THE IMPACT OF SELECTED ASPECTS OF GLOBALISATION ON THE PERFORMANCE OF SMALL-SCALE AGRO-BASED BUSINESSES IN RURAL SOUTH AFRICA

Abstract

Small-scale agricultural businesses (SSABs) are important in addressing South Africa’s social and economic problems and remain the main source of economic activity, especially in rural areas where socio-economic development is a major concern. It is therefore vital to address the multiple challenges confronting these businesses. The challenges among others include, the fluctuation in the prices of agricultural commodities and the inability of small agro-based firms to compete on a global scale due to their weak financial base and coupled with the vagaries of international trade. The greatest challenge for SSABs in post-apartheid (1994) South Africa is optimising global competitiveness, bearing in mind that these businesses were previously insulated from global competition during the apartheid era. In this respect, it is important to fully comprehend how globalisation has impacted on SSABs in post 1994 South Africa. Using SSABs located in Vryburg–Pokwani area of the North West and Northern Cape provinces as case study, an attempt was made to establish the extent (if any) to which aspects of globalisation impact on the performance of SSABs in post 1994 South Africa. This is mindful of the fact that the lowering of tariffs by South Africa around 1994, while allowing the benefits of free movement of migrant labour and technology transfer also exposes SSABs to foreign competition, which may affect their performance, growth and survival. In the study, data were obtained from 151 owners/managers of SSABs in the Vryburg- Pokwani area using a structured Likert type questionnaire. Results from analysis of the data gathered using analysis of variance (ANOVA) revealed that personal demographic factors (age, gender, education) and organisational demographics (number of years of operation, form of business, type of business activities, number of employees, engagement with foreign businesses, import and export of technology and products, foreign labour usage and pre-tax profit) significantly impacted positively on performance of SSABs. However, the extent of impact of each variable was found to differ for SSABs. The results therefore indicate that contrary to the position maintained by many — that globalisation negatively affects business performance, growth and survival — the reverse is also true. The issues raised by the study, which have negative impact on SSAB performance could be addressed by adopting the policy recommendations provided in the thesis. The problem of low level of involvement by both local and foreign investors could be solved by government and other stakeholders by removing policies and legislation that act as barriers to the performance of SSABS as well as designing new positive ones. Government and the relevant agencies should also embark on growth promotion programmes such as export guarantee schemes, tariff reductions and negotiating free trade agreements with foreign governments. Immigration laws should also be reviewed to facilitate the employment of skilled and technically efficient foreign workers. Incentives should be introduced, in the form of subsidies, tax rebates and discounts on transportation and shipping costs. It is also crucial to establish investment promotion information centres and promote research and development of the SSABs sector. Support must be given in the form of education and skills training to SSABs manager/owners. The issue of low level of participation by the youth and women could also be dealt with by providing incentives and support to these marginalised groups.