Informal markets keeping economy afloat

The South African economy is actually growing between 3% and 4% – in contrast to the current figure of 2% – because the informal market is vastly underestimated, says Ernst Janovsky, agricultural economist.

Janovsky, who addressed delegates at the AGM of the South African Grain Information Service (Sagis) about the importance of information, said South Africa recently started exporting energy.

“This is good for our trade balance which is currently 6% in the red. If we can spend that money in the country, it could mean further growth. Unfortunately, this means the possibility of shale gas exploitation in the Karoo.”

Janovsky also says the informal market is bigger than what people expect.

“About 60% of potatoes are sold on the street. Billions of rands are lost through corruption, but the economy still grows. This is the influence of the informal sector. But because it functions on a cash base, it can’t be calculated.”

He says if banks allowed free transactions, it will do South Africa a huge favour, because it will allow calculations on the true extent of the economy.

Janovsky says the true unemployment rate of almost 35% doesn’t take the informal sector into account.

“If so many people over the years haven’t had any income, they all would have died by now, despite support from social grants.

“The R10 a woman on the street earns from her corn-on-the-cob is an employment opportunity in the informal market that isn’t mentioned.”

Free Market

Janovsky says the elimination of managing boards was a good thing for South African agriculture.

“Today we are reaping the rewards, but you need proper information systems to make it work.”

He is gathering agricultural information in Botswana and says due to the lack of proper information, a farmer in Botswana earns R16/kg for a weaner, while the price in South Africa is R40/kg.

“Farmers are impoverished due to the lack of information systems.

“In South Africa we have working institutions, but our politics are failing, while the opposite is true in Botswana. Both have to function, otherwise there is an imbalance. In South Africa we are managing politics via our justice system, because our Constitution allows it.

“Without our Constitution we wouldn’t have been able to prevent our country from derailing,” Janovsky warns.

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