A shortage of skills in South Africa’s smaller municipalities threatens to compromise operations maintenance and may pose a credit challenge. This is according to the credit rating agency Moody’s Investor Service, which studied many of the smaller, more rural municipalities.
It found skills shortages in nearly every department of every municipality. Speaking about municipality in Limpopo, the agency said, “Skills shortages are prevalent in almost all operating departments including financial management and technical capabilities, which could hamper the infrastructural development of the city.” heo de Jager, head of Agri SA’s land affairs committee, said that while organised agriculture in Lephalale and Musina had received “excellent feedback” on property rates negotiations, much of this work was done by external consultants. “There are definite capacity shortages, both in terms of finance and human resources,” said De Jager. “I just think that local counsellors don’t know how to negotiate with farmers because of low self-confidence.”
He said that service and interaction with residents in Hoedspruit is non-existent, while policing and security issues in the province are more successfully dealt with by private security companies than by the police. Despite this, organised agriculture had a lot of hope for the new leadership of the country following next year’s election, but constructive interaction was desperately needed. Attempts to get a comment from the South African Local Government Association, which is mandated to assist in the transformation of local government with a focus on developmental service delivery, failed by the time of going to print. – David Steynberg
RPO defends the 40% tariff tooth and nail
A call for structural reform on the 40% import tariff on red meat has been raised by Harvard Group panellist and University of Cape Town economics professor Lawrence Edwards. reasury commissioned the Group to find ways of promoting economic growth. The group suggested an export-led growth strategy. Prof Edwards said that based on studies by the group, 8% of poor people’s expenditure is eaten up by tariffs that result in certain products being more costly than they need to be. “From a poverty perspective we should consider the rationale of these tariffs,” said Prof Edwards. “We’re not against the policy of tariffs, but they should be the exception to the rule.
There is a need to simplify the way they are set and to reduce our dependence on imports.” But Gerhard Schutte, manager of the Red Meat Producers’ Organisation (RPO), doesn’t think the scrapping of import tariffs would afford consumers any extra breathing space. Instead it would hurt the red meat sector.
“The average EU farmer gets a government subsidy of over 40%, or up to 70%,” said Schutte. “SA’s import tariff is not so much protection as levelling the playing field. In some countries without a tariff very little is invested into the livestock sector because of cheap imports.
That hurts the sector, while making very little difference to consumers.” Minister of trade and industry Mandisi Mpahlwa’s industrial policy approach, which aims to protect strategic sectors to drive manufacturing growth, has been criticised by the Harvard Group for obstructing export-led growth. he group’s review points out that consumers end up paying up to R2 million for each job protected to maintain high import tariffs in the manufacturing sector, while in the food sector, it costs R12,5 million per job.
“That’s on the processing and industrial side and doesn’t include farmers,” said Prof Edwards. S chutte said the emerging sector will be hardest hit if tariffs are dropped or reduced. “Some 40% of livestock belongs to emerging producers who are necessary for government to meet its poverty alleviation targets,” he said. “red meat industry even has a statutory levy to encourage and increase production in the emerging sector. Both business and technical support are covered.” But it seems producers are not to blame for the high price of red meat.
According to RPO figures the producer price of lamb between the start of 2007 and the end of February 2008 dropped by 3,8% (R30,21 to R29,05), while the retail price for lamb chops increased by 12,65% (R64,07 to R72,18). “While the price farmers get for their product is by no means below the world average, input costs have increased exponentially in the past year,” said Schutte.
At the recent Northern Cape RPO congress in Upington, Mohammed Karaan of the Agricultural Business Chamber and the University of Stellenbosch said the reduction in the import tariffs wouldn’t be marginal and farmers should not be surprised if they drop to single-digit figures. – David Steynberg and Annelie Coleman