17. June 2014

State of the Nation Address Focus on economy and job creation

President Jacob Zuma sought to provide answers to the voters and assure them that his second administration will work harder to improve things. He put more emphasis on improving the struggling economy, creating jobs, bettering service delivery and making South Africa more energy secure.
Zuma made his first public appearance 11 days after the ANC said it had asked him to take time off from work, following an intense elections campaign. He delivered his 72-minute-long speech looking frail and sounding weak. There has been much speculation about Zuma’s health since he took time off and the presidency announced that doctors had booked him off for fatigue.
Zuma put the economy at the centre of government’s plans to reduce poverty, inequality and unemployment, saying economic growth remained the most effective weapon against these perennial problems. He acknowledged the major economic challenges facing the country, following shrinking economic growth figures last week and the subsequent downgrading of the country’s credit rating by ratings agency Standard & Poor’s.
“The slow growth has been caused in part by the global economic slowdown and secondly by domestic conditions, such as the prolonged and at times violent strikes and also the shortage of energy. Key to concerns about economic stability has been the as yet unresolved strike on the platinum belt.
Zuma announced that he would take over the work started under his former deputy Kgalema Motlanthe on the Framework Agreement for a Sustainable Mining Industry reached by labour, business and government last year. These efforts will include work to revitalise mining towns, notably the areas of Matlosana, Emalahleni, Sekhukhune, Lephalale, West Rand and Matjhabeng.
In addition an interministerial committee on the revitalisation of distressed mining communities has been established to be led Minister in the Presidency responsible for Planning, Performance Monitoring and Evaluation, Jeff Radebe.
Government would be monitoring the compliance of mining companies with mining charter targets to improving the conditions of workers and Zuma urged companies to meet the 2014 deadlines set out in the charter.
Eskom announced it had started loadshedding moments before Zuma launched into an address that listed energy as a key lynchpin of economic development over the coming five years.
The president called for a “radical transformation of the energy sector to develop a sustainable energy mix that comprised coal, solar, wind, hydro, gas and nuclear energy”. This would require “structural changes in the manner in which government departments, affected state owned companies and the industry as a whole address the energy challenges”, said Zuma.
As with his February address, he emphasised the potential for nuclear energy to supply more than 9 000 megawatts of electricity to the country as well as the opportunity for shale gas to be a “game changer” for South Africa. He noted that the national nuclear and energy executive co-ordinating committee of Cabinet was in the process of being converted into a Cabinet subcommittee, to be known as the energy security Cabinet subcommittee.
The subcommittee would be responsible for the oversight, co-ordination and direction of activities for the energy sector. This included ensuring “that Eskom receives the support it requires to fulfill its mandate”. The utility, which is battling supply constraints and extensive delays on new power stations, also faces a R250-billion funding shortfall, raising the question of what shape further support from the state would take.
State owned entities such as Eskom, South African Nuclear Energy Corporation and the Central Energy Fund, would have to adapt to “redefined roles” to achieve security goals, noted Zuma.
While nuclear and shale gas has been a feature in previous speeches, both energy sources are viewed as controversial, due to the cost of funding nuclear in particular, as well as the environmental impact of shale gas exploration.
Zuma stressed the extent of technical work needed, especially when it came to nuclear energy and shale gas regarding funding, safety, exploitation and the local manufacture of components.
He called for the finalisation of the legislation to restructure the energy industry, notably the Independent System and Market Operator (ISMO) Bill. The long-delayed ISMO Bill stalled in Parliament last year, to the outrage of industry experts and opposition parties.
In the short-term, Zuma said the financing for a third new coal-fired power station would be “speeded up” to ensure procurement on Coal 3, as it is known, could commence. He also re-emphasised existing plans to look beyond South Africa’s borders for sources of energy, including the signing of the Grand Inga Hydro Power Project Treaty with the government of the Democratic Republic of Congo.
Zuma also promised that his administration would “promote local procurement and increase domestic production by having the state buy 75% of goods and services from South African producers”. This will appease trade union federation Cosatu, which called for the state to support small enterprises, co-operatives and broad-based black economic empowerment.
Zuma responded to the call for jobs for youth, a concern that was increased by the latest unemployment figures of 36.1%, according to Stats SA, which showed young people are the most affected by joblessness. “Government will introduce further measures to speed up the employment of young people, consistent with the Youth Employment Accord,” Zuma said.
“We will expand the number of internship positions in the public sector, with every government department and public entity being required to take on interns for experiential training”.
Despite strong opposition from Cosatu, Zuma highlighted the success of the employment tax incentive, launched at the beginning of the year. After five months, the incentive has benefited 133 000 employees, while 11 000 employers have participated.
Alongside this Zuma announced, in line with the ANC election manifesto, that the government would investigate “the possibility of a national minimum wage as one of the key mechanisms to reduce the income inequality”.
Zuma’s second administration will also accelerate mediation and peace building across Africa. South Africa has been involved in peacekeeping for a good part of the first 20 years of democracy, an exercise that sometimes raised questions about what the country was benefiting from the deployment of soldiers. Deploying the South African National Defence Force (SANDF) in the Democratic Republic of Congo for more than a decade and the death of South African soldiers in the battle for Bangui in the Central African Republic are some of the deployments analysts have questioned.
“The South African National Defence Force has been a source of national pride as it participated in peacekeeping missions in the continent. This role will continue and government is looking into the resourcing of the SANDF mandate in line with recently concluded Defence Review.” The ANC’s concern about the 2016 local government elections came out clearly in Zuma’s speech when he outlined plans for municipalities to address service delivery concerns. “We have listened to the complaints and proposals of South Africans over the past five years relating to the performance of municipalities,” he said, before outlining intervention plans for 15 municipalities across the country.
“We have inspected their financial management, how they work within legislative processes as well as their ability to roll out projects and to address capacity constraints.” The loudest cheer though, came with the announcement that the national government will help the City of Johannesburg to resolve problems with its billing system. The billing system of the country’s richest metro has been shambolic for years, with many households receiving inaccurate and vastly inflated bills.  ANC secretary general Gwede Mantashe told journalists last week that local government was going to be the party’s focus going forward. “We are going to be focusing on local government. We are not going to run around like headless chickens, we are going to be more systematic,” he said.
“Even the question of deploying people at local government is going to be more stringent and vigorous,” he said.

