John Deere Africa | Tech Terrain Special Edition | Construction and Forestry

Foreign.

Hello and welcome to this special edition of Tech Terrain. Introducing John Deere construction and forestry. Deere is here. Of course, John Deere had an event planned to meet with everyone face to face. But in the light of COVID 19, we're bringing you this event virtually from studios in Pretoria now. We've got an exciting lineup for you today. Tim Mudise is standing by to have a discussion with well known economists Dr. Azar Jamin and Dr. Roelof Botha, offering an economic overview of South Africa and Southern Africa. Then Team John Deere joins me in studio to talk to us about the latest economic and greatest in construction and forestry, more equipment launched on the African continent and everything you would expect from brand John Deere. But before we kick off the show, a message from Jaako Baers, who is John Deere's Sales and Marketing Director, Africa and Middle East.

We welcome you all to this very important event on the John Deere calendar. Of course, we were sincerely looking forward to some personal interaction with the industry. But this is not the first time we had to overcome COVID 19. We are excited about the fact that we are still able to engage with you, albeit virtually. We are equally excited to share the vision of John Deere construction and forestry with you today. It's been a long time in the making and there's no time like now to finally embark on this journey. We thank you for this virtual attendance and hope you'll enjoy the lineup today. Let's move some earth.

So let's kick off the show by welcoming Tim Mudise and his guests, Dr. Aza Jamin and Dr. Rulof Bhota in studio now. After the panel discussion, I will be back on set to take you through the rest of the program. But first, here's a sneak peek what John Deere construction and forestry have on offer.

They say it takes a village to raise a child. Or what does it take to raise a continent? Africa has always been a place of potential, a blank canvas of possibility. It is rich in diversity, rich in resources, and its people have been carrying wisdom of the land within them for generations. We believe in Africa and its people. We believe in what Africa can become. We have built and invested in this continent of origins and our footprint is embedded deep within its soil. We will continue to pioneer, to drive and to support those with vision. We imagine a brighter future, a fruitful economy and sustainable development while continuing to provide world class technology and equipment with integrity, quality, commitment and innovation. Imagine Africa.

Well, let's now take a look at the state of the South African economy. It's been a difficult time for many business people and companies out there. But you know, it looks like there are many more positive things happening in this economy. Dr. Azar Jamin is Director and Chief Economist of Econometrics. Dr. Roloff Bourata Economic Advisor, Optimum Investment Group and both of them are here to help me gain an appreciation for the positive developments it looks like that are emerging in the economy with the GDP first quarter, we are told, improving substantially over what was going on this past year. Let me start with you, Dr. Germain. You tell me, I mean, where is the growth coming from and where are the so called green shoots emerging?

Yeah, you've got to bear in mind that the South African economy hit a peak in 2007 and has basically been in a decline ever since then. And the decline accelerated massively last year as a result of the strict lockdown restrictions, which in retrospect, in hindsight, shows that it was ridiculous to lock down the economy to the extent that we did. So when we looking at the current situation, we are recovering off an extremely low and depressed base, but the recovery has been a little stronger than many people had anticipated. What we have seen, especially with yesterday's first quarter GDP figures, is a very strong rebuild of inventories that were run down hugely. Consumers are also in a position to spend a bit more than people had anticipated because of, firstly, the impact of a 3% reduction in their interest rates last year. Secondly, because they spent a whole year not traveling as much as they had done in the past, not going out to restaurants, not going on holidays. So that has enabled quite a bit of spare capacity to be done. But what we also have learned is that the strength of the economy is derived from the fact that the middle and upper income groups were not nearly as severely affected by the crisis as the lower income groups, the informal sector. But the middle and upper income groups account for 80 to 85% of the spending power in the country. So they haven't been hit as hard. So we are encouragingly finding that our tax revenues have not declined to the extent that we did. So government's shortfall and its budget deficit and borrowing requirement has not been quite as big as we anticipated. And now helping this all along is a global picture that is looking more positive than it has done for a decade as a result of the development of vaccines. The there's a lot of optimism that we are seeing a return to normal economic conditions far sooner than had been anticipated. And coupled with that, the world's leading governments and central Banks have embarked upon the biggest stimulus that the world has ever seen in terms of pouring money into the global economy, both in terms of giving people relief packages, but also just literally printing more money than ever before. And this is feeding through into creating an expectation of a huge demand for commodities that has resulted in commodity prices surging. And South Africa being Africa as a whole, sub Saharan Africa being primarily dependent on commodity prices and commodity production for their well being, are now starting to receive the benefits. And as a consequence we're seeing a situation where a couple of months ago the IMF forecast very dismal economic growth for the country and for the region. But more recently people are becoming more optimistic that we may not fall that far behind the rest of the world.

Well, but many South Africans unfortunately are of the view that the government does not seem to know what it is doing. Dr. Botha, that, you know, the recovery plan that has been spoken about has not been explained or communicated to the broader public. And anybody who has to know about these things, that the recovery plan is going to take this form, this shape and so on. So on the policy front, what do you see emerging from the South African government?

Well, we must always remember that government is not there to create jobs. That's not their job. Government is there to make sure there's law and order, that infrastructure is maintained, that there's public health, public education and police force. They must create an environment that is conducive to creating confidence in the economy. And then the private sector will come and create the jobs. And fortunately we now have a president that would probably agree with everything Azar has just said, which I'm saying. And before him for almost a decade we had a president that would certainly not pass grade one economics if it's presented at a grade one level. We had so much mismanagement of the public sector in general. And I would maybe just like to remind the viewers that every time the lights go out with load shedding, just try to remember where this started. It started with Qatari deployment, nepotism, mismanagement, a president whose sole purpose or objective was to stay out of jail. And as a result of this, hugely incompetent people were put in charge of the public administration of this country and we're counting the cost. But we are turning the ship around slowly but surely. And I must mention one piece of data before I forget, the composite leading business cycle indicator of this country has just hit an all time and I'm talking about 61 years high of more than 123 points on an index basis, it's the highest level it has ever been. And if you juxtapose on that slide, the per capita income of South Africans, per capita income in real terms, it follows exactly the same trend. We are a hell of a lot better off than we were prior to our first democratic elections. But unfortunately, we lost a decade. And now Mr. Ramaphosa and his new team are starting to build for the future. But obviously Covid came around. Nobody can prepare for a pandemic. But one thing that the viewers must maybe remember is that you can prepare for the end of the pandemic. And although the virus will be with us for many years, the pandemic will end and things are really looking bright.

