Tue Oct 25 10:38:26 SAST 2016

Zuma's litmus test

By Ido Lekota | Jun 02, 2009 | COMMENTS [ 0 ]

PRESIDENT Jacob Zuma presents his state of the nation address tomorrow in which he is expected to spell out his government's five-year plan.

PRESIDENT Jacob Zuma presents his state of the nation address tomorrow in which he is expected to spell out his government's five-year plan.

The plan is expected to outline how the government intends to develop South Africa's economy to meet the needs of the country's majority of citizens.

Given the current global financial crisis and the recent announcement that South Africa is in a recession - for the first time in 17 years - Zuma's government faces an uphill battle when it comes to delivering on the promises his party made in its recent election manifesto.

In its manifesto, the ANC identified five areas in need of crucial attention - job creation, crime, rural development, education and health.

All these goals need funding in an atmosphere in which the government is financially hamstrung due to the current economic situation.

Speaking at the Steel and Engineering Industries Federation of South Africa's annual conference three weeks ago, economist Raymonds Parsons articulated the challenges facing governments in developing countries.

"The global crisis places continued constraints on our access to global capital which is likely to be sustained for some time, possibly several years," Parsons warned.

A UN report released last week predicted that the world economy will shrink by 2,6percent this year "disproportionately hitting developing countries, which are being hit by capital reversals, rising borrowing costs and collapsing world trade".

This means that countries like South Africa will have limited access to foreign capital - either for borrowing or as investment. The situation, as Parsons has pointed out, means that South Africa will depend largely on local funding for, among other things, the government's ambitious more than R700billion investment in public infrastructure.

This is indeed a tall order in a country where domestic savings and investment remain very low - at 15,4percent and 23,2percent of the gross domestic product (GDP), respectively.

It is estimated that investment must increase to around 25percent of the GDP if, for example, the country is to meet the Accelerated Shared Growth Initiative of South Africa target of halving poverty and unemployment by 2014 .

Is there anything that South Africa can do to deal with these major challenges ?

The reality is that the economic meltdown provides serious challenges for the various stakeholders. As is always the case, there has been a call to workers to tighten their belts.

As expected, the call has rubbed the labour movement up the wrong way - because it is felt that workers, "who are not the cause of the economic crisis, are expected to be the ones bearing the brunt" - says Cosatu general-secretary Zwelinzima Vavi.

Vavi argues that if indeed there is to be partnership, it must be such that all parties concerned make sacrifices. These include reducing executive perks - as has been the case in the US and the United Kingdom.

To its credit, Zuma's government has committed itself to improving its performance when it comes to implementing policies that could benefit the country in the long run.

The establishment of structures like the Planning Commission as well as the monitoring and evaluation ministry in the Presidency are hopeful signs that the government wants to face its worst Achilles heel: "poor planning and therefore poor service delivery".

Speaking to the National Union of Mineworkers on Saturday, Zuma said his government would use a task team made up of government, labour and business "to forge a partnership that will make this country withstand the current global economic turmoil".

The litmus test for such an initiative will be the interventions agreed upon that will close the gap between business, government and labour when it comes to what should be done in the interest of this country, and not of particular constituencies.

In this regard Parson says " . If a system can be demonstrated to deliver where others have failed, ideology will be less important to the general public".

If one accepts that policy debates are about the "battle of ideas" this warning can be sounded to both labour and government.


Login OR Join up TO COMMENT