Land Reform, Redistribution and Agricultural Investment Growth: What Are Implications for the National Development Plan Output and Employment Targets?

Abstract

Evidence in this chapter shows that youth employment benefits from positive agricultural sector GDP growth shocks. The unemployment rate in the agricultural sector declines in response to an increase in employment growth. Positive agricultural sector employment growth increases more than output growth in response to positive agricultural investment growth shocks. This implies that output growth tends to be labour intensive (creates more employment). At the same time labour productivity growth improves. Furthermore, the results for a positive shock to area cultivated in the former homelands indicate that agricultural output growth, employment growth and labour productivity increase. This means that bringing underutilised land in the former homelands and communal areas will make a significant and meaningful difference in the agricultural sector contribution to output growth, employment growth and labour productivity growth. But the results show that increasing investment alone is not sufficiently large enough to boost agricultural sector output growth, employment growth and labour productivity growth. Bringing in underutilised land in the former homelands and communal areas more than doubles the response of the agricultural sector output growth, employment growth and labour productivity growth.

The policy implication is that policies aimed at growing the agricultural sector such as land redistribution and reform, support for the agricultural sectors in various forms such as investment in irrigation, research and development will benefit employment creation especially the absorption and participation of youth (new entrants) in the labour markets. In addition, such a policy strategy will also lead to increased rural labour absorption and participation and lower the unemployment rate in the so-called rural provinces. Such structural changes and policy objectives are compatible with dealing with the perennial societal ills associated with unemployment, poverty, income and wealth inequality.