WILL AGRIPARKS LIVE TO SEE THE LIGHT OF DAY?

2015-05-11 09:36

The adoption of Agriparks model by the fifth democratic administration of the ANC government demonstrates the original interest of pursuing neo-Keynesian economic system. With the current 2% contribution to the country's total GDP, agriculture may not appear to be a critical sector by economic ranking, yet it plays a pivotal role in addressing the country's food security challenge and presents new opportunity to become a commercial leader in establishing vibrant agroprocessing hubs to feed Africa's billion population in the coming years. The biggest worry that anyone could raise is the fact that South Africa did not rise to the occasion when the opportunity availed itself in leading Africa's trading blocs including ECOWAS, SADC and COMESA into a long-awaited future where African states are viewed as new emerging industrial giants of the South. Even before the Xenophobic onslaught, South Africa was increasingly viewed as the new super-power of Sub-Sahara. The Euphoria of African Renaissance and New Partnership for Africa's Development (NEPAD) has not yielded its original dream of building a united continent fighting economic austerity measures and structural adjustments imposed by the IMF and World Bank.

Some could argue that the adoption of Agriparks predicates the Reconstruction and Development theory that was pursued by President Nelson Mandela albeit with much emphasis, then, placed on building the country's infrastructure especially housing. When GEAR was finally adopted during the Mbeki administration, amidst protracted debate between labour and business, a new hope towards global capitalism was embraced. Although GEAR succeeded in raising high expectation of attaining 5% GDP growth, its capital intensive nature could not respond to the country's outcry of eradicating poverty and unemployment. Suffice to mention that the awaited Foreign Direct Investment to spur growth did not follow suit.

This has justified why South African government had to look within its limited resources to stimulate growth in earmarked labour intensive industries. There is abundance of plausible grounds why some critics may hold reservations to the announcement of 27 Agriparks by President Zuma during the 2015 SONA. First of all, the selected sites are 27 poorest districts-- notwithstanding their indisputable potential in developing world class agricultural sector. By selecting locations where market imperfections are high, critics suggest, could increase the chances for failure and yield limited expected results. Secondly, this is more true when government bequeathed its trust to district municipalities to run the Agriparks amidst heightened underperformance by a significant share of local municipalities in delivering basic services including water, sanitation and decent roads due to lack of critical leadership. Thirdly, compounding this challenge is the disequilibria between the role played by rural communities, black industrialists and private sector partners. The tragedy of a New Democratic dispensation is the limited role played by BEE morguls in producing new value chains in labour-intensive sectors and their proclivity to buy equity in business concerns that were built on the ingenuity of minority citizens. Their success, while commended, created more challenges to our democratic dream of building authentic industrialists. Its unintended consequences are evident in the proliferation of tendepreneurship culture--Billionaires that never hired ten people or innovated reputable brands.

To those observing with keen interest, Agriparks are not presented as viable industrial projects that are capable of transforming the country's current over-dependence on net-imported food. The principal hypothesis surrounding this argument could be that government has not yet demonstrated any value proposition behind the concept 'Agriparks'. While the plan sounds palatable, some may argue that government is offering more of the same. In advancing this position, they argue that Agriparks are not different from similar programmes government launched during the LRAD and Asgisa era. Hundreds, if not thousands, of noble agricultural projects were well funded including agroprocessing infrastructure through reputable entities including Independent Development Trust. Sadly, to the country's dismay, only few, if any, succeeded to operate in a new open market South Africa was not accustomed to, following her accession to WTO. It is for this reason that a salient question stands out: what differentiates Agriparks from the extinct agroprocessing projects pursued in the previous administrations?

On the face of the above, a more compelling business proposition, they believe, is desirable which is capable of attracting private sector capital and the country's limited technical wherewithal. Landing a blow to this debate can be a caution raised against political expediency in using Agriparks to mitigate systemic deficiencies of global capitalism or how it is implemented within developing markets, and its proclivity to foster capital intensive growth. The same argument can be raised that private capital is tendentious of downplaying government's interests and that of the poor in revitalizing agricultural sector and building world class rural industries.