But you see people experience blackouts, load shedding and say, turn around and say, see, now we've just lost jobs due to Covid. Now we don't have electricity or energy and therefore no confidence that the investors will come or business people will invest in companies and productivity of the economy. And the end result, creating jobs, because that's where people feel the impact of the recession and lack of economic growth. So what is it that I mean, that ordinary people, for instance, can have confidence in that jobs will come? They experience load shedding and then they think to themselves they're going nowhere.

Before you hand over to Azar, I just want to mention one piece of data.

Since the second quarter, you could come in as well.

Since the second quarter of last year, the COVID quarter, we have created 510,000 jobs. And in March alone, we created 152,000 jobs for highly skilled people. So it's a fallacy to think that the jobs are not coming. Remember, this was an unbelievable phenomenon, the pandemic, and it's the last thing in the world that any country in the world actually needed. But we are getting out of it at a rapid rate of knots. And as I said, yes, we're growing off a low base, but certainly the super cycle started in 2019, it was interrupted by Covid, and that will probably last for quite a while. With India expected to grow at 12% this year and China at above 8%, the US at probably close to 6%. There's just absolutely no way that this economy is going to grow this year, as far as I'm concerned, at under 5% and we should be able to gain that momentum. So the jobs will be coming, especially if government is true to its word and they create a more enabling environment for the private sector, remove the obstacles to growth, and you can start with labour Legislation curb the power of the trade unions. That's what Margaret Thatcher did in 1970 to fix the British economy.

Well, of course some of the infrastructure of our economy has been damaged over time, so reinvestment in that I suppose will help make a contribution to economic growth. But let me hear your comments.

Firstly, on the jobs front, I need to emphasize Ruloff is absolutely correct in suggesting that we have created jobs in the wake of the COVID crisis. But as last week's figures so eminently displayed, there is a bit of a challenge here. The jobs have been created in the formal sector, the informal sector. The poorer people are not seeing job creation and you have to ask yourself why. And at the heart is firstly, as Rulof suggested, the power of trade unions. That is restricting the ability of new entrants into the labour market to get decent jobs so that those who have the jobs can keep them. It's fascinating to see that the unemployment rate amongst people between the ages of 55 and 64 is, is just 13%. That's still high, but 13% compared with an overall unemployment rate of 32.5% officially and 43.2% unofficially. It's because there in lies a lot of the power of the trade unions to look after their own people. The second big challenge that we have is the educational system. Unfortunately there Covid has exacerbated the educations by forcing children at public schools to not to go to school. And the people fortunate enough to be at private schools or to be at former Model C schools, the elite have been able to carry on with their education virtually. And that inequality in educational outcomes is creating a society where you've got a small skills base that is very effective and can earn very well and constitutes the primary source of buying power in the economy because they earn well. But the vast majority are just not skilled enough to be able to contribute to the economy in a meaningful way. And that is precisely where sectors such as agriculture and infrastructure actually have a big role to play because they can start absorbing some of your lower skilled workers much more effectively than has been the case.

And.

But you know, Dr. Jermaine, there's also the argument out there in the public domain and I would like to hear your comment on this, Dr. Botha, that the land question, expropriation without compensation will lead to uncertainty and people who want to invest in, let's say agriculture will not be doing that unless there is policy certainty. What is the direction that you see government taking here?

Well, I was privileged recently to have updated a Macroeconomic impact study of what I call expropriation without comprehension. It's more or less the same thing. Yeah. And there were a series of media interviews. Agrisa actually sponsored that update. We ran an economic model, and I mean based on the case study of seven countries that had made this grave mistake and looking at capital formation, GDP ratios, and what can happen then to your economy. And it is absolutely. It's a disaster. It'll be tickets for us if they do this wrong. But our president has been on record, is on record so many times for assuring us that no piece of productive land will ever be taken without compensation. I personally believe that's not good enough because you are tampering with the most basic incentive for productivity. If Parliament gets this right, we're home and dry. If they get it wrong, the Rand is bound to go back to 19. That's not impossible. But talking about construction, I think the timing for companies to get cracking in this field with the infrastructure needs is absolutely excellent. We've seen in the first quarter of this year, compared to the same quarter last year on a year on year basis, an increase in wholesale sales of building materials and construction equipment of 35%. The value of building plans passed by municipalities, not only residential, the whole box and dice and lots of alterations, you know, for, you know, for Zooming. Because home office is not always conducive. You know, there are kids and grandchildren in my case, and chickens and dogs, you know, so people are building little Zoom studios in their homes. But the 340 billion rand. 340 billion rand infrastructure program, I mean, that really warms my heart. Government is apparently intent on giving us quarterly progress reports on how that's going. But the best thing that they've ever done as far as this is concerned, is that President Ramaphosa and his team are smart enough to realize that within the public sector, you do not have the capacity to run programs like this. I mean, it's just unthinkable. Not after what happened with the appointments during Mr. Zuma's disastrous term of office. So what did they do? They advertised for applicants for a technical advisory panel to assist them at all aspects. The design, the implementation, the adjudication of the tenders, making 100% sure. 100%. The corporate governance standards are in order, that the technical qualifications of the companies that must build this infrastructure are in order to. And that they haven't been concocted in a garage, you know, on the back of B and cadre deployment.

But you know, Dr. Porto, the thing is Again, going back to how the public sees the developments is that they look at news stories or hear the news stories that municipalities are falling apart and people are fighting for positions there. And then they get demoralized and start feeling or thinking that this is not going to work. Let me use examples of water shortages. Water problems across the country, and in some parts where the municipalities were capable in the past were delivering water easily, and these days, it's very difficult for them to do so. Why is that? And why should people have confidence that things are turning around like you say? By that, I mean somebody might say, you know, at the top, where the president sits, easy to see it that way. But where the rubber hits the road. Well, at the municipal level, it's different.

