Browsing by Author "Pfunzo, Ramigo"

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    Agriculture's contribution to economic growth and development in rural Limpopo Province: a SAM multiplier analysis
    (Stellenbosch : Stellenbosch University, 2017-03) Pfunzo, Ramigo; Punt, Cecilia; Stellenbosch University. Faculty of AgriSciences. Agricultural Economics.
    ENGLISH SUMMARY : The agricultural sector in Limpopo contributes approximately 2.2% to the provincial GDP. Agriculture can play an important role in contributing to economic growth, through agricultural production and job creation as a result of its linkages with the rest of the economy. Consequently, it can play a significantly role in reducing poverty. This study examines the potential agricultural contribution to economic growth and development in Limpopo. It starts with a literature review of the province’s sectoral development and growth. Most importantly, it examines two stages of poverty alleviation and agricultural growth; namely production and consumption linkages. The factors that constrain agricultural economic growth and development are described in detail. For the analysis, the study used the Limpopo Social Accounting Matrix (SAM) for 2006 developed by Conningarth Economists as a database to develop a multiplier model. Because the Limpopo SAM was unbalanced, data manipulation was performed, applying manual balancing to the existing Excel data. Firstly, the results from the SAM multiplier analysis indicated that R1 million injected into the agricultural sector will lead to a notable change in output (R1.67 million) and value-added (R764 000). Some of the agricultural sub-sectors generated a large increment in output – the largest being subtropical fruit and forestry. The water- and electricity industry was ranked first for output (R2.02 million) and third for value-added (R900 000). The financial industry was ranked first for value added (R962 000) and sixth for output (R1.77 million). Secondly, the analysis estimated the impact of a 5% export demand on the rest of South Africa and the rest of the world respectively. The results indicate that vegetables is the largest export demand to the rest of South Africa. On the other hand, for the rest of the world, the demand for exported citrus fruit is the largest. GDP increases by R59.48 million for a simultaneous 5% increase in export demand for output from all agricultural industries by the rest of the world. This exceeds the increase in GDP of R47.54 million for a simultaneous 5% increase in export demand for output from all agricultural industries by the rest of South Africa. Thirdly, the analysis estimated the impact of a 5% increase in investment demand in agricultural activities. The results show that the output from the agricultural sector increases more than that of the non-agricultural sector. The largest increase in output from the agricultural sub-sectors comes from forestry. The income from Black households (R4.47 million) increases more than that of White, Coloured and Asian households (R276 000). The GDP in the economy increases with R9.30 million. Fourthly, the forward and backward linkages for the economic sectors of Limpopo were calculated. The results show that tertiary sector industries are gaining more position on the list of leading industries in Limpopo. Moreover, the investment in the tertiary sector seems important for economic development because of its linkage to other sectors. The results of the study may be used for the development strategy of the Limpopo economy. It was concluded that despite the fact that most of the people in the province live in rural areas and are assumed to engage in the agricultural sector as a source of livelihood, the agricultural sectors actually contribute less to economic growth than non-agricultural sectors in Limpopo, and this is contrary to the original hypothesis. It should be noted, to achieve significant development in Limpopo, more focus should be placed on the water and electricity (output), financial insurance (value-added) and community and personal services (income) sectors for their contribution to economic growth, due to large multipliers when compared to other sectors.