PRESIDENT Jacob Zuma has never been stronger in government. He won an unchallengeable mandate from the ANC at its Mangaung conference in December and the party has packed its national executive council with members loyal to him. One might have hoped then for a brave vision in his state of the nation address on Thursday to accelerate South Africa to a new level of economic growth.
What we got instead was a summary of the status quo with a few still vague promises to fix some of the most pressing problems we face.
“He clearly is not South Africa’s action man,” opposition parties said.
Peter Montalto, emerging markets economist at Nomura in London, quickly identified the new obstacle holding Zuma back from the decisive action needed to escape mediocrity – the prospect of next year’s general election.
Zuma’s promised review of the tax system, which sounded in his presentation likely to result in a bigger government take from workers and from mines, was unlikely to produce anything until after the 2014 vote, he said.
Efficient Group chief economist Dawie Roodt was more optimistic, sensing a new vigour in Zuma’s presentation.
“My first impressions…were of a much more self-confident and stronger leader. Clearly his recent election victory is showing,” he said.
But in his summary of Zuma’s comments, Roodt said most of the plans hinted at would be unaffordable or unworkable, resulting only in greater state intervention in the economy.
The stronger Zuma was visible in rhetoric, but not in hard choices that could antagonise important constituencies such as Cosatu and the teachers’ unions.
Zuma appeared to back away from a confrontation with Cosatu on his 2011 announcement of a youth wage subsidy, saying he expected a signature soon on an unspecified youth employment incentive. Analysts and unionists interpreted Zuma’s statement as a victory for Cosatu, which has opposed any incentive channelled through corporate accounts as a wage subsidy.
Zuma also fudged the notion of a ban on teacher strikes, which he had previously mooted. He said teachers would be the first to benefit from a proposed review of public sector salaries and that he would expect them to perform better in return, but reaffirmed their right to protest.
Investors and economists routinely identify uncertainty as the biggest single obstacle to development. Thursday’s address acknowledged many of those uncertainties, but offered nothing that could form the foundation of a solid new investment wave.