The economic rationale for agricultural regeneration and rural infrastructure investment in South Africa

Abstract

This paper informs government policy insofar as it relates to the agricultural and rural development sectors and infrastructure investment within these sectors. The paper first quantifies the role of agriculture in the South African economy. This is done within the context of, inter alia, food security, agriculture's contribution to gross domestic product (GDP), economic linkages and multipliers with respect to the agricultural sector, as well as agriculture's employment creation and external stabilisation capacity. Investment in the agricultural and rural sectors are then analysed with a view of supporting the argument that agriculture's role in the economy is sufficiently important to warrant regenerative strategies, including renewed emphasis on agricultural and rural infrastructure investment by South African policy makers. The quantification of the agricultural sector in relation to the total economy and that of agricultural and rural infrastructure investment are investigated against the backdrop of declining government support, increasing production risks due to a variety of exogenous events like climate change, and increasing dynamic trade impacts. In this paper, the authors offer both supporting arguments in terms of current economic policy and recommendations for more decisive policy measures aimed at agricultural regeneration and rural infrastructure investment.