Cosatu's Zwelinzima Vavi and opposition parties have harshly criticised Jacob Zuma's Sona, with some calling for a radical change to economic policy.
Cosatu general secretary Zwelinzima Vavi said he was worried that the government was moving ahead with the implementation of employment tax incentives, despite strong opposition to this from labour. “He [Zuma] says 133 000 jobs were created but we are not told how many jobs have been lost . We are sitting at 36.1% youth unemployment. It’s a serious crisis,” said Vavi Cosatu has previously argued that the only way the government could deal with the issue of unemployment was if it changed the current economic policies.
“Youth make up 52% to 64% of the working population, yet account for only 42% to 49% of those with jobs. This shocking statistic is symptomatic of the wider economic crisis we face. Despite the advances we have made in the first 20 years of democracy – the scrapping of racist apartheid laws, a Constitution that enshrines human rights, andmany progressive laws and social grants to protect the poorest South Africans – our economy has changed relatively little since 1994”. 

Opposition parties were also not impressed by Zuma’s speech.
Democratic Alliance Parliamentary leader Mmusi Maimane said Zuma speech ignored issues of corruption and youth development. Maimane said while the national government’s intended intervention in municipalities was a good step in the right direction, he did not understand why Zuma needed to announce something that should have been done long ago.
Inkatha Freedom Party leader Mangosuthu Buthelizi said he did not expect anything new from Zuma speech.
“What I liked was his honesty, that the six-million jobs are coming from the expanded public works programme. People expected that these were would be decent jobs,” said Buthelezi.
Economic Freedom Fighters leader Julius Malema was also scathing. He said Zuma repeatedly mentioned the word radical without understanding its meaning. “You can’t promise radical economic changes and tell people the government will continue with its [current] programmes." (Mail & Guardian, Johannesburg)


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