In a State of the Nation Address (Sona) speech that really got underway only after members of the Economic Freedom Fighters (EFF) left Parliament on Thursday night, President Jacob Zuma was upfront about the country’s economic challenges.
Zuma started speaking an hour late after mostly members of the EFF challenged Speaker Baleka Mbete and Chairperson of the National Council of Provinces Thandi Modise, by raising numerous spurious points of order.
As he started speaking, Congress of the People (Cope) leader Mosiuoa Lekota raised, saying Zuma was not fit to address the house after admitting before court that he violated his oath of office. Lekota referred to Zuma’s legal team’s admission before the Constitutional Court two days before, that Public Protector Thuli Madonsela’s remedial action on the over-expenditure on Zuma’s Nkandla homestead was binding – a fact he earlier tried to sidestep.
Delivering his annual Sona, Zuma addressed the current economic challenges, saying the South African economy is small and open and has therefore been affected by international factors as well as local factors, like electricity constraints and unstable labour relations.
He outlined the risks associated with a ratings downgrade to junk status and said the country needs a turnaround plan and has to act where it failed to do so before.
Zuma said the NDP aim of 5% annual economic growth by 2019 will, in the current circumstances, not be achieved in the set timeframe.
“The tough global and domestic conditions should propel us to redouble our efforts, working together as all sectors. In this regard, it is important to act decisively to remove domestic constraints to growth,” he said.
“We cannot change the global economic conditions, but we can do a lot to change the local conditions. Let us work together to turn the situation around. It can be done.”
Zuma repeated earlier announcements aimed at making South Africa more attractive for investors, including the removal of red tape and legislative and regulative blockages.
He acknowledged concern about State-owned companies (SOCs) and named the South African National Roads Agency (Sanral), the Trans Caledon Tunnel Authority (TCTA) and Transnet as examples of well-performing SOCs.
“For the State-owned companies to contribute to the successful implementation of the National Development Plan (NDP), they must be financially sound. They must be properly governed and managed,” Zuma said.
He promised the implementation of findings of the revision of SOCs, under the leadership of Deputy President Cyril Ramaphosa and said those that are not relevant, will be phased out.
Zuma said South Africa should benefit from the weak currency through inbound tourism growth. He added that SA Tourism will spend R100 million a year on promoting domestic tourism.
With regard to delays in obtaining visas for skilled workers from other countries, he said the “draft migration policy” will be presented to Cabinet during the course of 2016.
“We have heard the appeals for policy certainty in the mining sector, especially with regards to the Mineral and Petroleum Resources Development Bill. The Bill was referred back to Parliament last year. We await Parliament to conclude the processing, which we trust will be done expeditiously,” he said.
Zuma said government’s cost cutting measures will be intensified with a focus on overseas trips, catering, conferences and entertainment. The elaborate dinners after departmental budget votes have been scrapped, he said.
He challenged provinces, municipalities, the judiciary and Parliament to follow suit and, specifically, said the maintenance of two capitals – Pretoria and Cape Town – is costly and should be urgently revised.
A ten-point plan has been drafted for the next phase of the back-to-basics strategy to improve municipal service delivery, Zuma said. This will, among other things, see national government doing spot checks relating to municipal procurement.
Zuma gave feedback on the progress in implementing the nine-point plan he announced in his Sona last year. These are:
- Revitalisation of the agriculture and agro-processing value-chain;
- Advancing beneficiation adding value to our mineral wealth;
- More effective implementation of a higher impact Industrial Policy Action Plan;
- Unlocking the potential of SMME, co-operativess, township and rural enterprises;
- Resolving the energy challenge;
- Stabilising the labour market;
- Scaling-up private-sector investment;
- Growing the ocean economy;
- Cross-cutting areas to reform, boost and diversify the economy;
- Science, technology and innovation
- Water and sanitation
- Transport infrastructure
- Broadband rollout
- State-owned companies.
He outlined the steps taken by government and the private sector to stabilise electricity supply, citing that no load shedding occurred since August.
He was muted on nuclear, saying government “will test the market to determine the true cost” and will only procure on a scale and pace it can afford.
Zuma said labour relations have improved over the past two years. He welcomed the Nedlac agreement on the principle of a national minimum wage, as well as the finalisation of a framework to limit the length of strikes and curb associated violence.
He appealed to business to refrain from retrenchments as a first resort when it finds itself in financial difficulty.
Zuma listed successes of Operation Phakisa, aimed at accelerated implementation of growth strategies and said a State-owned pharmaceuticals company had been established and would participate in the supply of anti-retroviral medication to government in the current financial year.
Zuma also stated that the South African democracy is functioning, solid and stable. He said the “journey to a non-racial society” is however, not completed. In the aftermath of incidents of extreme racism in January he announced that Human Rights Day on March 21 would be the first National Day Against Racism, laying the foundation for a long-term programme against racism.