Protocol
We stand here before this august gathering with a deep sense of honour to have been accorded a chance to share our personal reflections on this all important and noble
agenda of the economic significance of the sugar industry in South Africa.
This gathering to which we are privileged to be witnesses today, is one of the glaring
manifestations of our renewed and invigorated collective commitment as the people of
KwaZulu-Natal to refocus our energies towards achieving our common objective of an
economically successful province.
In view of the above, we stand before you, ladies and gentlemen, not as a tutor on
economic development dialogue, but rather, mere policy makers with a heart to see the
realisation of KwaZulu-Natal economic prosperity equally shared by our people.
We stand before you, not with an intention to prescribe a course of action for this
Indaba, but as fellow South Africans driven by a national calling to share our thoughts
with the revered delegates and in this way, make our contributions towards our
collective efforts to turnaround the sugar industry and maintain our common dignity and
pride as a province and a people in the global community of nations. Our common goal
in this regard is to create an economy that creates opportunities for us all and to make
tourism to work for us all.
While most of us gathered here might be conversant with the significance of the sugar
industry in this province and South Africa in general, allow me, Ladies and Gentlemen,
to start by recapping on the economic intricacies of this indispensable sector.
Programme Director, South Africa is one of the world’s largest producers of sugar. The
country produces an estimated R22 million tonnes of sugar per annum. The South
African sugar industry exports more than 50% of its sugar production, and is generally
amongst the top ten sugar exporters in the world. Raw sugar cane exports are
predominantly to the Far East and Middle East refineries.
The industry competes directly with Brazil, Thailand, Australia and Guatemala for raw sugar markets and with refineries in the EU. The bulk of the sugar crop is cultivated in KwaZulu-Natal. Fifty percent (50%) of the 2.5 million tons of sugar produced in South Africa per season is marketed in the Southern African Customs Union (SACU) which comprises of South Africa, Swaziland, Lesotho, Botswana and Namibia.
Ladies and gentlemen, South Africa cannot continue to be an exporter of raw materials
and importer of processed manufactured products. The KwaZulu-Natal province has an
entrenched dominant position in the exports for raw sugar followed by Gauteng and
Mpumalanga. This phenomenon which has been going on since the arrival of our
colonial masters must come to end.
Programme Director, the implication of exporting unprocessed commodities is
tantamount to the exportation of jobs to the international community. This further
exacerbates the unemployment quagmire facing our economy. But more importantly it
speaks to one of the biggest structural challenges facing our continent – the fact that for
far too long Africa has been a purveyor of raw material which is beneficiated elsewhere
and sold back to us at an exorbitant price.
As government we are prioritising value addition initiatives in most of our sectors.
Overreliance on unprocessed commodity exports exposes our economy to external
vagaries such as currency appreciation, oil price shocks and other socio-political
factors.
Programme Director, we have already learnt important lessons from the recent global
financial turbulence, where a small turmoil in the US economy affected global economy.
As South Africa, we were not immune to this economic havoc. However, countries such
as China and India, which have broad based export baskets, escaped the global economic recession with little bruises on their economies.
Programme director, the revised Industrial Action Programme (IPAP2) makes reference
to agro-processing as an area in which business opportunities and jobs can be
unleashed. By virtue of producing the bulk of the sugar in the country, and inferring from
the statistics that over 50% of the sugar is exported, the provincial government in
collaboration with the business community must find ways of beneficiating sugar. It is
our hope that this Indaba will further deliberate on ways of improving beneficiation in the
sugar industry.
Ladies and gentlemen, the sugar industry has immense economic benefits ranging from
an observable contribution to our economy, it generates foreign exchange earningscontributes an estimated average of R2 billion to the country’s foreign exchange
earnings on an annual basis, creates employment opportunities through linkages with
major suppliers, support industries and customers.
In terms of its contribution to national gross domestic product (GDP), the sugar industry
constitutes between 0.5% and 0.7% and accounts for 0.9% of total merchandise exports
by value, 0.5% of total income tax, and 0.3% of salaries and wages. With respect to
employment, the industry contributes an estimated 85,000 direct jobs and a total of
350 000 direct and indirect employment.
The employment generated in the industry stems directly from production and
processing of sugar which further trickles down to numerous support industries in
sectors such as fertilizer, fuel, chemical, transport, food and services. It is for, among others, these reasons that we hold the conviction that the sugar industry
can play an important role towards the attainment of government’s employment targets
by 2020, given the industry’s labour intensiveness. We encourage our industry role
players to expand their operations in support of this vision.
Programme Director, these figures may sound insignificant but the sector has an
overwhelming contribution to the livelihoods of our people. There are approximately one million people dependent on the sugar industry in South Africa. The sector plays an
equally important role in rural areas where sugar is the only viable economic activity.
