Zuma’s Speech Disappoints as South African Economy FaltersMike Cohen
South African President Jacob Zuma did little in a key speech yesterday to inspire confidence among analysts and opposition parties that his government can spur an economy battered by mining strikes and power shortages.
Zuma’s State-of-the-Nation address to Parliament in Cape Town “was more of the same,” Mamello Matikinca, a strategist at FirstRand Ltd.’s investment-banking unit, Rand Merchant Bank, said in a note to clients today. “Sustainable solutions to the fundamental problems facing the country, such as labor relations and the quality of education, remain elusive.”
Zuma, 72, pledged to boost the economic growth rate to 5 percent by 2019, improve the business climate and play a more proactive role in resolving “untenable” labor strife. He began his second five-year term in May amid a 21-week strike that’s shut the world’s biggest platinum mines, the threat of recession and a credit-rating downgrade.
“It was a speech of a leader out of touch with the plight of the people he has the privilege to serve,” Mmusi Maimane, parliamentary leader of the main opposition Democratic Alliance, told lawmakers in Cape Town. “Our economy should be creating jobs and creating wealth for all South Africans, but it is faltering because of policy uncertainty.”
Zuma made his first public appearance yesterday in more than a week following a two-day stay in the hospital after suffering from exhaustion. He was driven to the front entrance of the National Assembly and took the hand of Speaker Baleka Mbete as he descended the steps into the venue.
Standard and Poor’s cut the nation’s credit rating to one level above junk on June 13, concerned that a slowdown in growth will make it difficult for the government to stick to its budget targets. The strike by 70,000 mineworkers caused gross domestic product to contract an annualized 0.6 percent in the first quarter.
The state will help revitalize mining towns while ensuring companies meet their obligations to improve workers’ living conditions, Zuma said.
Economic policy in Zuma’s second term is focused on implementing a 20-year National Development Plan that seeks to cut South Africa’s jobless rate to 14 percent by 2020 from 25 percent.
The central bank last month cut its growth forecast for this year to 2.1 percent from 2.6 percent.
The rand has slumped 2.3 percent against the dollar this year, extending last year’s 19 percent plunge. It gained 0.9 percent to 10.7389 as of 4:42 p.m. in Johannesburg after data showed the current-account deficit narrowed in the first quarter.
Zuma said the government will address power shortages that have caused rolling blackouts since last week, including speeding up the provision of funding for a third new coal-fired power station and the development of new nuclear-energy plants.
“We are not sitting on our laurels or hiding our heads in the sand,” Deputy President Cyril Ramaphosa said in a speech in Cape Town today. “The government is very much alive to the challenges we face. Watch this space. There is going to be performance.”
Sixty-one percent of 3,370 adults surveyed in February and March said the state wasn’t doing enough to tackle unemployment, research company Ipsos said in a June 13 e-mail. Just 12 percent said they got value for money from the taxes they paid, it said.
The government’s pledges won’t address racial inequity that persists 20 years after the end of white minority rule, said Julius Malema, the 33-year-old leader of the opposition Economic Freedom Fighters, which advocates the nationalization of mines, banks and farms.
Malema, who formed the party last year after being expelled from Zuma’s African National Congress, called on Parliament to legislate a national minimum monthly wage of 12,500 rand ($1,163) for miners, in line with the wage demands of striking platinum workers.
“You are a man of tradition, a tradition of empty promises,” Malema told Zuma in Parliament today. “You lack courage. You are extremely scared of white people, particularly white minority capital.”