/ 22 October 2008

Don’t panic, Zuma tells investors

Jacob Zuma, widely expected to become South Africa’s next president, met United States government officials on Tuesday to assure them it was business as usual in Africa’s biggest economy, despite recent political turmoil.

In his most high-profile foreign visit since becoming president of the African National Congress in December, Zuma held talks with Secretary of State Condoleezza Rice and met briefly with President George Bush at the White House.

Zuma said one of the main aims of the visit was to improve commercial ties between the two countries.

He said not enough had been done in the past to encourage investment from the United States, one of South Africa’s key trading partners.

The State Department said in her meeting with Zuma, Rice underscored the importance of concluding the nearly seven-year-old round of Doha world trade talks to ensure an agreement that would help South Africa. She expressed hope that a trade deal could still be completed before Bush leaves office in January.

Zuma’s rival Thabo Mbeki bowed to party pressure and stepped down as president in September, paving the way for Zuma, as ANC leader, to take power after elections in 2009.

Some foreign investors are worried Zuma may bow to pressure from his communist and trade union allies to steer South Africa away from Mbeki’s pro-business policies.

Those fears intensified after the ANC, the Congress of South African Trade Unions and the South African Communist Party unveiled an economic blueprint at the weekend that called for greater government intervention in the economy to combat poverty.

In a speech to the Council on Foreign Relations in Washington, Zuma repeatedly emphasised that the ANC was a democratic organisation that took collective decisions and had played a major role in writing many of the checks and balances into the country’s Constitution.

No change
”So, there should be no worry. The situation is going to continue normally. In a sense I am saying: no panic, everything is fine in South Africa,” said Zuma, who is also due to meet business leaders during his visit, which ends on Thursday.

”I have absolutely continued to say that I would change no policies if I became president. I have no authority to do so. That is in the hands of the ANC.”

He did not refer to a weekend economic summit in which the ANC and its allies called for ”decisive action” to change wealth distribution in South Africa, which has high unemployment and millions living in poverty.

However, Zuma stressed that the ruling party would not succumb to pressure from its trade union and communist allies and ”move to socialism”, saying he viewed them mainly as a ”voice of the poor”.

Warning that the economic turmoil sweeping the globe would slow South Africa’s economic growth, Zuma said he was in the United States to push for greater US investment.

”Some of us believe we have not done sufficient in terms of the investment from here. We believe America, up to now, has not taken … advantage of the open economy that we have,” he said.

According to the US Census Bureau, the United States exported $4,2-billion worth of goods to South Africa between January and August this year. Imports amounted to $7,2-billion.

Riding out the storm
Meanwhile, SA Finance Minister Trevor Manuel said on Tuesday that the financial storm had arrived and it was fiercer than anyone could have imagined

However, he said, South Africa would ride out the storm due to the pre-emptive action it had already taken, in presenting his Medium-Term Budget Policy Statement.

”We can say to our people: our finances are in order, our banks are sound, our investment plans are in place, our course is firmly directed at our long-term growth and development challenges, and we will ride out this storm, on the strength of a vision and a plan of action we share,” he said.

He noted that the government took the ”tough decisions” early.

”Yet there is no avoiding the coming storm,” he added, saying that global economic growth would slow ”for several years”, South Africa’s export earnings would be negatively affected and it would be more difficult to finance the country’s investment needs.

The Treasury said in the budget statement that tough economic decisions taken early on were bearing fruit in the face of the world financial crisis.

”Early decisions on macroeconomic policy, banking regulation, the gradual approach to exchange-control liberalisation, the introduction of inflation targeting and our counter-cyclical approach to fiscal policy have enabled South Africa to benefit from the global environment, while providing a degree of protection from the worst effects of financial contagion,” it said. – Reuters, I-Net Bridge