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Sona wrap: Zuma drops bomb on land ownership

Feb 13 2015 07:44
Donwald Pressly

PRESIDENT Jacob Zuma has acknowledged that South Africa is facing economic challenges, but put the blame largely on "a difficult economic climate" globally.

The president shocked the nation by announcing that foreigners in future would "not be able to own land" and would be forced to lease properties. He did not spell out what would happen to existing foreign-owned land, but said local farmers' land would also be restricted to 12 000 hectares.

READ: Foreigners won't be allowed to own SA land

This would be regulated by the regulation of land holdings bill, which would go to parliament this year.

It is no secret that Sir Richard Branson owns 13 500 hectares on the border of the Kruger National Park - the Ulusaba game reserve - and the Getty family has interests in the Phinda private game reserve in Kwazulu-Natal. Various multinational companies, some of them listed abroad, have vast mining and agricultural interests too.

Another controversial area touched on by Zuma was that South Africa is committed to expanding its nuclear power supply with the help of foreign powers. The first mini nuclear power plant, of a planned six, would be up and running by 2023 when Eskom retired some of its ageing plants.

While he made no reference to the fluctuation of the rand - which this week reached the lows of 2012 against the dollar - or of corruption and to the scandal over his Nkandla home, Zuma referred instead to the "global economic growth" forecast being revised down to 3.5%.

'Pay back the money' calls ignored

Zuma also did not refer in any way to calls by MPs of the Economic Freedom Fighters "to pay back the money" for Nkandla, the R250m compound built for his retirement. He also did not make any mention of the removal of EFF MPs from the national assembly shortly after he began his State of the Nation speech.

The fall of the rand has been ascribed by analysts to fiscal uncertainties - with higher-than-forecast budget and trade deficits expected in Finance Minister Nhlanhla Nene's February 25 budget, perceived state corruption and South Africa's energy troubles causing the power monopoly Eskom to impose load shedding of late, for the first time since 2008.

On the domestic economy, he said: "Our ambition of achieving a growth target of 5% by 2019 is at risk, because of the slow global growth... as well as domestic constraints," noting that these constraints are in energy, skills, transport and logistics.

While the national development plan was the highlight of the last State of the Nation speech, there was only a passing reference to it in Thursday night's speech.

While the prohibition on foreign-owned land and the capping of farm land had been proposed at a recent African National Congress national executive committee meeting, it was expected that the prohibition proposal would be watered down. The proposals still have to pass parliamentary legislative muster, however.

Acknowledging energy challenges, Zuma said the "war room" established by the cabinet in December is working "diligently around the clock with Eskom to stabilise the electricity supply system and contain load shedding".

Zuma's speech  - which was an hour late after EFF MPs were removed by security staff and DA MPs walked out - reported that R23bn would be directed at Eskom to solve its financial problems in the next fiscal year.

READ: Zuma: Eskom government's top priority, to get R23bn

"The country is experiencing serious energy constraints.... it (load shedding) is an impediment to economic growth. It is a major inconvenience to everyone in the country."

Government is directing Eskom to convert diesel-powered plants to gas. South Africa would be looking to procuring gas from its neighbouring countries. "Given the high cost of diesel, Eskom has been directed to switch from diesel to gas as a source of energy for the utility's generators." Zuma referred to tapping into shale gas supplies in the Karoo in the longer term.

On the bright side, he said that three new power stations - Kusile, Medupi and Ingula - would add 10 000 MW to the national grid in time. Already 1 000 MW is being procured from independent power producers "using renewable sources".

The first three bid windows of the renewable energy procurement process has attracted more than R140bn from private investors, he reported.

READ: First new nuclear plant scheduled for 2023

The government would be also be forging ahead with the procurement of 9 600 MW in nuclear power. Government has signed inter-governmental agreements with five countries - the United States, South Korea, Russia, France and China - on nuclear power. They would bid in a fair and competitive process to be a "strategic partner" in South Africa's nuclear build programme.

Significantly, Zuma said South Africa would be looking to draw 15 000 MW of power from the Democratic Republic of the Congo's hydro-power scheme - nearly twice the power to be drawn from nuclear power in the long term.

Zuma believed that the labour market is looking better than other economic figures. This week's Statistics SA report showed that 15.3 million people are employed in South Africa. "Our investment in youth employment is paying off. The Employment Tax Incentive which was introduced last year directed mainly at the youth, is progressing well."

However, in a move that is likely to encounter opposition from employers, Zuma said legislation was proposed that would regulate the practices of labour agencies and temporary employment services - to stop "abuse" of "unsuspecting" work seekers.



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