Coherent in Davos, undone in Cape Town
ANY good President Jacob Zuma and his team might have done in wooing investors at the World Economic Forum in Davos last month would surely have been undone by his state of the nation speech last week.
In Davos, Zuma and six Cabinet ministers sang from the same song sheet and convinced investors that SA has a plan to fix its economy — the National Development Plan (NDP). Last week’s address had none of that coherence. Not only did the NDP itself rate just one mention, but the Davos song sheet gave way to the usual jumble of competing policies with no obvious strand tying them together except the usual imperative to give everyone a little bit of what they wanted.
And a little bit it was. There was a new nine-point plan to fix the economy, most of which reflect existing policies. No reason was given for those nine being chosen as the means to “ignite growth”, nor was much substance provided on most of them.
Take point three: “Advancing beneficiation or adding value to our mineral wealth”. Anyone hoping for clarity on an issue that is highly contested in the Cabinet’s economic cluster would have been none the wiser. The only other reference to beneficiation in the speech was the following: “I have instructed government to partner with the mining sector to develop win-win solutions to beneficiate our mining resources.”
At least there was a sentence. On point five of the plan, “encouraging private sector investment”, there was nothing at all. Perhaps Zuma expects that synchronising environmental impact assessments and water and mining rights applications might do the trick, along with a one-stop investor complaints clearing house.
It is true that if the government were to resolve the energy challenge — point one of the plan — and moderate workplace conflict — point six — it could go a long way to creating a more favourable climate for investment. The trouble was that when it came to detailing how it planned to go about acting on these two points, what Zuma offered didn’t seem that likely to deliver what was promised. So while he went on at some length about electricity, much of this was about long to very long-term plans to bring a plethora of new sources of power onto the grid, in no particular order of priority or feasibility.
Arguably, what is really needed to tackle the power crisis in the short to medium term is to put a seriously competent turnaround CEO in at Eskom and give them the backing to do what needs to be done to fix it.
On labour, too, there was more about the national minimum wage and regulating labour brokers than about bringing peace to labour relations. On mining there was more about housing projects and addressing the woes of distressed mining towns, issues that are not about igniting economic growth or promoting investment.
A potentially significant aspect of the speech was the attention it gave to agriculture and agribusiness, a sector the NDP identified as key to look to for job creation as well as growth and food security. Zuma listed revitalising agriculture and the agroprocessing value chain as point two, promising a new Agricultural Policy Action Plan, developed with the private sector, to bring 1-million hectares of underused land into full production over the next three years. Presumably, the million will be farmed in 12,000ha chunks, by South Africans, given the proposed limits on land ownership and the emphasis on land as redress, rather than as investment. But it’s a start.
The state of the nation speech has under Zuma’s presidency tended to be a cut-and-paste job, not a serious economic policy document. So our expectations are low, and last week’s speech did not disappoint them. At least we have next week’s budget speech to look forward to.
Under Zuma, the National Treasury has ceased to be the “imperial treasury” in charge of economic policy it once was. But they still know how to craft a good speech, and Finance Minister Nhlanhla Nene will hopefully not disappoint.