was on an economic collision course and things needed to change urgently. “Once you realise this, the worst is behind you. However, for those who have not recognised it yet, the worst is yet to come.”
Wandile Sihlobo, Agbiz’s chief economist, acknowledged that while South Africa is awaiting clarity on the new political situation, it was clear that the policies of only two of the five biggest political parties, uMkhonto we Sizwe (MK) and Economic Freedom Fighters (EFF), would negatively impact the country’s agricultural landscape due to their positions on land reform. “Both the Inkatha Freedom Party (IFP) and the Democratic Alliance’s (DA) policies are more favourable towards agriculture. But we will have to wait and see what our political colleagues have in mind.”
Aggressive new markets sought
South Africa’s ambassador to the World Trade Organisation (WTO) in Geneva, Switzerland, Dr Mzukisi Qobo, emphasised the urgent need to aggressively open new markets in the South African agricultural sector. The traditional European export market’s potential is diminishing, making diversification crucial. Dr Qobo said currently government and the private sector are still not collaborating enough to enable the aggressive market opening that is required.
One of the issues that could hamper South Africa’s efforts is the rise in protectionism. Countries may exclude any country that is not considered an ally. “This could very well be the next cold war. In other words the stance becomes ‘If you are not with us, you are against us’,” Dr Qobo said.
An interesting development that could benefit South Africa amid challenging trading circumstances is the rise in connector countries. These countries serve as conduits between countries, such as China and the United States, that do not have friendly trade relations. “These countries, such as Mexico, are reaping the dividends by being non-aligned. They don’t make any friends or enemies,” Dr Qobo said, adding that South Africa should carefully consider its own actions. “It is important not to get caught in the crossfire between conflicts.”
Slight economic uplift
Dr David Fowkes, advisor to the governors of the South African Reserve Bank, emphasised that South Africa stands at a major inflexion point in its history, with a highly changeable economic environment.
However, the entire year so far has been tumultuous. “Initially, we thought this would be the year of big interest rate cuts, around six or seven. However, as things are unfolding, we would likely not see more than one or two cuts,” Dr Fowkes pointed out.
Several factors contribute to the persistence of sticky interest rates, including an unusually strong dollar, a difficult geopolitical environment and oil prices that remained high. “Food inflation was also terrible last year, and we were worried that the drier weather would make the trend continue. However, the last forecast was very favourable and a cause for optimism,” Dr Fowkes indicated.
In the longer term, South Africa ranks among the seven worst-performing economies in per capita growth. “We really are the underperforming kid in the class.”
However, Dr Fowkes stands amazed at how South African businesses continue to grow despite severe service delivery challenges. The agricultural sector did very well. “Agriculture has played a role in lifting the rest of the economy.”
Dr Fowkes believes that it does not require serious insight to know what needs to be done to get South Africa out of its underperforming rut. “Basic things need to be fixed. The lights need to be on, and the rails need to work. Ideally, I would also like it if South Africa could have a tighter fiscal policy, which would lead to a looser monetary policy.” – Susan Marais, AgriOrbit
