Address by Dr Zweli Mkhize, Premier of the province of KwaZulu-Natal, during the Agri Business Summit, One on One Conference Centre
31 Aug 2010
Master of ceremonies
Councillor Obed Mlaba, Mayor of eThekwini municipality
Ms Lydia Johnson, MEC for Agriculture, Environmental Affairs and Rural Development
Hubert Danso, Vice Chairman and Managing Director, Africa investor
Dr Iona Stewart, President, Royal Agriculture Society
Ladies and gentlemen
Allow me to extend a warm welcome to all the delegates and participants from the different parts of our country and from different parts of the globe to this Africa investor's Agri Business Investment Summit. We value your presence this morning.
I am delighted to be part of this historical event which has given us the opportunity to showcase our agricultural sector.
I am sure we will all appreciate the fact that the art of marketing is rapidly becoming complex, with the advent of information technology allowing broader reach of potential clients across the world through internet and e-mails.
However, while acknowledging the significance of the "information highway" in the advancement of a modern enterprise, some conventional marketing instruments are still relevant than ever before.
The concept of summits, exhibitions or trade fairs will continue to be an integral part of the provincial government marketing strategy. These are most interactive platforms of communicating investment packages to potential investors and customers.
As government we are able to speak directly with potential investors on the advantages of investing in the province. This personal or human interaction helps reduce the levels of doubts about the qualities and efficacies of a market offering, confirming the old adage of "seeing is believing".
Master of ceremonies, the breakaway sessions have been structured to ensure that after this summit, delegates will have a clear picture of salient features of the provincial agricultural sector. More importantly, we hope to draw new interests in business and capital to this sector throughout the province.
Agriculture is the sector which presents enormous opportunities for investments. This government has therefore put in place an ambitious plan to use this sector to stimulate foreign direct investment.
We are fully aware of the fact that global trade is undergoing a significant transformation and that there is an opportunity for the developing nations such as ours to utilize this opportunity to our advantage.
The World Bank report entitled World Development Indicators of 2003 suggests that globalisation is giving an opportunity to emerging markets to integrate their economies and their societies with the modern world.
Notable, globalisation means rapid growth and poverty reduction in emerging countries such India and China. The two countries were poor 20 years back. But during the period 1990 to 1999, 125 million people were moved out of poverty because of globalisation.
Highlighting the consequences of globalisation a Goldman Sachs study: "Dreaming With BRICS: The Path to 2050" reports that the BRICS economies (Brazil, Russia, India and China) together could be larger than the G8 in dollar terms in less than 40 years from now.
China has been growing at the rate around nine percent annually, consistently for more than a decade now and doubled its gross domestic product (GDP) in the last six years. As the provincial government we are learning from these countries.
We have realised that these countries have grown at a higher rate because they are benefiting from foreign direct investment while others have not been able to attract as much foreign direct investment. China gets 60 billion dollars foreign direct investment annually.
At a time when the world economy was facing the worst credit crunch in several decades, India attracted $2.7 billion foreign direct investment in January 2009, up 58.8 percent from two years ago. India still remains a favourite destination for cross-border investments.
Quite interestingly, both countries have strong agriculture sectors which provide job opportunities to millions of people.
Only 15 percent of the total land available in China can be cultivated but agriculture employs over 300 million farmers and the country ranks first in worldwide farm output, primarily producing rice, wheat, potatoes, sorghum, peanuts, tea, millet, oilseed, pork and fish. The available land is divided into nearly 200 million household and at an average everybody has nearly 1.6 acres of land in their part.
Ladies and gentlemen, it is for these reasons that when the current government term of office started, we unveiled an agrarian reform plan which seeks to use agriculture as the platform from which to drive socio-economic development.
The province has a total of 6.5 million hectares of land for farming purposes for which 82 percent is suitable for extensive livestock production.
There is an unrealised potential in agriculture in the province to the tune of 366 percent of present production. The demand for agricultural products world-wide creates investment opportunities.
We have set the ambitious target of stimulating increased investments into the agricultural sector and increase its contribution to the gross domestic product above the current level of 4.7 percent to double digits.
Through an integrated programme involving departments in all spheres of government, we are focusing on subsistence farmers in urban and rural settings. Programmes have been created for commercial agricultural operations involving larger areas of communal land.
We have also set up monitoring mechanisms to ensure that we attend to state land on lease and farms that were acquired through land restitution.
What is encouraging is that in this province we see emerging farmers from disadvantaged communities working in partnership with successful commercial farmers. This approach will ensure the future prosperity of the agriculture industry in the province.
Master of ceremonies, as government we believe that for poverty to be eradicated, we need a thriving agricultural sector, which is mainly based on productivity, competitiveness, profitability and job creation.
