What if things worked as they should?

Published: 1 October 2023

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Dr Dirk Strydom
Marketing, NAMPO and Research Coordination lead

Corné Louw
Applied Economics and Member Services lead

What would happen if everything in South Africa worked properly? Could one be grateful if all things always worked as they should? But why ask such a question in the current political and economic climate, people may wonder.

How would things look currently if South Africa (1) had sufficient power; (2) the roads and other infrastructure such as railways were maintained; (3) the regulatory environment created the perfect climate for the private sector to do business; and/or (4) the ports had sufficient capacity to realise everything that we could import and export?

On the one hand the fact that many things in South Africa are not going as they should, is positive. South African producers are often viewed as the best in the world. Because they get everything they want? Not exactly … actually the opposite is true. Local producers receive some of the least support worldwide and that is exactly what makes us strong.

Likewise with other things in the country that do not work. It creates opportunities; it makes us think differently; it gives us perseverance. Even more: it makes us grateful for the things that do work.

In the past two marketing years South Africa has exported more maize than ever in the free market despite the railways not working; strike action; looting; floods; and insufficient port capacity.

What would the situation be if everything worked? What would be possible? South Africa can and should perform better. But is this not an example of what makes South Africans as good as they are? That which causes them to keep on going, even when the lights are off? This is what gives our country hope.

In South Africa pointing out problems and finding solutions have been perfected. However, when it comes to implementation, very little happens. Recent examples include the national development plan (NDP); Operation Phakisa; the agriculture and agroprocessing masterplan (AAMP) and the poultry masterplan – to name but a few.

A few key aspects needing attention, that were highlighted in the AAMP for example, include the following:

  • Resolving ambiguities in policy and creating an investment-friendly climate.
  • Creation of enabling infrastructure.
  • Provision of extensive producer support, development financing, research and development (R&D) and extension services.
  • Ensuring food security, expanded production and job creation.
  • Enabling market expansion, market access and improving facilitation of trade (among others the registration of chemicals, effectiveness of Act No. 36 of 1947).
  • Improving local production, reducing imports and expanding agricultural processing for export.

Interestingly there have been good progress from industry’s side on a few issues with plans on the table. If an enabling environment is created for industries, many of the challenges can be rectified. The question remains, what if everything worked? In short, the answer is that if everything worked, South Africa will be more competitive in the global and free market environment. If competitiveness improves, this automatically has a positive effect on sustainability.

In agricultural economics and economics, students learn about Porter’s diamond model of national competitive advantage. This concept, developed by award-winning American professor Michael Porter, offers an in-depth look at the factors that influence the competitiveness of nations in a worldwide economic context.

The importance of institutions in this context should not be underestimated. Institutions refer to the regulation, legislation, corporate governance and overall management of a nation’s business environment. Strong institutions, promoting a fair, effective and stable environment, can encourage competitiveness by creating a positive business climate.

Therefore, institutions are crucial to support and reinforce the other factors in the Porter diamond model. A positive institutional environment can encourage the development of factor conditions, demand conditions and related industries, and it can have a favourable influence on the business strategies and culture of a nation. In short, institutions play a key role in promoting national competitiveness and the success of businesses in a global economic context. Given this background, it is important to make sure that our institution works ánd works effectively.

In the past year there has been a definite trend with the industry taking the initiative and implementing plans to improve effectiveness, but one must also take into account that there are certain areas where this is impossible. It is therefore extremely important to have a central partnership and shared vision with the authorities to try and overcome these barriers.

Just as a producer must be competitive compared with other producers – locally and internationally – it is important that an environment is created within the value chain to be competitive.