Cape Town - Cutting the expense of two capitals, limiting foreign travel and the sizes of delegations and cutting back further on functions and catering - these were some of the measures outlined by President Jacob Zuma as part of what he called an “effective turnaround plan” for the economy in his State of the Nation Address.
After almost an hour’s delay as the EFF carried out its promise to interrupt Zuma if he didn’t explain the reasons for his removal of Nhlanhla Nene as finance minister, the president got down to business when EFF MPs eventually left after being ordered to do so by NCOP chairwoman Thandi Modise.
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He acknowledged the weak state of the economy – admitting the National Development Plan target of 5 percent growth by 2019 was now beyond reach – and domestic factors contributing to the problem, promising improvements in the governance of state-owned enterprises, among others.
“Proper monitoring and evaluation will be done,” he said.
This was essential for growth and to reduce national debt levels, he added, referring to SOEs like SAA and the Post Office that have relied on government loan guarantees and funding injections to stay afloat amid board and management infighting.
Turning to fears over the proposed nuclear build programme, which commentators had flagged as unaffordable and a risk to the fiscus, Zuma insisted it would remain part of the future energy mix, but would be procured at a scale and pace the country could afford.
The market would be tested first to establish the true cost, Zuma said.
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He made no mention of cuts in social spending or downsizing the public service, as some had feared.
While there would be an effort to spend public funds wisely and cut wasteful expenditure, this would be done “without compromising on the core business of government and the provision of services to our people”, Zuma said.
In another nod to concerns the government would forge ahead with potentially costly policies in an election year, the president said he welcomed progress on a national minimum wage but it was “important to emphasise that the national minimum wage should be implemented in a manner that does not undermine employment creation, the thriving of small businesses or sustained economic growth”.
As part of efforts to boost the economy, Zuma said government, business and labour should share a “common narrative” about the country as a preferred investment destination.
“If there are any disagreements or problems between us, we should solve them before they escalate,” he said.
His talks with business had yielded suggestions on how to turn the situation around and put the economy back on a growth path.
The One Stop Shop investment clearing house would be fast tracked in partnership with the private sector and he urged business to take advantage of the exchange rate as well as the recent changes of visa regulations to boost inbound tourism.
“We urge big business to partner new manufacturers including businesses owned by women and the youth, as part of broadening the ownership and control of the economy,” Zuma said.
He announced that banks would establish a centre of excellence for financial services and leadership training to attract and develop talent in the sector.
“A big expenditure item, that we would like to persuade Parliament to consider, is the maintenance of two capitals, Pretoria as the administrative one and Cape Town as the legislative capital,” Zuma said, adding it was expensive for members of the executive to have a house and car in each capital, while government officials had to travel constantly between them.
“We all have a lot to do to turn the economy around and to cut wastage. We will go through a difficult period for a while, but when the economy recovers, we will be proud of ourselves for having done the right thing,” Zuma said.
On land reform, he said a draft bill limiting farm sizes and foreign ownership would be presented to the cabinet early this year.
The government had received 27 proposals to implement the 50/50 shared ownership model for farms and four were being implemented.
The government would fast track implementation of broadband roll-out to connect more than five thousand government facilities over a three year period, with a budget of R740m in that time.
Without announcing the date for local government elections, Zuma urged especially the youth to register to vote.
He said a 10-point plan of back to basics priority actions had been developed and included the promotion of community engagement.
Returning to the economy, Zuma said the tough global conditions should “propel us to redouble our efforts”.
“We cannot change the global economic conditions, but we can do a lot to change the local conditions,” Zuma said.
“Let us work together to turn the situation around. It can be done.”
Political Bureau