Critically, the provincial government is serious about forming partnerships with farmer organizations and other stakeholders. In this regard risk sharing agreements have been signed with financial institutions to ensure that emerging small scale farmers are not excluded owing to the issue of collateral.
Over the years, the provincial government, through Economic Development Department signed memoranda of understanding (MOUs) with a number of financial institutions such as Nedbank, ABSA and Standard Bank.
These banks together with the Industrial Development Corporation, Development Bank of Southern Africa, First National Bank and others have been participating in a funding forum coordinated through the Gijima KwaZulu-Natal local economic development program.
A special purpose vehicle, known as the Agribusiness Development Agency (ADA) which we established has proved very useful. The agency assists the emerging farmers with training.
I wish to emphasise that we still need to attract more private sector investments into agriculture. I am very encouraged because the issue of private sector investment is one of the topics to come under discussion during this summit.
Why should you consider investing in agriculture in KwaZulu-Natal province?
This province caters for every type of agricultural activity on 6.5 million hectares of land. KwaZulu-Natal is South Africa's best watered province, has a larger area of high quality agricultural land than any other province, and is the national leader in several agricultural products.
The midlands area between Pietermaritzburg and the Drakensberg is the heart of this high quality agricultural area with a concentration of vegetable, dairy and stock farms.
The KwaZulu-Natal coastal belt yields sugar cane, wood, oranges, bananas, mangoes and other tropical fruit. Forestry in the areas around Vryheid, Eshowe, Richmond, Harding and Ngome presents good return on investments.
KwaZulu-Natal offers plenty of opportunities in a range of products including herbs and spices, medicinal plants, nuts, fruits and vegetables and aromatic plants for essential oil production.
Sugar and forestry are the dominant sectors. The sugar industry has played an important role in economic transformation. The initiative to broaden the base of black small growers and the ownership of certain mills is remarkable.
There are currently well over 40 000 small growers. The collaboration between established sugarcane growers and small growers have given meaning to governments policies on promoting economic growth, empowering black people, enhancing skills and capacities of our people and ensuring that the land reform process is successful.
The province has approximately 20 percent of South Africa's cattle. Beef are mainly reared in the Highveld and Midlands areas, with dairy production being undertaken in the Midlands and South.
The abundance of antelope and a variety of wild games creates huge prospects for mixed farming and agri tourism especially in lower rainfall acacia veld.
Some 18 percent of the country's milk output is produced between Kokstad, Matatiele, the Underberg, Wintertorn, Mooi River, Howick and Cato Ridge. The midlands are also home to some of the country's finest racehorse stud farms. The area around Camperdown is one of the country's most important areas for pig farming.
Sheep are also found in these parts Northern and Southern parts of the province. Wool and mutton sheep are both reared. As I speak master of ceremonies, there are just too many countries that have asked KwaZulu-Natal to supply them with fresh agricultural products. The Dube Trade Port which is linked to the King Shaka International Airport has opened up opportunities and access to the international markets.
The agricultural zone at the port is a specialist growing area for exporters of high yield, time sensitive produce by airfreight. Facilities for storage, handling and processing have been built to prepare, process and package products to an export standard.
In conclusion, ladies and gentlemen, I must say that sheer enthusiasm shown by all participants is a clear vote of confidence in what we do as a province, creating an environment conducive for real economic growth and empowerment of our people.
Future growth is linked to investments and specifically foreign direct investments. Investments assist in bringing in new technologies. New technologies offer not only "catch-up" potential but also "leapfrogging" possibilities. Also, new science offers better prospects across both productive and service sectors.
Future growth will also need to be environmentally sustainable. Improved management of water and other natural resources is required.
The climatic change appears to be the biggest threat to human development and it is the defining challenge for the 21st century. Climatologists and international experts have warned that the world is drifting towards a "tipping point".
There are fears that this could leave hundreds of millions of people in poorer countries facing malnutrition, water scarcity, ecological threats, and a loss of livelihoods.
Already we have seen in this province a breakdown of agricultural systems as a result floods and runway veld fires which were exacerbated by an increased exposure to drought.
We have been warned that here in Africa, rising temperatures, and more erratic rainfall, could leave up to 600 million more people facing malnutrition.
Studies of human development point out that climate shocks such as droughts, floods and storms, which will become more frequent and intense with climate change, are already among the most powerful drivers of poverty and inequality and global warming will strengthen the impacts.
This summit has also given us the platform to share experiences, knowledge and information on how to preserve the environment for future generations. With these words ladies and gentlemen, once again on behalf of our provincial government, I wish to close by expressing our sincere gratitude for your support of this important summit.
Let’s build a better future together!
Issued by: KwaZulu-Natal Office of the Premier
31 Aug 2010
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