Understanding The issues Impacting The State Of Our Provincial Economy
KIMBERLEY – For several years now, the South African economy has struggled to maintain economic growth rates high enough to alleviate the high levels of unemployment that blight our society. In a country with high population growth rates like ours, one of the consequences of this is that per capita Gross Domestic Product (GDP) growth can, and has turned negative, implying that we are regressing as a nation. Sadly, persistent high levels of unemployment and increased dependency on social grants and credit in the absence of jobs has condemned more and more South Africans to a life of poverty. The situation is made worse by rising public debt, credit rating downgrades, a net outflow of foreign investment and the recent erosion of the financial sustainability of a number of key state-owned enterprises. All of these factors have eaten away at business and investor confidence further undermining prospects for much-needed growth. Closer to home, the Northern Cape economy continues to face serious challenges and the province continues to contribute the least of all nine provinces to national economy. The province remains heavily dependent on the exploitation of its natural resource endowments, particularly in mining and agriculture and its vulnerability to mineral commodity price shocks has in recent years clearly illustrated the danger of dependency on primary mineral extraction. Similarly, persistent drought and the growing impact of climate change together with a lack of transformation and empowerment have constrained growth in agriculture. Unfortunately, in the decades since minerals were first exploited on an industrial scale and since agriculture became the major contributor that it has, very little has been done to stimulate growth in other economic sectors and little progress has been made to diversify the provincial economy. But even against this backdrop all is not doom and gloom! While public sector decision-makers, private sector investors, labour and civil society certainly face numerous challenges if they are to succeed collectively in boosting economic growth in the province, demand for our mineral and agricultural output is buoyant in key export markets. Furthermore, business confidence and investor sentiment appears set to improve following recent political developments and the greater policy certainty and political stability that these may bring. Through a series of feature articles and contributor columns, the Solomon Star intends to elaborate on what some of those challenges are and what strategies might be needed to overcome them. Stimulating robust debate on key issues that confront planners, investors, labour and civil society alike is therefore high on our agenda. So too is explaining to the “non-economists” amongst our readership some basic economic concepts in our quest to improve economic literacy amongst a large part of our target audience. In so doing we believe that we can contribute to empowering those stakeholders whose very livelihood depends on the state of our provincial economy to better understand and participate more meaningfully in the debates and dialogues that will shape its future growth and development trajectory. So you can look forward to regular articles that pose questions about just what the economic impact of mining is, on the national fiscus, on the mining companies bottom line, but especially on the host communities where mines are located. Look out for an article on that old bugbear, the clamour for the “beneficiation” of primary mineral and agricultural output locally. We will devote a lot of attention to agriculture seen by many as the backbone of many a local economy in the province. Look out for articles that pose questions about why agricultural output amongst black farmers and land reform beneficiaries all too often remains terribly constrained. Or why is transformation of the agricultural sector so slow despite the policy imperatives for change. Look out for an article on agricultural water and why, in a water-scarce province like ours some rights holders don’t use their water allocation while others use more than that to which they are entitled with impunity. Forthcoming articles will also consider why so little progress has been made in stimulating local manufacturing especially in the input supply industries to the mining and agricultural sectors. We will contemplate how the mines met Mining Charter targets in respect of affirmative procurement but yet so little of what they consume is manufactured here in the province? Look out for articles on tourism, often cited as a panacea for the lack of non-mining and non-agricultural economic growth opportunities. Is this the new growth sector some say it is or is its potential impact limited by the very nature of many of our tourism products? Our approach will, at times, be unapologetically provocative but only as a means to stimulating debate amongst stakeholders. We may ask uncomfortable questions about a range of subjects such as the National Development Plan, the Provincial Growth and Development Strategy, planning for post-mining substitution economic activities, the state of our economic infrastructure, the efficacy of government’s development agencies and so on. We could go on, but we think readers will get a sense of what our coverage of developments in the provincial economy will be and what the issues are that have to be faced head-on if that economy is to be placed on a positive growth trajectory. You are urged to look out for feature articles and columns penned by selected contributors on matters of the economy from our launch edition onwards.