South Africa must act now to minimise the impact of the global financial crisis on the poor, but still has to spend wisely, President Jacob Zuma said on Wednesday in his first State of the Nation address.
Read President Zuma’s full State of the Nation address
Zuma is under increasing pressure from union allies who demand more spending, but is also wary of scaring off investors.
“We take as our starting point the framework for South Africa’s response to the international economic crisis, concluded by government, labour and business,” Zuma said.
“We must act now to minimise the impact of this downturn on those most vulnerable,” he said in a speech to Parliament that lasted more than one hour.
Demand for South Africa’s minerals and manufactured goods has suffered from the global downturn, making it harder for Zuma to satisfy the demands of the unions who helped his rise to power in April elections.
Eurasia Group analyst Mike Davies said Zuma’s speech could have done more to address the biggest problems.
“I think it actually misses the opportunity to provide some clarity on setting targets, setting out an agenda,” he said.
“From investors’ point of view, it mentions the planning commission and it mentions the context of the global economic picture but it doesn’t give much more on how they are going to look to focus on job losses and how they are going to continue with infrastructure spend.”
Tempering expectations, Zuma made clear there were limits to what the government could do.
Prudence
“Since the implementation of our programme will take place in the face of the economic downturn, we will have to act prudently — no wastage, no rollovers of funds — every cent must be spent wisely and fruitfully,” said Zuma.
“The economic downturn will affect the pace at which our country is able to address the social and economic challenges it faces. But it will not alter the direction of our development.”
Zuma’s greatest challenge now is meeting the demands of supporters who say not enough has been done to help the poor.
“If you are listening to what he is saying, it outlines how difficult the task facing this government is. How extremely limited their room for manoeuvre is,” said independent analyst Nic Borain.
Metal workers have threatened mass strikes to demand deeper cuts in interest rates — although those are set by central bank policymakers rather than the government — and mine workers have said they could also consider strikes.
Millions of black South Africans still live in grim townships, glaring reminders of the inequalities of apartheid. Critics say a black economic empowerment programme has only served a few black millionaires with close ties to the ANC.
He also pledged to do more to address one of the world’s highest rates of violent crime, a particular concern ahead of the Soccer World Cup. South Africa is banking on the event to bring in millions of dollars and international prestige.
Zuma said that on the presidential inauguration on May 9, the African National Congress had made a commitment to eradicate poverty and the government had identified 10 priority areas, which formed part of the medium-term strategic framework for 2009 to 2014.
He said the effects of the economic downturn were now clearly being seen in the South African economy.
“We have begun to act to reduce job losses. There is an agreement in principle between government and the social partners on the introduction of a training lay-off.”
He said “a scaled-up” industrial policy action plan would be developed.
“The lead sectors already identified are automobile, chemicals, metal fabrication, tourism, clothing and textiles as well as forestry. In addition, attention will also be paid to services, light manufacturing and construction, amongst others, in the quest to create decent jobs.”
He said the expanded public works programme and the community work programme would be fast-tracked.
“It offers a minimum level of regular work to those who need it, while improving the quality of life in communities.”
Education
Education would be a key priority for the government for the next five years, Zuma said.
“We want our teachers, learners and parents to work with government to turn our schools into thriving centres of excellence.”
The early childhood development programme would be stepped up, with the aim of ensuring universal access to Grade R and doubling the number of zero- to four-year-old children by 2014.
“We reiterate our non-negotiables. Teachers should be in school, in class, on time, teaching, with no neglect of duty and no abuse of pupils. The children should be in class, on time, learning, be respectful of their teachers and each other, and do their homework.”
To improve school management, formal training would be a precondition for promoting teachers to become principals or heads of department, he said.
“I will meet school principals to share our vision on the revival of our education system.”
He added the government would increase its efforts to encourage all pupils to complete their secondary education in line with a target to to increase enrolment rates in secondary schools to 95% by 2014.
“We are also looking at innovative measures to bring back into the system pupils who dropped out of school, and to provide support.”
Cost of telecommunications to be reduced
Zuma said the government would ensure that the cost of telecommunications was reduced.
He said the roll-out of digital broadcasting infrastructure and signal distribution transmitters was a development “which should boost the
World Cup”.
“Overall, we will ensure that the cost of telecommunications is reduced through the projects under way to expand broadband capacity,” he said.
“We have to ensure that we do not leave rural areas behind in these exciting developments,” he added.