SARAH BULLEN, Cape Town | Friday 6.00pm
BUSINESS has given President Thabo Mbeki’s State of the Nation address the thumbs up in what it has digested as a market friendly statement — but one that lacked in depth and detail what it made up in for with good cheer.
“As expected and in true political fashion, no radical viewpoints were put to the nation,” said Citadel Investment Services chairman Louis Fourie.
Economists were upbeat about the announcement of the formation of an International Investment Council that includes international financier George Soros and the heads of 12 multinationals.
Mbeki’s broad presidential policy directives were offered against a background of very positive economic signals which painted a picture of an economy poised for a strong recovery while maintaining low inflation. Mbeki also acknowledged that employment creation, poverty alleviation and measures to boost savings and investment still need to be addressed effectively.
ING Barings chief economist Kristina Quattek said, however, that Mbeki mentioned all the right buzzwords that should support the markets — but failed to spell out details, in particular with regard to further economic reform measures.
He did, however, pick up on the themes that market players and analysts have been concerned with as obstacles to investment and higher growth: a rigid labour market, the slow pace of privatisation, and the existence of exchange controls.
Unions were more guarded in their assessment of the speech. The Congress of South African Trade Unions endorsed the speech and said it is satisfied that it placed the issues of poverty, job creation and economic development firmly on the national agenda.
South African Municipal Workers Union, however, expressed alarm at comments that restructuring of state assets will be speeded up — warning against a pattern of slashing jobs and privatising assets in the drive for a “lean and mean state”. In his speech Mbeki reiterated the government’s commitment to restructuring the public service, which involves significant downsizing and is bound to run into union resistance. The tone of the address confirmed a tougher government stance towards the unions.