Over the last ten days or so, there appears to have been a subtle shift in the mindset of South Africans around this credit / financial crisis and the real impact it is likely to have on local business. A policy shift aimed at stimulating the South African food sector may be a way to ease the impact in South Africa.

While I don't have any statistics to back it up, my impression was that a lot of local businesses were a little ambivalent toward the crisis. In our heads we were saying "Agh its happening overseas, it's not coming to South Africa -
we're safe down here..."

But then suddenly something shifted last week - at least in terms of the businesses I have been dealing with.

I know of at least three companies, controlled by overseas principles who announced that they would not be paying thirteenth cheques or December
bonuses this year.

Suddenly the crisis is here and it is going to have a very negative effect on
South African business particularly our manufacturing sector which has just
not fired this year.

Look at the statistics, 6000 - 7000 cars per month are being repossessed each
month. That figure is enormous. Nearly 70 000 homeowners are more than two
months behind with their bond instalments according to an article I read
earlier today.

If the impact on the South African middle class is that they are losing their
houses and their cars, what do you think the lower earners are feeling?

Stimulate SA food sector
There's an old saying - when things are bad, there will always be a demand
for two things - beer and bread.

As much as it is said tongue in cheek, the reality is that there will always
be a demand for beer and bread. The South African government should be thinking along these lines and trying to address multiple issues during this time:

- Investing in dry food manufacturing operations (mealie meal and bread) are relatively low cost to get off the ground. This provides the perfect opportunity to develop lower level entrepreneurship, employment for skilled manufacturing professionals and begin to address the high prices of food.

- Land claims could be pushed through, provided workers indicated a willingness to work the land and provide a solid supply of raw materials going into some of the startup manufacturing plants.

- Despite the constant reminder that food prices are soaring due to supply constraints, we have seen no noticeable shift in policy to include investment in non land intensive projects such hydroponics.

Politicians all bemoan the fact that there is a serious shortage of food in the country and we all acknowledge that the crisis is really starting to bite at the lowest level of the economy. The more serious this problem becomes, the more chance we have of creating social problem.

One or two enterprising South Africans have already proven that they can produce low cost food packs - but they don't have the scale to

Yet, despite knowing all these factors we continue to see government focusing its investment on telecoms (Sentech as one example) and logistics with all the road and transport upgrades.

While these are all important factors for creating a world class economy, if your people are broke and hungry then I'm not totally sure that they will take the time to appreciate these investments...

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