At many municipalities, there are no engineers in their employ because they look at the B requirements. And then unfortunately, many of these people apparently have decided, okay, well, you know, the town manager or the engineer, whether he's got a qualification or not. My cousin doesn't have a job, you know, so let me give him a call. Yeah, and this is just crazy. So, yes, it's true. There is not one municipality in the whole of the Northwest Province that's, that's functional, thanks to Supra and his crowd. Obviously, Mr. Ramaphosa has to fix this. And what I was mentioning about the technical advisory panel, they got 1,200 applications, and I believe they've appointed about 200 people to help them run this whole project. Now they've got a data bank of 1,000 people, many of them recently retired. And I'm also recently retired, but I'm still full of fighting. Project managers, engineers, some economists, I believe, as well, accountants, legal experts. And they can use that pool of resources as task teams to go into some of these municipalities and start fixing the problem. But you have to start with expediting the judicial process of the people, where there's prima Farsi evidence of corruption, theft, nepotism and the like. So as far as I'm concerned, Titu Mbweni must give a lot of money to Sharmila Batoy at the NPA and get cracking, put the crooks in jail, then we can get somewhere.

Well, maybe that might help restore confidence amongst those who have lost it over a period of time. But agriculture seems to have been resilient, irrespective of COVID and some of the problems that we are highlighting here.

Dr. Jamin, without a doubt, Tim, one of the big unsung success stories in South Africa has been agriculture. Amazingly, despite all the uncertainty surrounding land Reform and uncertainty surrounding food security. South Africa is still very self sufficient in agriculture and is managing to export a lot. This year we're expecting more than $10 billion worth of exports of agricultural feeds. So something is going right in agriculture which may have been going wrong in many other areas of the economy. The infrastructure is collapsing and yet agriculture is pumping. And I believe that it has a huge potential, not only in South Africa, but in the rest of the African continent as becoming the breadbasket of especially what we're seeing now is countries like China where they're struggling to carry on feeding their population with ever more demanding and high quality good foods. I mean, one of the reason why agricultural food prices have soared by 40, 50% in dollar terms over the past year is because the Chinese, having become wealthier, are now consuming more and more meat products. And meat products require more and more inputs of soya and grain which have to be imported from the rest of the world. And eventually I think that's why China is so interested in Africa as a whole, Sub Saharan Africa, because they see it as a potential breadbasket for the rest of the world.

Well, you mentioned something, Dr. Buta, about the Northwest earlier on. Right. And one looks at the contribution that the different provinces are making to the economic growth of South Africa and the creation of opportunities, jobs and so on. Northwest is part of the maize belt of South Africa. How are the farmers doing there? And most of the rural towns of the Northwest, Are they growing? Are they showing an appetite or interest in doing more business, investing in more opportunities?

Yes, you can pick up this trend from property prices of farms. It is as if the farming community in the country at large has decided that they've taken faith in especially some of the comments recently by Agbas Vanilla. Sisloba has done a lot of research on this as well and we must just open pray that they do this right. But certainly the resilience is there. As Azar has mentioned, agriculture is just doing unbelievably well. I've recently done an estimation of the current harvesting season of our 10 most important horticulture crops and we're looking at the 27% growth. The biggest soya bean crop in our history, in random terms, the biggest maize crop in our history. We are one of very few countries on this continent that is food secure and obviously agriculture feeds into food, processed food, and that's also a major export earner. So hopefully government will appreciate the fact that we have this luxury. The Northwest of course is not only an agricultural hub, it is also the province that has the biggest contribution to mineral sales in South Africa because of the platinum and manganese and several other metals and minerals. And it deserves better than they, as far as the governance and the infrastructure is concerned. But once again, getting back to construction, I mean, there's just so much work to do. I often tell people from overseas when they used to come here that you may get mugged in South Africa, but you will never get bored. There's always something to do. I mean, that's why this man next to me, Azhar, came back to South Africa after spending 10 years in that disgusting place they call London, because it's such an exciting and a vibrant place to be right now, but especially because of policy. And I must give you one quote from Adrian De Reiter, who's probably got the most difficult task in this country, next to Cyril Ramaphosa, of course, after a couple of weeks at Eskom, he had a media conference and he said, there's not one single problem at Eskom that cannot be solved. And obviously the rider to that is with backing from government, with the right policies and with the right skills. And that's what we need to do. There's a skills deficit in the public sector, and that is restricting the ability of the private sector to grow this economy at 5, 6%, which we can do.

Yeah, let me just come in right there. You see skills deficit in the public sector, but in the broader South African population, do we have enough of those skills that can make up or compensate for that deficit?

I just want to mention one thing. As far as water engineers are concerned, yes, we do have. We have literally dozens of them that cannot find employment right now. But this government brings in engineers, water engineers from Cuba, who cannot understand English. It'll take them six months just to try to understand what's happening in South Africa's water sector. By that time, they've used up millions of rand taxpayers money. How the hell do they get away with this kind of stuff? This is ludicrous. And I just wanted to make that point.

But again, going back to where we started, where you mentioned that, you know, you or I got a sense that you are confident that the policymakers and those running the country know what they are doing, that they are taking it the right direction. But that's an example that people will point at and say if a decision of that nature is taken to import engineers from Cuba, then those in charge have got no clue what they are trying to do.

We must remember that when Cyril Ramaphosa became president of the ANC, not of the country, of the ANC. He only had a little bit more than 50% support in the NEC, the National Executive Council, the ANC. That has now been broadened to the best of my knowledge, speaking to political analysts, as I do regularly, to probably just over 70%. But he still has a battle on his hands. And that battle, that faction, the ret. Radical Economic Transformation. I don't think they know exactly what that means within the anc. These ideas about, for instance, bringing engineers in from Cuba, what a stupid thing to do, that emanates from that faction. So he's got just so many battles that he has to fight and to try to fix the economy. And then they've still got the COVID et cetera. So spare a thought for that man. He's got a tough task yet, but he's moving in the right direction.