A positive outlook on Agriparks

Plausible as these arguments may be, the South African government deserves to be commended for the bold approach it is taking in developing agriculture and agroprocessing sub-sectors. This is in line with its developmental state mandate where the state assumes the risk of launching industrial projects in sectors where the private sector may not immediately demonstrate interest due to market imperfection. Any government that fails to address the state of poverty, unemployment and inequality facing its people in a radical manner is prone to be a pariah state. Undoubtedly, government reckons that the industrialization of rural communities is not an option but a critical attribute of the National Development Plan.

While commending the adoption of Agriparks, emphasis should be placed on market-driven principles. Certainly, disadvantaged communities cannot remain as consumers of low quality imported goods while controlling enough arable lands to feed themselves. In fact, the extent to which South Africa succeeds in optimally utilizing the land already obtained under land restitution determines how smooth the second window of land claims could fare. As market driven initiatives, Agriparks can play vital role in empowering rural communities to become part of the value chain beyond primary production. With fair consultation, and partnership with private sector, Agriparks can become new industrial giants that are well positioned to service domestic, regional and global markets. Indeed, South Africa's per capita income and strong consumer market makes Agriparks new hope for sustainable job creation and empowerment of rural communities. The weakening rand against the dollar presents immense opportunity for businesses established around Agriparks to earn in foreign exchange.

But will Agriparks see the light of day?

The current process of government's consultations with farmers, led by minister of Rural Development, Honourable Gugile Nkwinti, is a good step in a right direction. It engenders a bottom-top approach and ensures local ownership. Beyond consultation, a more robust business proposition is required which must ensure that private sector and BEE companies or "black industrialists" are well represented. 5th administration needs strong leadership with working business model to translate Agriparks into real industrial hubs. On the contrary, critics are not overly sold to the Agripark model for a number of reasons. They argue that government has not demonstrated a successful track record in rolling out its mass based economic projects within its Rural Enterprise and Industrial Development unit. Most importantly, the concept 'Agriparks' do not have a working definition neither can its best-practice be identified so as to ensure that clear indicators and milestones are set.

As a result, this renders the concept opaque and elusive. As a caution, Agriparks can be used as Trojan horses that drive the interest of the few masquerading under the popular concepts including beneficiation. If Agriparks are to make significant impact in reversing the tide of poverty and inequality, they should be evidence-based, and to realize that, much research and feasibility studies must be done to ensure that there is a seamless flow between primary and secondary production and market uptake. Without demonstrating in-depth research to this end, the rolling out of 27 sites becomes highly ambitious and detached from acceptable business practice. This argument emerges from critical concern already raised around leadership deficit and lack of required technical wherewithal in rural districts to drive similar proposed initiatives as profitable enterprises. The ensuing political power contestations in some of the earmarked districts have made it highly impossible to secure business decisions on noble initiatives that were subjected to tedious scientific processes. A dark cloud that continues to hang around all acclaimed developmental states, notwithstanding their successful track record in delivering on the development agenda, is their democratic deficit and undermining the role of entrepreneurship. Yet it can be justified that East Asian developmental states were led by technically astute technocrats.

What can differentiate Agriparks from its predecessors is the pursuit of market-driven value proposition where communities, institution of higher learning, local industrialists and private sector could forge strategic partnership for mutual benefit. To this end, the role of government should be a facilitative one and putting in place regulatory framework while ensuring that Development Financial Institutions (DFI) are responsive. At times, DFIs are not in sink with government's development agenda nor understand the urgency of rolling out IPAP projects to which the State President Jacob Zuma demonstrated the passion to see them coming to fruition.

Exciting as the Agriparks plan could be, much capacity building will be required to transform the mind-set of rural communities and emerging farmers to espouse commercial principles upon which white Cooperative Institutions created their wealth and diversified their portfolios into highly profitable sectors including banking. Mind-set change will enable emerging farmers to look at their natural resources as the bedrock in reversing the tide of poverty. Even when that has been done, on its own, cannot translate poverty into opulence or economic affluence. To do so, South Africa must inculcate a culture of self-reliance, industriousness and building calculated risk appetite. Arguably, these are some of the distinct attributes that are evident in all progressive economies. Institutions such as Land Bank could wisely respond by saying that they've already committed significant investment in project that almost declared them insolvent. That on its own demonstrates the complexity of agricultural value chain and a need to build robust systems to monitor and track performance of agribusiness in the hands of emerging farmers.

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