There has been mixed reaction to President Jacob Zuma’s State of the Nation address,delivered last night.
The opposition Democratic Alliance party, was, as is to be expected, unimpressed. DA Parliamentary Leader Lindiwe Mazibuko said “South Africans were looking forward to an honest assessment of the state of our nation. They did not get it. Instead, they got a speech designed to put a positive gloss on government performance and appease the governing party’s alliance partners ahead of the Mangaung elective conference in December. As a result, the President appeared out of touch with reality.
“Instead of acknowledging that 107 000 jobs were lost this year, the President spun the figures to make it appear as if there had been an improvement in job creation. Despite growing unemployment, the President had nothing new to say – besides spending on infrastructure – about how jobs would be created. It was notable that, as a result of opposition from Cosatu, there was no mention of the wage subsidy he announced in 2010.
“We welcome the infrastructure projects mentioned by the President, but there are question marks over how we are going to find an additional R330 billion per year to pay for them. If the President had the courage to take on his alliance partners, he would have announced plans to cut the public sector wage bill to pay for new infrastructure,” Mazibuko said.
“The President also appeared untroubled by the violent crime that holds people hostage to fear. Just three sentences on safety and security in an hour-long speech will do nothing to reassure South Africans that the government has a plan to keep them safe from criminals.”
Tim Harris, the DA’s shadow for finance says the speech leaves Finance Minister Pravin Gordhan “holding the fiscal baby”. He says the State of the Nation speech was the easy part. “Now Finance Minister Pravin Gordhan is faced with a difficult balancing act in his National Budget address, scheduled for February 22. While the strong commitment to infrastructure-led growth is welcome, it will probably leave Minister Gordhan with a funding shortfall.
Harris says if the government wants to scale up its role in the economy, then investment in infrastructure is the place where intervention is much needed. “The National Planning Commission has calculated that the maintenance backlogs for electricity distribution alone is R30 billion. The backlog in maintenance of our roads is R149 billion. In order to make up these and other backlogs, and build the infrastructure that will enable the South African economy to grow at 8% a year, we need to invest around 10% of our GDP in infrastructure, equivalent to R330 billion in 2012. Given the Finance Minister’s stated investment of R808 billion over the medium term, we are left with a shortfall of around R51 billion this year.
Political analyst Steven Friedman said it was very worrying to him that Zuma made no mention of plans to improve local government following many complaints by South Africans. Friedman said this gap in Zuma’s speech raised eyebrows because Zuma had declared 2011 as a year of turning around local government. “There was no single word on how government plans to improve services. That is key and ignoring it won’t solve the problem. Most people don’t think that was done [last year],” said Friedman. He welcomed the focus on infrastructure, saying it was expected as it was what the country needed to create jobs.
Friedman said apart from infrastructure investment, the president was “repeating what we already know”, particularly on economic transformation. Zuma spoke of government’s plan to amend the Broad-Based Black Economic Empowerment Act, the SA Press Association reports. He admitted that the land redistribution process was “slow and tedious” and acknowledged that the willing buyer-willing seller option had not been the best way to address this question. Only eight percent of land, of the 30% target by 2014, had been distributed.
Another analyst, Aubrey Matshiqi of the Centre for Policy Studies, described Zuma’s address as “very ambitious”, but said it lacked detail on implementation. “The targets are not completely related to an agenda for 12 months. It means we’ll have to judge the ANC government in terms of promises made in the speech and how much progress is made in the short to medium term,” said Matshiqi.
Matshinqi said it was interesting that Zuma made no mention on international relations.
Should plans on infrastructure development materialise, they would depend on a partnership between government, the public sector and civil society. Matshiqi said it would also depend on the performance of the global economy. “One weakness is the absence of a pact between our social partners like labour, the private sector and the state,” said Matshiqi. “With the absence of these, all plans will come to naught.”
Idasa analyst Judith February said some of the critical issues Zuma did not emphasise were corruption and tenderpreneurship, considering the number of tenders that would be rolled out as a result of this big infrastructure programme.
SAPA further reports trade unions praised President Jacob Zuma on Thursday for what they described as his honesty and frankness on the problems South Africa faced. “It was good to hear the president admitting that municipal service delivery is still not on a desirable level,” Solidarity deputy general secretary Dirk Hermann said. However, Solidarity was disappointed that Zuma did not provide solutions. “With regard to crime, skills shortages and the pressure that is put on the rights of minorities in South Africa, President Zuma did not bring forward any significant new solutions,” said Hermann.
The union also welcomed Zuma’s plan to invest in big infrastructure projects, but was worried about the emphasis on empowerment instead of development through education. The Cosatu-aligned Food and Allied Workers’ Union (Fawu) said Zuma’s address was “inspiring”. “President … Zuma… [was] frank about current challenges, especially the triple challenge of unemployment, poverty and inequalities,” the union said. Fawu welcomed job creation being the focus of the massive infrastructure development plan. “We still wish to see much more focused and deeper plans on the creation of green jobs, and the agro-processing sector becoming one of the job drivers.”
The Federation of Unions of SA (Fedusa) questioned where the additional money for the infrastructure development plan would come from. “Infrastructure investment in our roads, rail, ports and water will unblock the rich mineral resources of platinum, palladium, chrome and other minerals to increase South Africa’s mining potential and beneficiation programme,” Fedusa secretary general Dennis George said. “The president did however not mention where the funds for this investment will come from and what time frame will be allocated.” Hardly any emphasis was placed on education either, he said.
The South African Chamber of Commerce and Industry (SACCI) was very pleased with the State of the Nation address, although disappointed that small business was ignored, CEO Neren Rau said. “We were very pleased with the speech given the current economic circumstances. We commend President Jacob Zuma for his choice of themes and level of detail provided, which exceeded the level of detail provided in the past.” However, SACCI was concerned about the blatant omission of small, medium and micro enterprises. The lack of a clear direction on policy was concerning. “We would have liked to have seen some sort of long-term direction for the nation, some policy direction for foreign and domestic investors, especially on nationalisation, which was avoided. “That sort of policy clarity was essential,” he said, adding that it was also lacking in Zuma’s ANC centenary address last month.
SACCI was looking for feedback on the local government turnaround strategy, but this was not mentioned. The reduction in port charges was a good news. “That has been a thorn in the side of my members for a while.” Rau also welcomed the planned improvements to infrastructure. “Especially as it’s all in projects that facilitate getting minerals to the coast and to international markets.”
Rau said the creation of 365 000 jobs in 2011 was fantastic, despite the target having been 500 000, as it was a very difficult year. In relation to the statutory commission to monitor non-compliance with black economic empowerment and the criminalisation of fronting, Rau said it might be time to review the process. “We do think it may be an opportune time to review the entire process of BEE and transformation. We’ve tried it in its current form, we’ve identified a number of failings… maybe it is time to review the whole process… perhaps before we get too far along on the wrong path to take stock.”
Rau said fronting was a consequence of an inadequate education system. “We have these transformation targets, but if you don’t have the education system turning out the skills required, then business’s hands are tied… as a consequence you have distortions like fronting coming about.”
As such, Sacci would have liked to have seen plans to improve the education system, he said.