Now we look at the neighborhood, Southern Africa. South Africa may be trying this, that and the other, but the neighbors have their own challenges. And those challenges may have a negative impact not only on South Africa, but on the continent's economic growth. Dr. Jamin, what's your take? What do you see happening in.

I actually see well beyond the SADC region, Sub Saharan Africa. I actually see that as a potential source of great economic growth for South Africa and South Africa's ability to export and to supply a lot of the expertise to that region. And one only needs to look at the historical trend of growth in sub Saharan Africa vs South Africa and the rest of the world. In the 80s and 90s, Africa just lagged behind the rest of the world. And then from around 2000 onwards, we saw growth in Sub Saharan Africa being the second highest growth region of the world economy. Unfortunately, with COVID that has fallen back and it's a challenge for the next year or two that Sub Saharan Africa is set to underperform for a short while, the rest of the world, largely because of the very slow rollout of vaccinations and also because of the huge challenge of having to. They do not have the fiscal room to stimulate their economies the way in which the industrialized countries have been able to do because of the fear of very high debt levels and high interest rates, but payable on those debts. But once we get over that hump, I find it very interesting to look at the IMF's forecasts for sub Saharan Africa as opposed to South Africa, which sees Sub Saharan Africa growing slightly slower than the rest of the world for this year and next year, but after that starting to grow faster than the rest of the world, because people see the massive opportunities there are of a very low base to start building up the infrastructure of the region precisely to supply the agricultural and mineral resources that the world is desperately in need of and to supply the services that go hand in hand with actually accommodating the infrastructural drive that takes place. But it's also very dangerous to look at sub Saharan Africa in one homogeneous manner. SADC has been lagging behind other parts of sub Saharan Africa, and that's largely being held back by South Africa's underperformance. Whereas if you look at East Africa and parts of West Africa, they've been shooting the lights out. Yes, they've got, in various countries some political challenges, but by and large, they seem to have discarded a lot of the obsession with the ravages of colonialism and the negative effects of that, and are starting to just create a lot of very entrepreneurial societies now.

You know, looking at again, in the region or the rest of the continent, for emerging entrepreneurs and the young professionals, both of you, you sound very positive. You've got a positive outlook on what's happening in the economy. But for those who must now participate, take a risk, whether investing or creating new opportunities, which sectors do you think are going to play a key role in contributing to this growth that we're talking about?

Well, with the super cycle that Azra and myself both refer to, it's not 100%. There's not consensus over whether it's a super cycle, but it does have that flavor for commodity export prices. It's very clear that the primary sectors, agriculture, for other reasons as well, food security reasons. And of course, if you want to get cracking with industrialization, if you're still a developing economy, as virtually every country in this continent is, then food processing is a fantastic starting point because it's not technologically inhibitive and you want to feed your population. Obviously, you save so much on foreign exchange as well, so those primary sectors will really drive it. And I must tell you that if I were a little bit younger, I would like to get cracking into construction, because it doesn't help you if you've got this huge crop, surplus food, but there's no road to take it to the harbour. So building roads, building.

And the harbour is also not working properly.

So, I mean, I think it's construction companies are going to have a field day over the next one or two decades in Africa on condition, and Azar mentioned this on condition that there is a little bit more political stability than we've become used to. And as he indicated, you know, you'll have to cherry pick. There are some countries which are still no go areas in terms of wide scale violence.

But innovation, you know, it's been spoken about. We've heard talk about the fourth industrial revolution and you know, it's in all aspects of technology. Why it appears that we don't have a clear sense of how innovation is going to be encouraged in South Africa.

Unfortunately, this is where we encounter one of the big structural weaknesses of the South African economy. And that is that there is so much power concentrated in the hands of government with a very strict over regulation of the economy. Secondly, organized labor that is very inhibitive and resistant to innovative ideas because of the fear of job losses due to technological progress. And thirdly, a business sector that is highly concentrated in the hands of a small number of very large companies that tend to restrict entry into businesses. And that is this particular South African weakness that we have to try and overcome.

I go back then to an earlier question, Dr. Bhutto, which has got to do with the government's change of mindset. Government having the authority and power and influence to restructure the economy to bring its influence to bear on some of the big companies, for instance, that they. And breaking all the monopolies that may exist in our economy.

Well, as I mentioned is that they are. It's actually more of an oligopolistic structure which sounds like a dangerous spider, a scientific name, but we don't have that many monopolies. The dilemma is more in the over regulation and certainly they can look at if they want to soften the blow with regard to maybe some backlash from the trade unions. Where they can start is with a two tiered labor legislation system. So if you have a company with a turnover, let's say of less than a billion rand a year, then you don't have to comply with all these strict requirements for B and for this and for that and minimum wages, etc. And then you couldn't even take it up into three levels. But as we were promised with Tito Mbwini's new deal, remove the obstacles in the way of the private sector to be more, to just come forward with more ideas. There are so many obstacles in the way. Okay, Covid put us on the back burner a little bit, but I take him at his word. At some point in time there's going to be a big fight between organized labor and government. Now the good news is that if we go back to the last elections, one of the major trade unions decided to go to the elections for the first time to the polls in the guise of some socialist revolutionary. I don't know. One of those things reminds me of the definition of a communist. You know, it's a person who's got nothing but he wants to share it with you anyway. And they were confident of getting. He told this to my friend Theo Fenter. He said that this leader, he's going to get seven seats in parliament because all he needs is 100,000 of his members and their wives and one friend to vote for him. How many seats did he get? Zero. I mean that's music to my ears. Zero is sometimes a very nice number. So what I'm trying to tell government out there is that there is no political threat or risk associated with get the economy going, deregulate labour legislation as Azar it's called for every single business leader in this country, whether you've got a small little business or a large business, has been calling for this for the last 15 years. Promised that to us. You know, big promise. Tabu is also another tabu promise, you know.

But then the high unemployment rate, the people who are unemployed in the country will appreciate what you've just said. But they wait and they're getting impatient. They wonder, young people in particular, and say when are those jobs going to come? What's going to push government to finally adopt the policies or come up with ideas that will encourage the business people to start investing more and creating opportunities.

