Zuma reveals his economic plan to heavy criticism
President Jacob Zuma has once again come under heavy criticism over how his government plans to grow the economy from a sluggish 1.5% to at least 3% in the next three years.
The 3% economic growth is a downward revision from the 5% the ANC-government had committed to achieve by 2019.
In his State of the Economy address at the Union Buildings in Pretoria on Wednesday, Zuma said the economy would grow by 3% through a focus on inward growth opportunities. He said the government would unlock nine opportunities, including revitalising the agricultural sector, mineral beneficiation, the creation of black industrialists, increased focus on small business potential, the ocean economy and resolving problems in the energy sector – something government officials call the Nine Point Plan.
But this plan is not new and the problem is that critics say it does not seem to be working.
‘Not confronting critical issues’
In an interview with the Mail & Guardian on Wednesday, University of Witwatersrand dean of commerce, law and management, Professor Imraan Valodia, said the government’s plans were nothing new.
“There’re always opportunities to find ways to accelerate growth, but we have heard this argument before. There are growth opportunities in the ocean economy. There are growth opportunities in small businesses. But we are not confronting critical issues,” said Valodia.
He said the state should focus on improving public infrastructure. To do this, it needs to improve the governance of state-owned enterprises, especially as they are critical to growth, being strategic sectors.
Valodia said the state could talk about scaling up private-sector investment, but there were a number of serious problems on the political front that would have a big impact on investor confidence.
“I don’t take great comfort in what the president said. There are severe bottlenecks in our infrastructure, energy, transport and all aspects of our social environment,” said Valodia.
Deep state of denial
Michael Cardo, Democratic Alliance spokesperson for economic development, told the M&G on Wednesday that Zuma was a man in a deep state of denial about the economic mess into which he and his government had dragged South Africa.
He said Zuma’s solution to look inwards for growth opportunities was problematic in that government puts too much power in the hands of an increasingly parasitic and incompetent state.
“They don’t tackle the real issue, which is to free up the private sector to get on with growing the economy and creating jobs. The idea that you can ‘create’ industrialists is just a statist flight of fancy. The IPAP [Industrial Policy Action Plan] contradicts the National Development Plan, which Zuma – despite having staked his legacy upon it – has forgotten and abandoned,” said Cardo.
He said the government was correct to focus on the small business sector to boost development and growth, but that the emphasis should be on removing red tape and barriers to market entry, such as onerous regulations. “Instead, the government tinkers with procurement,” he said.
Cardo added that Zuma was deluded about the energy situation in the country.
“He is about to make things a whole lot worse by embarking on this reckless nuclear deal. His priorities should be to provide policy coherence and certainty, fix the mess at Eskom, deregulate the labour market, scrap the visa regulations that are killing tourism and get serious about empowering small business,” said Cardo.