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13 October 2020 | Story Prof John Mubangizi | Photo Sonia du Toit
Prof John C Mubangizi is Dean: Faculty of Law, University of the Free State.

South Africans are sick and tired of corruption. They are angry, frustrated and despondent. And they have every reason to be. South Africa has many problems: crime, unemployment, poverty, gender-based violence, inequality, low economic growth and now – in common with many other countries – COVID-19. The list goes on and on. What makes corruption the biggest threat among all these is that it cuts across all of them and impacts on their gravity in different ways. 

The South African Constitution envisages a society based on democratic values, social justice and fundamental human rights. The way things are going, that society is never likely to happen. That is because corruption has been, and continues to be, the greatest threat to any possibility of realising that constitutional dream. In South Africa, like everywhere else where corruption is rampant, it occurs both in the public and private sectors, where it affects democracy and human rights by deteriorating institutions and diminishing public trust in government. It impairs the ability of government to fulfil its obligations and ensure accountability in the delivery of economic and social services like healthcare, education, clean water, housing, and social security. This is because corruption diverts funds into private pockets – which impedes delivery of services – thereby perpetuating poverty, inequality, injustice and unfairness. The problem is aggravated when government is the main culprit. “Government” here, of course, refers to the dictionary meaning of the term, namely, “the group of people with the authority to govern a country or state”.

Corruption existed in ancient Egypt, China and Greece

There are those who argue that corruption is as old as mankind and, therefore, it is here to stay. Indeed, corruption is known to have existed in ancient Egypt, ancient China and ancient Greece. In Robert Bolt’s 16th Century play A Man for All Seasons, Richard Rich’s opening remark is “But every man has his price.” In the 1836 play The Government Inspector, Nikolai Gogol cleverly satirised the human greed, stupidity and extensive political corruption in Imperial Russia at the time. And in a recent article in The Conversation (28 August 2020), Steven Friedman wonders why South Africans express shock at corruption when “it is perhaps the country’s oldest tradition.” He locates the advent of corruption in South Africa at the arrival of Jan van Riebeeck in 1652, through to the ensuing colonialism and apartheid. He argues that in reality, “corruption has been a constant feature of South African political life for much of the past 350 years. It is deeply embedded and it will take a concerted effort, over years, not days, to defeat it”. 

Agreed, but does it have to be that way? At the time of Jan van Riebeeck and during the 350 years of colonialism and apartheid, we did not have the legal framework that we have now. Here is a brief overview of that framework.

Read full article here

Opinion article by Professor John C Mubangizi, Dean: Faculty of Law, University of the Free State


News Archive

Producers to save thousands with routine marketing strategies, says UFS researcher
2014-09-01

 

Photo: en.wikipedia.org

Using derivative markets as a marketing strategy can be complicated for farmers. The producers tend to use high risk strategies which include the selling of the crop on the cash market after harvest; whilst the high market risks require innovative strategies including the use of futures and options as traded on the South African Futures Exchange (SAFEX).

Using these innovative strategies are mostly due to a lack of interest and knowledge of the market. The purpose of the research conducted by Dr Dirk Strydom and Manfred Venter from the Department of Agricultural Economics at the University of the Free State (UFS) is to examine whether the adoption of a basic routine strategy is better than adopting no strategy at all.

The research illustrates that by using a Stochastic Efficiency with Respect to a Function (SERF) and Cumulative Distribution Function (CDF) that the use of five basic routine marketing strategies can be more rewarding. These basic strategies are:
• Put (plant time)
• Twelve-segment pricing
• Three-segment pricing
• Put (pollination)(Critical Moment in production/marketing process), and
• Pricing during pollination phase.

These strategies can be adopted by farmers without an in-depth understanding of the market and market-signals. Farmers can save as much as R1.6 million per year on a 2000ha farm with an average yield.

The results obtained from the research illustrate that each strategy is different for each crop. Very important is that the hedging strategies are better than no hedging strategy at all.

This research can also be applicable to the procurement side of the supply chain.

Maize milling firms use complex procurement strategies to procure their raw materials, or sometimes no strategy at all. In this research, basic routine price hedging strategies were analysed as part of the procurement of white maize over a ten-year period ranging from 2002–2012. Part of the pricing strategies used to procure white maize over the period of ten years were a call and min/max strategy. These strategies were compared to the baseline spot market. The data was obtained from the Johannesburg Stock Exchange’s Agricultural Products Division better known as SAFEX.

The results obtained from the research prove that by using basic routine price-hedging strategies to procure white maize, it is more beneficial to do so than by procuring from the spot market (a difference of more than R100 mil).

Thus, it can be concluded that it is not always necessary to use a complex method of sourcing white maize through SAFEX, to be efficient. By implementing a basic routine price hedging strategy year on year it can be better than procuring from the spot market.

Understanding the Maize Maze by Dr Dirk Strydom and Manfred Venter (pdf) - The Dairy Mail


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