Lehman Brothers: Zuma's plans sound expensive

Global analysts Lehman Brothers said in a research note on Tuesday that African National Congress (ANC) president Jacob Zuma’s high-growth policy plans sounded “rather expensive”, with funding probably coming from the budget surplus. The analysts said that Zuma had not supplied cost estimates, and they would need to examine these figures before commenting further.

The analysts made their comments after the ANC’s 96th anniversary rally on Saturday.

“Zuma’s policy speech was much as expected, concentrating on spending, growth and unemployment as well as the unity of the party. There was no mention of the monetary policy regime,” noted the analysts.

“Overall, he is seeking a high-growth policy aimed primarily at reducing the gap between rich and poor through universal service provision and state intervention.”

“Critically, however, and departing from his prepared speech, he said that those in government must abide by the will of the ANC and that if not there would be very ‘severe consequences’. There was also mention of a further acceleration in giving land back to whom it belongs,” they pointed out.

The analysts said that on spending, Zuma’s priorities appeared to be education, healthcare and unemployment.

“Regarding education, the policy is for the number of free school places to rise dramatically to 60%. There are also plans for a new adult literacy programme for 4,5-million people employing some 80 000 tutors.”

On unemployment, Zuma plans state intervention to reduce the rate of joblessness, partly through “promoting labour-intensive production methods and procurement policies through significant expansion of the public works programmes”.

“On healthcare, he wants to increase access for the poor to government help to reduce costs and set up a state-owned pharmaceutical company and expand free HIV/Aids treatment to 80% of people,” noted the analysts. - I-Net Bridge