And this is where government should really be pushing the idea of entrepreneurship and innovation in a big way. And one of the big weaknesses in our educational system is this complete obsession with getting university qualifications where there is a need for practical manual skills left, right and centre. And I see it in my own environment where there are a number of small companies developed by previously disadvantaged individuals in plumbing, in electricity, in construction, in welding, in being, in mechanics where you don't need to have high powered mathematics and go to university to develop those skills but instead we have seen a degeneration of the countries ability to develop those technical skills. That is a critical area and the.

Confidence levels of the business sector. Do you get a sense that many of the leading companies and business people in the country have confidence and are willing to put to pump more money into the economy.

Well, let's look at two issues. The one is an index and the other one is a practical example. As far as the index is concerned, if we go and look at the IHS Market Composite Business Cycle Index, Purchasing Managers Index, PMI for South Africa, this is services and manufacturing. So it's probably 90% of the economy that has been above the 50 level. I think now for the seventh successive month that hasn't happened in a couple of years. And if you look at the EPSA Bureau of Economic Research From Stellenbosch, their PMI, which is only manufacturing that has been above the 50 line now I think for 10 successive months. Clearly an indication of renewed confidence. But let's use a practical example. In Pretoria Special Economic Zone and a major motor manufacturer got contacted the President's office, contacted the Minister of Trade, Industry and Competition and voila, a couple of weeks later they announced an 18 billion1,8 18 billion rand new investment in vehicles. The majority, the overwhelming majority of which will be exported. A couple of thousand high skilled jobs are going to be created. It can be done. And that's the big difference between Mr. Zuma's economic policies and Mr. Ramaphosa's is that Mr. Ramaphosa understands the fact that the private sector has to create the jobs. That's where the wealth of this country is going to come from and the jobs and the tax revenues and is working with the private sector to do that. Ultimately, I like to believe that within the next couple of years our fiscal situation would have improved to such an extent that we can actually afford a basic income grant for a registered unemployed person that can prove that, can pass a means test, but that will require unfortunately a little bit of admin because people that employ people in the informal sector like myself, I've got a landscape executive that comes once a week.

That's the political work for my gardener.

And Jan Mukari who's there this morning, by the way. He earns those four days with me in cash and in kind. He earns 2,000 bucks, two and a half thousand rand a month. So he's not entitled to this basic income grant. So I have to register him at the Department of Labor. It would be good if this can be privatized, by the way, so that people don't crook the system. We can comfortably afford that within the next two years if our growth is going to go the way I like.

To leave it at that, which may lead to an ideological battle. Now, you know, if we insist on that, somebody will say, you see, that's exactly why we have the problem with President Ramaphosa, that he seems to be more privatization oriented than the other ideological way. But be that as it may, let's look at the future now. You know, we are here going forward again, you sound both of you very confident. About the developments in the economy, what do you see emerging?

Dr. I better just be cautious in terms of my confidence. I'm confident for a variety of reasons that the next year or two will be a lot better than what we've just been experiencing statistically off a low base, the rest of the world booming, etc. After that, a lot will depend on just how successful we are in changing the caliber of management within the public sector to be able to appreciate what the problems are and support the president in what he wants to do. Because an absence of sufficient transformation. And I'm talking here in the broader notion of transformation, not just giving previously disadvantaged people jobs, but without a proper transformation, I think we run the risk of returning to a very low growth scenario.

Let me just come in there. A quick comment from you that when.

You say.

Proper transformation, what do you mean? Give me examples.

The first one is beating off corruption we've been talking and state capture. You have no idea how many resources we may suddenly find become available that we thought previously wouldn't be available. Secondly, you have to improve, as the President says, the capacity of the state machinery, including your municipalities. And this is where this is a huge challenge. How do you take away those people who have been put in those positions due to their connections and replace them with people who are there due to their qualifications and ability? Third challenge, improve the educational outcomes, especially in a technologically progressive world where people need to be able to start thinking more technically and be able to count better. In other words, improving maths and science abilities, outcomes from the school to enable more and more people to then start gaining access to jobs, or improving the technical educational facilities to enable those people who are not that good at maths and science to still be able to add value to the economy. The next factor is the need to somehow reduce the concentration of power in South Africa. That means government not being obsessive with regulation, labor being less monopolistic in terms of determining who can get jobs and who can't, and business somehow let getting in the private sector, entrepreneurs and innovators more space to actually grow. They're all interrelated.

And I want to hear your comment as well, Dr. Booth, on this, that one other area that people talk about and are concerned with going forward is the concentration of capital in fewer companies and fewer individuals. And it sounds to me, it seems to me that it's, it's something that has a bearing on the politics of South Africa, you know, and you also in your comments have emphasized the role of the president. Now, somebody might Say if you remove him, what happens? Because we are going to have elections this year, we'll be having elections nationally in about two years time or so that you know, the politics is always going to come back into play. So two parts to my question. One is the concentration of capital. How do you distribute it so other people can have access if it's possible? And number two, the emphasis on the role of the president. How do you devolve that? So even at provincial level, at other levels, people feel that they can make stuff happen by themselves.

