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SONA 2016: Optimists see growth spurt, pessimists see junk

Feb 12 2016 07:22
Matthew le Cordeur

Cape Town – President Jacob Zuma’s State of the Nation Address on Thursday was seen as an important moment for him to change some key policies and strategies to reverse the plummeting growth rate and economic collapse.

While cabinet ministers said Zuma achieved his objective to keep South Africa out of the perilous state of junk status and re-ignite growth in the long-term, analysts questioned the lack of detail and new initiatives.

After two political parties were removed from the National Assembly in Cape Town on Thursday, Zuma told the joint sitting that South Africans must come together and sort out its economic differences in-house before they escalate.

COPE president Mosiuoa Lekota and EFF leader Julius Malema both led their parties out of the National Assembly in protest amid Zuma’s speech, after criticising him for being dishonourable and having failed the Constitution.

Once he got passed the bit about the sluggish global economic jazz, Zuma praised the “fruitful meetings” he had with business leaders this week.

“We have heard (their) points to create the right investment support infrastructure,” he said. “Government will implement a one-stop shop of investment to signal that South Africa is ready for business.”

Deputy Finance Minister Mcebisi Jonas praised the speech, explaining that South Africans “are coming together and business has a serious interest in seeing growth in our economy.”

Department of Trade and Industry Minister Rob Davies said Finance Minister Pravin Gordhan’s budget speech will inform rating agencies to South Africa’s fiscal policy, but they will also have to believe the country has “things in our economy, which are going to be able to sustain a growth story”.

Criticising the lack of new ideas, Nomura emerging markets economist Peter Attard Montalto said, among others, the one-stop shop is not a new policy.

He said Zuma’s address showed no “meaningful microeconomic structural reforms to give more hope on growth to investors or, more important, to ratings agencies”.

“There were no shock-and-awe moments to show decisiveness, no pulling of rabbits out of a hat to show a different way of thinking, and no recognition that business as usual was insufficient,” he said.

Analyst Daniel Silke said Zuma’s mention “of the need to combat ‘regulatory blockages’ can be broadly applied in correcting damaging legislative and policy initiatives that retard both foreign and domestic investment”.

Silke mocked Zuma’s speech as a mere “prelude to a budget”, saying “it was almost as though the president had deferred the real meat to his finance minister”.

The State of the Nation sets it all up for Pravin Gordhan, said Silke. “It’s almost as though this Sona reflected a removal of power from Jacob Zuma, as Treasury and the Finance Ministry took charge. But let’s wait – and hope – for February 24.”

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