What matters most to Zuma

Cape Town-16-02-16 President Jacob Zuma smiles during the SONA debate in Parliament.pic Phando Jikelo

Cape Town-16-02-16 President Jacob Zuma smiles during the SONA debate in Parliament.pic Phando Jikelo

Published Feb 17, 2016

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Anthony Nelson

IN PRESIDENT Jacob Zuma’s sitting room, there is a book titled Currents of Contrast, illustrating the submarine treasures of the Benguela and Agulhas currents off South Africa.

It seems aptly to sum up the different political reactions to his State of the Nation address (Sona) last week, with some applauding it as a stream of plans to invigorate growth, and others denouncing it as just a torrent of words.

Jacob Zuma invited me to meet him last Friday (we are long-standing friends since my time as a British government minister) and, over a cup of tea, we discussed some of the challenges and opportunities he faces. His address identified some solid achievements and constructive proposals; good news at home, but what was the main message abroad?

“South Africa is open for business” was his immediate response. “We want to remove any impediments to inward investment. We are open to suggestions from business that will enhance and retain the flow of investment funds. We know that foreign investment is like water, it will flow where the resistance is least.

“Just as South Africa has proved to be an attractive location for many global manufacturers, particularly in the automotive sector, so we hope we can also make it the destination of choice for investors seeking competitive advantage in service industries such as tourism.”

In his Sona, the president spoke about “turnaround plans”, doing things differently and acting more quickly to correct shortcomings. I was interested to learn whether he was prepared to “break some eggs” and face down opposition to change. He said these turnaround plans referred, in part, to the future of state-owned companies which had been the subject of a Presidential Review Commission. Some of these companies were no longer relevant to the development agenda and would be “phased out”. This included some public enterprises which could and should be privatised.

There would be inevitable opposition to this from self-interested groups, but there was a fiscal as well as a commercial imperative for change. Despite the collapse of energy and mineral prices in recent times, Zuma recognises the long-term importance of these sectors to South Africa and to underpinning its credit rating.

He considers South Africa’s proven and contingent offshore oil and gas reserves to be a potential “game-changer”. For example, the Ibhubesi Gas Project off the coast of the Northern Cape is South Africa’s biggest undeveloped gas field, with reserves of 540 billion cubic feet of gas.

These and other exploitable natural resources are true foundations of a country’s long-term credit rating, rather than the froth surrounding the short-term comings and goings of ministers.

Given the finite nature of natural resources, I wondered whether the president had considered establishing a Sovereign Wealth Fund to reinvest some of the proceeds of depleting mineral and energy wealth in a global fund for the long-term benefit of South Africans.

I had in mind a “next generation fund” which would reinvest the income and returns in the intellectual capital and attainment of young South Africans, particularly at basic educational level. Jacob Zuma is a good listener and is open to ideas which could improve the national balance sheet by growing its equity assets and not just its debt liabilities.

He is keen to accelerate improvements in basic education standards, putting it at the top of his “legacy agenda”.

Conscious that 7 percent of public expenditure goes on education (more than almost any other country) and yet numeracy and literary results are among the lowest, he wants more than anything to see the next generation get a better start in life. “Nothing matters to me more.” I sensed that this is a mission of personal experience and resolve. What you had least, you want for your children most.

Sitting in the quiet of Genadendal, the president’s residence in Rondebosch; the personal criticisms levelled at the president, the retribution of the capital markets and the howls of the EFF seem somehow distant. It is a place where successive leaders of this great country have reflected on the bigger picture, the issues that really matter and the world beyond. Right now, there is a bigger problem further afield, which impacts on the lives and prospects of South Africans, namely, the stand-off and deteriorating relationship between the West and Russia. As the US and EU impose sanctions on Russia, as Nato amasses its forces on Russia’s borders and as Russia retaliates with devaluations and unilateral foreign excursions, so the peaceful coexistence of great trading nations is undermined. Such an increase in tensions is in the interests of neither the West nor Russia – nor is it in the interests of South Africa, for whom the EU is their biggest trading partner.

The economies of the EU are in the doldrums, and Russia is taking extreme measures to stand alone. It is time to lower tensions, to find commonality and reignite growth.

Africa needs that as much as Europe. It is time for a peacemaker. Who better than Jacob Zuma? He enjoys an international reputation beyond his domestic standing for mediating between warring factions in Libya, Sudan, Burundi, Lesotho and beyond. I hope Zuma will use his influence as a respected figure in South Africa, the Brics and the AU to lower tensions internationally and restore the economic lifeblood of distant lands which matter near at home.

l Nelson is a former British Minister for Trade and Industry, Economic Secretary to HM Treasury and Vice-Chairman of Citi Group

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