Look, capital is a multifarious concept. You have financial capital, you have economic capital. Capital essentially in economics is the assets without which you, you cannot produce anything. So for a farmer it's a tractor. For a small builder it's a cement mixer and a bucky. And for a consultant like myself, it's a laptop and a fast car. Sometimes too fast, but anyway. So how do you get this? Well, you save a little bit, you go to the bank. We can certainly look at more diversification in our financial services sector, etc. The point is just that the overwhelming majority of the wealth of any progressive nation in the world is in the hands of people that have got formal sector jobs. Yes, you have your Bill Gates, you have your super rich, but if you could do an impact assessment of how many jobs were created and how many tax revenues were generated for governments all over the globe as a result of people like Bill Gates and his unbelievable geniality in coming, you know, just in expanding technological advancement, you need people like that. But you need, as Azrah has repeatedly said now, you need a culture where you can incentivize innovation. And we are slowly but surely moving towards that. But let's have a quick look at one or two facts. Everybody is entitled to their own opinion of course, but not to their own facts. So let's have a quick look at the AGBAS confidence index for agriculture. It is at a seven year high. Seven year high. This is a crucial, crucial sector, as we've spoken, construction. The Afrimat Construction Index Composite Index. That is not at a seven year high, but it has recovered. It has a V shaped recovery. And when I flew to Cape Town to address the Optimum Investment Committee a couple of weeks ago, they asked me. The Rand was then just over 14 as I predicted. And they asked me, Rolf, can it go to 1350? And I said of course. The Rand has strengthened against the US dollar since 6 April last year by almost 44.0%. It is the number one currency in the world the coolest currency in the world. And that's why I've got my 95 World cup tie on the box are also number one by the way, for the time being. Let's hope that lasts. But you know, there are just so many positives. You can look at virtually every key indicator outside of course of commercial aviation and tourism. They are still going to battle a little bit and it's understandable. You mentioned the GDP figures first quarter this year compared to the first quarter last year. Restaurants and hotels down by 33%. Entertainment down, food up by I think about 17% thanks to government's intervention with the grants, which as long as you can afford that for somebody that does not have the skills to get employment, I mean that's the way to go ultimately in society as well. And Azar mentioned this, but and this is very important, we are going to have a fiscal overrun. Whatever they budgeted for is going to. I think Edward Kitschwetter is ringing. He's very glad to see these new GDP figures and all this positivism even from a low base. So our fiscal affairs will probably stabilize in the next year or two. And that is such an important ingredient for sustained growth.

So would it be correct then to think that the John Deere investment in Africa, South Africa specifically, is well timed given the optimism that you are expressing and the opportunities that you see in agriculture and infrastructure builds?

You've got to realize the construction sector has been in the doldrums over the last couple of years both in South Africa and in sub Saharan Africa for some time now. And what better time to be investing in opportunities that present themselves globally as a result of a commodity price boom, a surge in demand for raw materials and agricultural products and the need to accommodate that surge in demand with developing infrastructure both in South Africa and in the rest of the continent to accommodate that surge in demand, what better time than to get into the market to start supplying that construction equipment to the region and especially to use South Africa as a base to from which to export to the region where as I suggested earlier, it is foreseen that after an initial underperformance compared with the rest of the world because of slow pace of vaccine rollout and possibly load shedding as well. In a few years time, Africa stands to resume its role as the second fastest growing region of the world and with the potential to develop massive amounts of infrastructure and the supply of services to the continent.

Any risks that you see?

Plenty, plenty of risks. But as Azar has indicated, getting at the bottom. Construction has been severely disadvantaged as a result of COVID not only in South Africa, but in the whole, in all of the continent. If you get into the bottom, you've got a very good chance. But I mean construction is just. It underpins virtually everything else we know about the infrastructure deficiencies over here and in the rest of the continent. So it's no good. You produce goods and services, you cannot get them to the markets, to the ports, etc. If you look at the the local Afrimat construction index, it's very clear that as far as the building plans are concerned, as far as government's huge infrastructure program is concerned and ambitious infrastructure programs also north of the Limpopo river, that there is a boom waiting for construction. So I like to believe it's going to be a very competitive market. Obviously a firm like John Deere has very competitive, they're used to competitiveness and they've got excellent equipment, especially in agriculture. So I think the timing is excellent.

I get a sense that you're very optimistic, positive about the future and it's based on what's happening currently. So it's not just made up optimism, am I correct?

You are correct. It's optimism. One sees the opportunity to turn around the declining fortunes of this economy. But clearly there are some major political challenges that have to be overcome for that to be achieved. And one is just going to hold thumbs that, that and that that.

Actually, Dr. Porto, there was a hit song a couple of years ago, quite a long while ago come to think of it, and it went something like this. The future is so bright you have to wear shades. And I like to believe that we're hitting that environment. With a bit of luck I'll be able to afford a John Deere tractor next year.

Thanks very much Dr. Olof Buerta and Dr. Azhar Jamin. Well, that's the story about the economy, South African economy overall and parts of the African continent. The two economists fairly confident and optimistic that things are going to get better after all. Thank you again.

Some amazing insights from the gentleman. Up next though, we talk to the John Deere team. Well, Deere is here and we're excited to hear from the John Deere team about their construction and forestry equipment. Let's get all the answers to our questions. With me is Yakube, Sales and Marketing director, Africa and Middle east and Griffiths Makate, construction and Forestry sales manager for Africa. Yaku and Griffiths, thank you so much for joining us on Tech Terrain. We heard from our economists. They're looking forward to the next Couple of years or so. They're very optimistic about the, particularly the construction sector in Africa. So Yaakif, I may start with yourself. Why did you feel you need to introduce your plant within those two sectors right now?

Tony, the continent of Africa is truly strategic for John Deere. We're fortunate now to be responsible for Africa, Middle east, agriculture, construction and forestry. And if you look at it, the great opportunities in agriculture to improve yields and fortunately we're the market leader on the agricultural sphere. But massive opportunities as we listen to the economists talking about infrastructure, natural resources, the mining of minerals, forestry and you know, we can go on and on, great opportunities. And the time for us is as they said, it's actually now. Let's bring it and build on it. Construction is not new to John Deere construction. It's not new to the continent. We've been under a different brand that we just bring in with. The first time in Southern Africa with the Deere brand in West Africa. We've been running for over a decade, really successful. We believe we understand the customers. The customer is focused on uptime. Those machines need to run 24, 7, 7 days a week. And it's about cost of operation, moving earth as cheap as possible. In other words, dollars and cents counts. Now as John Deere, you know, if we look at as a whole the amount we spend on R and D to bring in new technologies and we can leverage that same technology from the construction to the agricultural space, that is key. And that's where we think we've got a competitive edge that we can bring to the market is with new technologies in fuel efficient equipment. And then when it comes to keeping the equipment running, we're fortunate in that we developed, we call it Dealers of Tomorrow. One of the strongest channel across the continent when it comes to agriculture, the agricultural division. And what we're going to do now is expand with some of these key dealers and build additional business onto it on the construction side. So you need that separate focus, construction and agriculture. Why? Because it's very cyclical if you look at agriculture and even construction. But if you put the two together, all of a sudden I've got dealers now willing to invest even more in countries because you know, you've got the agricultural space, you've got the construction, you've got the forestry. A lot of back office work is exactly the same. And if you look at components, 65% is common components between construction and agriculture. So a lot of similarities, a lot of, a lot that we can leverage from, from our technical side, technical teams as well. So we are quite bullish. We feel the time is now, as you guys said, and looking forward to a great success.

