President Jacob Zuma has moved to assure South Africans, uneasy about the current unfavourable economic conditions, that they should not be despondent, but rather the country should work together to turn the situation around.
In his State of the Nation Address last month, which was watched by millions of people, President Zuma highlighted that the tough global and domestic conditions should encourage “us to redouble our efforts, working together as all sectors”.
“We have had fruitful meetings with business, including the high level meeting with CEOs…we have heard the suggestions from the business community on how we can turn the situation around and put the economy back on a growth path,” said President Zuma.
He announced that government was developing a ‘One Stop Shop/Invest SA’ initiative to signal that South Africa is truly open for business. Government would speed up the implementation of this service, in partnership with the private sector.
Global Economic Downturn
President Zuma reminded South Africans that the country, like many other developing economies, has been affected by the global economic downturn.
“Our reality right now is that global growth still remains muted. Financial markets have become volatile. Currencies of emerging markets have become weak and they fluctuate widely.
“Because our economy is relatively small and open, it is affected by all of these developments. Our economy is also affected by domestic factors such as electricity constraints and industrial relations, which are sometimes unstable,” he said.
The International Monetary Fund and the World Bank predict that the South African economy will grow by less than one per cent this year. The lower economic growth outcomes and outlook suggest that revenue collection will be lower than previously expected.
The President also acknowledged that South Africa seems to be at risk of losing its investment grade status from ratings agencies.
“If this happens, it will become more expensive for us to borrow money from abroad to finance our programmes of building a better life for all, especially the poor.”
He urged South Africans to take advantage of the exchange rate as well as the recent changes of visa regulations, to boost inbound tourism. SA Tourism will invest R100 million a year to promote domestic tourism, encouraging South Africans to tour their country, he said.
Progress Is Being Made
Reflecting on the progress that has been made in the past few years, President Zuma mentioned that state-owned freight company Transnet has built rail infrastructure which has enabled the country’s mines to move massive bulk of commodities through the ports to markets around the globe.
The South African Road Agency Ltd (Sanral) has built some of the best roads in Gauteng and in many parts of the country.
The Trans Caledon Tunnel Authority has built dams of varied capacities, making it possible for South Africans to have access to safe drinking water.
“Eskom, in spite of the challenges, still manages to keep the economy going, against all odds. Our development finance institutions such as the Industrial Development Corporation, Development Bank of Southern Africa and others have provided finance for infrastructure, various industries and agricultural businesses without fail, even in the aftermath of the global financial crisis,” he noted.
President Zuma also reflected on developments related to the Nine-Point Plan he announced last year saying, among others, that progress has been made to stabilise the electricity supply.
The plan aims to boost economic growth and create much-needed jobs. It consists of, among others, revitalisation of the agriculture and agro-processing value-chain, promoting beneficiation, unlocking the potential of small business and the energy challenge.
President Zuma said government has invested R83 billion in Eskom, which has enabled the utility to continue investing in Medupi and Kusile, while continuing with a diligent maintenance programme. Additional units from Ingula power station will be connected in 2017, even though some of them will begin synchronisation this year.
The multiple bid windows of the Renewable Independent Power Producer Programme have attracted an investment of R194 billion. “This initiative is a concrete example of how government can partner with the private sector to provide practical solutions to an immediate challenge that faces our country.” The President said this year government will select the preferred bidders for the coal independent power producer.
SA has made a lot of progress
Addressing The New Age business briefing, in Cape Town, a day after he delivered the State of the Nation Address, President Jacob Zuma said despite being a young democracy, South Africa has made a lot of progress in building a resilient economy that is inclusive.
He added that while a lot still needs to be done, he is satisfied with the progress that has been made by the country.
“I believe that as a country, given our age and the challenges, we have made good progress. We have dealt with the social issues that affect our country and we have created jobs but the only problem is that while we are creating jobs, we are losing jobs at the same time,” said the President.
Government, through the Department of Trade and Industry, introduced a number of incentives in the past few years to boost investments in the manufacturing sectors, especially textiles, leather and the automotive sectors.
The President said incentives that were introduced for the automotive sector have attracted investments of over R25 billion over the past five years.
Construction has begun in at least five Agri Parks, which include the West Rand in Gauteng, Springbokpan in North West, Witzenberg in Western Cape, Ncora in the Eastern Cape and Enkangala in Mpumalanga. The President said government often made difficult decisions and has invested in several areas to improve the quality of the life of all citizens.
“We have been working very hard to invest. For example, infrastructure is one of the very visible areas of progress that we have made in the country. We are building huge power stations to satisfy the needs of the economy and the needs of the people.
“We have worked out a national plan that is accepted by all South Africans... We have made education priority number one and we have divided the department into Basic and Higher Education to make the majority of South Africans, who were excluded before, part of the economy,” he said.