Zuma's economic plan dismissed for lack of detail
Markets reacted coolly on Wednesday to Zuma's proposals which were intended to quell economic turbulence in South Africa, with analysts and politicians decrying the lack of details in the plans.
Following several weeks of labour unrest in the country, Zuma tried to restore confidence in South Africa's economy by unveiling a wide-ranging plan devised by government, business and organised labour.
But the announcement did not immediately provide a panacea to jittery investors.
The JSE All Share Index finished on 37 274.68, just 0.81% up on the previous day's trade, following the announcement of Zuma's plan to restore investor confidence.
The rand also continued to slide against the US dollar, ending on R8.58 to the greenback – 1.11% down on Tuesday’s close.
Key to the president's proposals to restore economic confidence after almost 10 weeks of industrial action across the mining and transport sector hinged on production in the minerals sector being normalised as a matter of urgency.
"We assure workers that we recognise the frustrations and challenges that have become clearer during the protests and the legitimate grievances will be attended to," Zuma said.
In the hopes of facilitating the sector's normalisation, special attention would be placed on addressing the housing needs of mining communities, pressure caused from wage disparities and increased reckless lending.
"While many accords and social agreements have been reached in the past, we want this to be different in the speed and focus of our implementation," Zuma said.
The plan to bring the mining sector under control will work in tandem with a plan to:
- accelerate overall economic growth by speeding up infrastructure development;
- provide assistance to workers and companies affected by the current global economic slowdown; and
- increase job creation through the public sector works programme.
In addition to delivering various stimuli to the economy, Zuma said all parties involved in negotiations would call on CEOs and high level executives in both the public and private sector to undertake a 12 month pay freeze.
The president described this as a "strong signal of commitment to build an equitable economy" and that a committee will be set up to address income inequality within the next six months.
But Mike Schussler, founder and director of economists.co.za, told the Mail & Guardian that without a concrete course of action to rescue the economy, Zuma's plans were merely words.
"The president merely urging workers to return to work and for us as South Africans to pull together won't magically solve our economic ills – we need action," he said.
Schussler said South Africa's current political situation did not allow the space for important but difficult economic decisions to be made. "I don’t think we are in a position for our politicians to allow the hard choices to be made that will fix our economy," he said.
Schussler also said if marked action was not taken soon to arrest the current economic downturn, matters could worsen rapidly.
"The South African economy has not withstood this type of stress in a long time and this is beginning to make every other strike season we’ve had seem inconsequential," Schussler said.
'Short on detail'
Zuma's plans also came under criticism from opposition parties, with the Democratic Alliance saying it is "short on detail".
"What steps will the government take to restore confidence in the economy following the Moody's and S&P downgrades?" asked DA parliamentary leader Lindiwe Mazibuko.
Mazibuko said the economy needed firm plans in order to restore investor confidence. "The South African economy needs more answers, not more questions. President Zuma has a lot of explaining to do," she said.
In addition to the plan failing to inspire a positive reaction in the markets, workers at mines across the country are continuing their strike.
Striking workers at AngloGold Ashanti in Carletonville refused to return to their posts until their pay demands were met.
Thursday will also mark a deadline for up to 15 000 Gold Fields employees ordered to return to work or face dismissal..