Okay, Griffiths welcome to Tech Terrain. The first time myself chatting with you, just looking at the fact that you know what Jaku is saying here. You know John Deere has been in Africa for a long time with all agricultural products and so forth, and you understand the African continent. Welcome to Tech Terrain. The first time myself chatting with you, just looking at the fact that you know what Jaku is saying here. You know, John Deere has been in Africa for a long time with all the agricultural products and so forth, and you understand the African continent very, very well. Did that make it easier for you to pick the sort of lines that you wanted to introduce first? And also just talk to me about some of the products that you have on offer and very did that make it easier for you to pick the sort of line?

So thank you, Tony. At the moment, throughout the African continent we've got a wide product line. As Yaku has said, we've been running the construction in West Africa for quite some time now. And then we've got from skid steers, excavators, backhoe loaders, wheel loaders, dump trucks.

That you wanted to introduce first. And also just talk to me about some of the products that you have.

On offer, dozers and graders on the construction side. And then in the southern part, like what we are trying to introduce now as Deere branded machines, we are actually coming in with a smaller amount of machines that we introduced to the market. But then the timelines that we are looking at now is towards the end of the year you'll see a full product line running in these markets, especially in South Africa where in all of Africa these machines have been running. So on the forestry side we've got a full product line that's already running in these markets. And then it ranges between skidders, grapple and cable skidders, forwarders, wheeled and tracked harvesters. So yeah, we've got over and above, we've got about 71 models that we can offer to the market. The only thing is just it will be linked to what you as a customer would want to see based on those models.

I mean, Griffiths, I'm au fair with the forestry industry in South Africa, but how big is it throughout the rest of the continent?

So the forestry market, actually it's not as big as the construction market and not as big as the normal agricultural market because it depends on where the trees are planted and where you can and Based on the climate. So the market is fair and I think it's bigger more in South Africa because of the amount of land that there is provided for forestry. But then as you go up into Africa, it's not that big. It's just on certain spots of the continent.

Jacob, coming back to you, you spoke about the dealerships and of course after sale service is key for John deere.

Tony, you're 100% correct. We pride ourselves for keeping our farmers up and running through the different seasons. Construction, those equipment needs to run 24, seven, seven days a week. And we're up for the challenge. We believe we're geared in order to support them. Just to put it in perspective, a farmer, if they miss their 10 day planting window, their whole yield is lost. And if we can do that since 1837, we're confident we're going to do it and actually exceed expectations on a construction site. We're proud in bringing these world class dealers to construction. West Africa we've got Dem equipment, the Tata Group, South Africa, it's Afghari, Senves, Mascor and then in East Africa at this point it's also the Mascor and then Southern Africa, Afgri is also running in a few countries. More announcement very, very soon as we expand with construction and agricultural sites. Tony, really, really looking forward to getting to know the customers. And the proof lies in the pudding. How are we going to support this for the customer?

100%. Krivis, let me just end with you. You spoke a little bit about the fact that John Deere has been operating in terms of the construction and forestry space in West Africa. But what's new now? What can they expect in terms of the product line? Just give us a little bit taster.

Yeah. So Tony, what I can add is that our machines just look out for a lot of improvements in the product and we are still sticking on our strategy of puck which is performance, uptime and low cost of ownership. And the most important thing is if you are a grader, owner or operator, just go and look at those areas where you know that your frames can crack. Just go and do measurements on those on, on that, on our frame and see what we've done in actually strengthening our frames on our new excavator that is actually first in these markets. You'll see that when it was built and designed, it was actually made or designed with the mechanic in mind, with the customer in mind to reduce the time that it actually takes for you to either troubleshoot hydraulics or electrical wires. It's based on the routing of those hydraulics, hydraulic hoses, those electrical wires as well. And if you look at our covers, our panels, you just go and just feel them and then you'll see that there's a lot of durability in that. And on the wheel loaders, what I will share is that we've actually improved on our cooling system just to make sure that your machine actually runs longer and with less overheating problems and very efficient.

Fantastic stuff.

Awesome, awesome. Gentlemen, thank you so much. Yaku and Griffiths, thank you so much for joining me here on Tech Terrain. And as you heard from Yaku, he's feeling very bullish about the introduction of all this new kit within the construction and forestry space in South Africa and the rest of the continent from John Deere. Well, we'll be back with more information on John Deere's yellow and black machines right after this. So we're still chatting to Team John Deere about the exciting launch of its construction and forestry range. And I welcome in studio, Yana Lies Van Buren, who is the director, aftermarket and customer support services for Africa, Middle East, India, Asia and China. And also Antwer van der Weste joins me, is the managing director, John Deere Financial services or financial Africa. Guys, thank you so much for joining me. Yana, Liz, when do you ever find time to actually relax? Africa, Asia, Middle East, I think it's.

All about time management and how we schedule the thing. So, yeah, sometimes early mornings, but sometimes early afternoons as well, when I call off.

Yeah, fantastic. Listen, good to have you here with us on Tech Terrain.

So talk to us.

I mean, the John Deere promise is the critical part of that is after sales and technical support, when we look at cnf, which is construction and forestry, are you going to offer exactly the same?

Pretty much the same, Tony. Yes. So, you know, we offer our aftermarket and customer support on the full product range that we will have available in construction and forestry. And you know, our promise to the customer is that we want to, or our goal is that we want to enhance the economy value of every single piece of equipment through the full life cycle of that piece of equipment. You know, so since the first hour that you turn key till the last hour, that piece of equipment runs.

