Economic development in the Southern African Development Community region: is Rainbow Biotech the next big thing?

Roux, Pieter Gerhardt Van der Byl (2011-03)

Research report presented in partial fulfilment of the requirements for the degree of Master of Business Administration at the University of Stellenbosch

Thesis (MBA (Graduate School of Business))--Stellenbosch University, 2011.


ENGLISH ABSTRACT: The purpose of the study is to investigate the feasibility and sustainability of producing biodiesel from Jatropha, which contains oil in its seeds by using the Rainbow Biotech economic intervention or also known as the Distributed Food and Fuel Plantation (DFFP) model. The DFFP model is an effective mechanism for producing food and fuel in conjunction with each other, without the biodiesel production influencing the production of food in an adverse way. This is very important, as food security is a high priority for Africa, in order to address the problem of hunger and poverty. Biodiesel produced from Jatropha is an eco-friendly and sustainable alternative to fossil fuel diesel, as it is a carbon neutral fuel. Jatropha cultivation will also create much needed employment in the rural areas of Africa, which has the highest need for socio-economic development on the continent. Jatropha also has the ability to grow on marginal soils and wastelands. Africa has vast open spaces on which Jatropha, as a biodiesel source, can be cultivated without infringing on food production areas. The energy return of the whole production cycle of Jatropha biodiesel is nevertheless a source of much debate. Most stakeholders felt that the energy return is negative. No agreement has yet been reached about whether the energy content of the by-products from biodiesel must be included in the integrated energy balance equation. In order to make biodiesel from Jatropha a sustainable alternative for small farmers in the Southern African Development Community (SADC), government and regional policies will have to support it by promoting it actively. This will generate interest from global biodiesel investors who will then be willing to invest in projects based on the DFFP model of economic development. The DFFP model offers investors economic returns on investment of between 29 and 33 per cent and payback periods of less than four years. It is a very attractive economic development instrument, as it will ensure equitable and sustainable economic and rural expansion in SADC. Ultimately, this model has the potential to create a better life for all the inhabitants on the African continent. Rainbow Biotech (the DFFP model), as an economic development mechanism, will therefore indeed be the next big thing for the SADC in the future.

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