In the same breath, the government is cognisant of the many challenges bedevilling the
sugar industry in South Africa. In recent times, the introduction of the Economic
Partnership Agreements (EPAs) between African Caribbean and Pacific (ACP) and the
European Union (EU) entailed a steep reduction in the price of sugar our industries
received from the EU market. The impact of the price knock has had serious economic
ramifications to our producers, more so, our small micro medium enterprises (SMMEs)
and cooperatives.
We are also conscious of the challenges emanating from the land tenure system in
South Africa. Through the national Department Rural Development and Land Reform,
the government is committed to finding a permanent solution to this challenge.
Government is also aware of the freight difficulties facing the industry. As government
we will continue to invest in infrastructure, particularly revitalising the railway network
and easing congestion at our ports.
Programme Director, South Africa is arguably regarded as a high cost producer of sugar
despite being a relatively industrialised economy in the region. This could be attributed
to a host of reasons amongst which include monopolistic tendencies especially in
provision of fertilisers and other key inputs. The government through the Competition
authorities will continue to monitor and enforce good industry behaviour. This in turn is
envisaged to translate into a to highly competitive chemicals sector which will benefit
the agricultural sector in general.
Despite the unfriendly vagaries of some of these intractable challenges, the sugar
industry continues to be a force behind the agriculture sector in KZN, South Africa and
the region.
Programme Director, the government has over the years promoted cooperatives and
Small, micro and medium enterprises (SMMEs). Our endeavours in this direction were
premised on two major developmental objectives.
Firstly, as government we reckon the proliferation of SMMEs as an engine through
which the gap between the formal and informal economies can be realised. Secondly, the promotion and development of SMMEs is critical to our commitment in
the war against poverty and unemployment.
Therefore, this Indaba could not have come at a more opportune time. The sugar industry is dominated by a few large players both in the upstream and downstream value chains. As government, we would like to reaffirm our commitment to working with the South Africa Sugar Association to escalate the participation of SMMEs in the industry. In this regard, the government will foster Public Private Partnerships (PPPs) in skills transfer and development.
In our quest to ensure broad based participation by all stakeholders in the sugar
industry, the government recognises the role played by women. Women participation in
the sector will present enormous opportunities and strengthen them economically and
politically. As they grow economically, they are also able to feed and take care of our
families.
In light of the New Growth Path (NGP) and pressure from the international community to
cut down on the carbon foot print, the KZN provincial government in collaboration with
SASA must think of ways to exploit and pursue business options in the area of the
green economy. We believe that we can take our cue from Brazil, the world’s first
producer of sustainable bio-fuels from ethanol, derived from sugar. In the region,
Zimbabwe also produces ethanol that is blended with petroleum.
Bio-fuels are becoming an increasingly important source of energy globally. This is mainly due to the realisation that emission gas from fossil fuels lead to environmental pressure and other related ills. Finding ways of utilising sugar cane bi-products towards the production of bio-fuels is, therefore, germane to the advancement of economic development in the province.
Programme Director, poverty is rampant in rural areas. Government considers the sugar
industry association a key partner to advance rural economic development in KwaZulu-
Natal and other parts of the country. Rural economic development is one of the key
priorities of government which has been identified in major policy pronouncements as
way to eradicate the twin economic woes of poverty and inequality.
The role played by South African sugar association in promoting rural economic
development is appreciated by government. These initiatives are inadvertently or by
design, on course in contributing to the dream of both spatial economic and rural
development.
As government we will continue to work with the sugar industry association to advance
the economic fortunes of our province. The government endeavours to escalate the
level of infrastructural development and promoting a conducive environment to the
growth of the sugar industry in South Africa. Of prime significance is revitalising railway
network in the province, expanding the port of Durban and upgrading road
infrastructure. We encourage the business community to take advantage of the
opportunities bequeathed by the Dube Trade Port and the new King Shaka International
Airport.
Before we conclude we wish to touch on an issue that we think is of paramount
importance to the industry. As all of us know, countries which are under the banner of
the Southern African Development Community have all agreed that by 2015 we will
have a common market and that by 2018 we will also have a single currency as part of
efforts at regional economic integration. As all of us know, this is aimed at creating one
strong regional economic block which has sectors that can compete on an equal footing
in the rough and tumble world of global economy.
Now we all know that South Africa, and in particular KwaZulu-Natal, is one of the
biggest players in this industry. But more importantly we also know that there are many
countries in SADC region which produce sugar. This means as sugar producers from
this country we must begin to talk about this with a view to looking at how are we going
to position ourselves when the tide of economic change sweep through the SADC
region. This is a matter that we think this gathering should also seize itself with. In our
humble view, it is a matter that is critical for the future sustainability of this industry.
In conclusion, we wish you well in your deliberations. We have no doubt that this
gathering will emerge with a number of resolutions on how this industry can continue to
play a critical role not only in our economy but also at the global level.
I thank you.
Source: KwaZulu-Natal Provincial Government
Address by the KwaZulu-Natal MEC for Economic Development and Tourism, the Honourable Michael Mabuyakhulu on the occasion of the South African Sugar Association Development Indaba
Province
