Downgrading of the country's investment status

2017-04-06 15:51

The downgrade of the investment status of the country was for quite some time inevitable and expected and it will have the same impact on the agricultural industry as on any of the other industries in the primary, secondary and tertiary sectors of the economy.

It will force the country into negative economic growth with much higher unemployment, poverty and the general degeneration of the livelihoods and prosperity for all the people. The consequences will even be much worse because the government doesn’t have the knowledge and capacity to ever turn it around as long as it is trying to stay in power through its social legislation while deliberately ignores the basic economic laws and principles which is the only way to solve the many serious problems facing the country.

Economic growth is the only way these problems can be addressed but it is a tragedy that this socialist and communist government will never understand how economic growth can be created. Economic growth is created by profits and nothing else and profits are driven by two main drivers namely by, firstly, the prices of all the inputs which are used in all the industries and sectors in the economy against the prices of all the outputs that are produced, manufactured and delivered, as well as, secondly, the efficiency of the technology with which these inputs are converted into products and services.

This is how economic growth should be created instead of limiting and destroying the economy through its present social welfare and communist legislation by, amongst other things, the increasing tax burden, black economic empowerment and employment equity, labour laws and minimum wages, the tax on fuel and other indirect taxes and corruption. The same applies to the proposed revision and amendment of legislation on poverty, unemployment and inequality; creation of an equal distribution of wealth, restitution and land redistribution, security of tenure, as well as nation-building and reconciliation.

None of these legislative objectives are feasible if the economy does not show strong growth on a sustainable basis because it can in itself not create any economic growth. The chances are rather good that the possible amendments to these laws can transform South Africa into an underdeveloped country like in the rest of Africa, in which at least 85% of the inhabitants are dependent on agriculture and where poverty, hunger and general degeneration will take on much bigger dimensions which will never be restored or even reversed. It will undoubtedly harm the economy and progress of the country even further and will be in fact a further economic self-destructive process.

Fanie Brink

Independent Agriculturel Economist

082 573 5661


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