Okay, so now you're launching the range throughout the whole of the continent, then one has to ask the capacity for you to service my machine. If I'm buying this in Tanzania, if I move to West Africa, in Ghana.

And so forth, capacity is extremely important. So our approach is very similar to what we do in the agricultural space. So we are focusing to have dedicated construction and forestry technicians in the space. And then already in place today we have over 520 parts people at the counters, you know, that can service our customers, that knows the systems. Very importantly for us as well, you know, is where we source the parts from, you know. So for our dealers in Southern Africa, our parts supply will come out of the Johannesburg parts distribution center and then our dealers located in East Africa. There we will source our parts directly from Germany in Europe, and then our dealers located in West Africa, we source directly out of the United States.

All right, Antoine, let me come to you about. Let's talk about this plant that we're talking about, the kit we're talking about. It is not cheap. It's necessary, but it's not cheap. Where does John Deere Financial come in and what sort of solutions do you offer?

Antonio, thanks. I think to answer that properly, we have to go back in history a bit. So in the early 1950s, John Deere Financial was established as a business to enable our equipment divisions to sell equipment. So we quickly realized that for our customers to afford our equipment, we need to make sure that we provide a financial solution that is tailor made for them, that is really flexible and suits their business. So for that reason, John Air Financial was started in the early 1950s. So about 16 years ago we had the honour of bringing John Deere Financial into Africa. We started that business in South Africa and since then we've been making a big difference in the agricultural sector. So it's very important to understand that business because if we understand that business, we can design our financing solutions for that specific need of our customers. And you know, two farmers sitting right next to each other have different needs and the cycles differ, the production cycles difference. Now we're very happy to say that we're doing exactly the same for our construction business. We know that construction businesses also differ. A business that's involved in road building or in surface mining is very different from a business that's just building commercial properties. And we need to understand that because if you understand that, you can design financial solutions that suit that specific business. And that's where we come in. So we're very happy to say that we have that capability now that we can do that for our construction customers.

And this is from a dealership level and also to the individual or to a company level.

Absolutely. So it is for our dealers. We enable our dealers to have the stock available when our customers need it. So we provide a financing solution for our dealers to carry that stock and then for the individual. So if the individual needs to buy immediately, we have the solution for him available to go and buy.

Well, Yana, lies I'm looking at I want to get into construction, I want to get into forestry. I'm already involved in these industries. Why should I come and knock on your door as John Deere's door?

Tony I think, you know, there's some differentiators that we can call out. We just launched into the market, you know, and short term, you know, we made available a free inspection program for all our customers with yellow kit with also a very attractive, you know, parts discount that they can benefit from. But then I think, you know, also very attractive is the extended warranty that we will offer on all our yellow machines. With extended warranty, we can tailor, make it to the customer need. The customer can determine the duration that he wants to take out the extended warranty. And then you also have the choice, do I want to warrant my whole machine? Just a portion, the powertrain, the engine. So there's various options that the customer can look at. And then I think also a great, powerful differentiator for us is the connectivity that we have through JDLink into our machine, where we monitor machine health through expert alerts. We've got dedicated people sitting at dealers monitoring our machines 24 hours a day. And should something go wrong with a piece of equipment, it fires out an alert. We call it expert alert. So I think those are awesome differentiators that we bring to the market today.

Okay, so Antoine, tell me, can one get financing for aftermarket products?

Tony Good question. I think what's very important, as Yanalies was saying, is one of our differentiators is the fact that we provide exceptional aftermarket service. But we also know that when you're a contractor, you get paid at the end of your contract. So if you have breakdowns and things like that, you need money to be able to keep that machine going. That's where things like the extended warranty can help you quite a lot. But we also know there's a lot of machines that does not have those warranties in place. They too old and they run out of warranty, but we still need to keep them going. So our solution on financing is at two levels. The first one is when you buy a new machine, you can buy service plans, you can buy maintenance plans, you can buy the extended warranties. All of that is included in the purchase price of that machine. And we provide the financing for that as well. So it's incorporated As a first off already, so you have peace of mind to know that that machine is catered for. But then also those machines that need to have parts, that need to have additional services down the line, they're getting too old. We are very excited that we are launching a aftermarket financing product that will enable our customers to carry stock of parts that will be able to pay for those services. And that's all in a structured way that again is fitted to the way that the contract and what the market is asking for. I think what's also very interesting is we already collaborating with Wirtken, our road building business. We are already providing that solutions for them. So this is not totally new for us. As a South African John Deere Financial business, we've already sort of wetted our feet a bit and we've picked up a lot of lessons and learned a lot so that we can just service our customers at the end a lot better.

And just before I let you guys go, I mean, Antwer, you know, financing, it's a relationship, isn't it? Because long term, you know, you're getting into it's a deal, but it's a relationship that you're forming with your client.

Absolutely, very true. And I think that's one of our differentiators as John Deere Financial. Many people think if you buy a piece of equipment or you buy a car, it's a once off, you do the deal, you drive it and it's gone. We don't operate like that. We have an extended network of salespeople and support staff available throughout our country and even north of our borders into Africa, that whenever there's any need for additional financing, there's any problems, there's any questions that need to be asked, we have people and experts available to support our customers for that.

And Yanale is exactly the same for yourself, isn't it? In terms of that relationship that you have with your customers?

Extremely important, you know, and I think, you know, something that we can call out as well, you know, is the importance, you know, to have the knowledge to be able to service our customers, meaning, you know, educate our technicians, our parts people to ensure, you know, that we have premium service out to our customers and out there.

Okay, fantastic. Look guys, thank you so much, Elise, Antoine, for chatting with me. So they've made it loud and clear the after sales support is there and also the financial support is there from John Deere and we know that customers will be well looked after. Indeed, it is a lifetime experience. Deere is here and ready to walk the road with you all the way. Thank you for joining us today for the official introduction of the John Deere construction and forestry range change. It's truly exciting stuff. So let's go move some earth from me, Tony and Doro. Bye bye for now.

Sam, it.