President Zuma lists state successes

President Zuma lists state successes

In his final State of the Nation Address for this term of office, President Jacob Zuma covered what the government had achieved and the challenges it had encountered….

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In his final State of the Nation Address for this term of office, President Jacob Zuma covered what the government had achieved and the challenges it had encountered over the past five years in particular and the past 20 years in general. To prepare for the new administration after the elections, “we have, over the past year, been working on a Medium Term Strategic Framework”.

The government had done much in the past five years to improve the economy and the lives of citizens, but a lot still had to be done in some areas, particularly in promoting and developing emerging black industrialists.

Presenting his State of the Nation Address on 13 February in Cape Town, President Jacob Zuma said emerging black industrialists were experiencing difficulties in accessing industrial finance, supplier and retail markets, and technical production support. Development finance institutions like the Industrial Development Corporation, however, were available to help such individuals, he pointed out. “The National Empowerment Fund, the Industrial Development Corporation and the Small Enterprise Finance Agency will continue to provide finance to viable black-owned businesses to promote industrialisation.”

The IDC has various schemes in place to provide finance for projects, in line with government policies such as the Industrial Policy Action Plan, the New Growth Path and the National Development Plan (NDP). The corporation does this by identifying and funding high-impact and labour-intensive projects in specific sectors, and taking the lead in creating viable new industries. The sectors include agro-industries, chemicals, wood, green industries, mining and mineral beneficiation, textiles and clothing, health care, and tourism.

Established businesses, Zuma said, were also encouraged to support the development of black industrial businesses.

Government incentives to boost manufacturing were also yielding returns. “The Automotive Investment Scheme that was launched in 2009 has approved a total R3.8-billion worth of incentives for about 160 investment projects. These sustain more than 50 000 jobs,” said Zuma, adding that these projects would be making sedan cars, minibus taxis and buses.

“We have stabilised the clothing, textile, leather and footwear sector, which had been shedding jobs… Several industries have been designated for local content. These include buses, canned vegetables, clothing, textiles, leather and footwear, and other goods.”

Localisation programme

The government’s localisation programme was proving successful. In the past two years, more than 20 000 minibus taxis and 330 buses were assembled locally, providing much-needed jobs and investment. “In the next five years, the state will procure at least 75% of its goods and services from South African producers.”

In addition to these steps, the IDC and the Department of Trade and Industry have set up the Manufacturing Competitiveness Enhancement Fund (MCEP), a support scheme which offers manufacturers incentives to raise their competitiveness and retain jobs. It has a budget of R5.8-billion over three years. The scheme, which offers grants and loans to established manufacturers, has been a success, with beneficiaries creating thousands of jobs and reporting improved operations.

All of these efforts were an attempt to eradicate the triple challenges of poverty, inequality and unemployment, and dealing with these challenges was key to the current administration, said the president. The NDP outlined the government’s plans to eradicate poverty, increase employment and reduce inequality by 2030, he said.

South Africa had done much to improve the economy. On average, Zuma said, the economy had grown at 3.2% a year from 1994 to 2012 despite the global recession in 2008 and 2009 which had claimed a million jobs. The country’s gross domestic product had grown to more than R3.5-trillion. “Jobs are now being created again. There are now 15 million people with jobs in the country, the highest ever in our history, and over 650 000 jobs were created last year, according to Stats SA.”

However, the unemployment rate remains high. Youth unemployment continues to be a concern but the government has implemented various measures to deal with this, including the Employment Tax Incentive Act which encourages employers to hire younger workers. In addition, the National Youth Accord signed in Soweto in April 2013 calls on the youth, the government, business and labour to co-operate to create jobs.

The IDC, which is privy to the accord, has added R1-billion from its Gro-E Scheme to fund businesses owned by young people.

Currency depreciation

The depreciation of the rand during the past year had led to inflation – not good news for South African consumers. In 2013, the rand depreciated by 17.6% against the US dollar. “However, export companies, particularly in the manufacturing sector, should take advantage of the weaker rand and the stronger global recovery,” said Zuma.

One of the key drivers of the South African economy was mining, a sector which employed over half-a-million people, he added. “It is the biggest earner of foreign exchange in our country. It also contributes about R20-billion directly to the tax revenue… Mining also makes a far larger contribution as a buyer of goods and services, and a supplier of inputs to other sectors of our economy and other economies around the globe.”

Besides mining, the government had identified five other job drivers in 2009: tourism, agriculture, the green economy, infrastructure development, and manufacturing. Zuma said the tourism industry had grown dramatically since 1993, “when South Africa received a mere three million foreign visitors”. By 2012, this figure had grown to 13 million visitors. “We will continue to grow this industry, given its potential for job creation.”

On infrastructure, Zuma said the government had implemented the National Infrastructure Plan, which had led to an investment of R1-trillion in public infrastructure over the past five years. “Many of the projects are completed or are nearing completion.” They included:

  • The 700km fuel pipeline from Durban to Gauteng to transport four billion cubic litres of petrol, diesel and jet fuel a year;
  • The construction of new rail lines in Mpumalanga to ease the pressure on the roads;
  • The Gautrain, which carried over 1.2 million passengers a month;
  • The launch of the Saldanha Industrial Development Zone and two new factories in Atlantis;
  • Two large new dams had been completed – De Hoop in Limpopo and Spring Grove in KwaZulu-Natal – while phase two of the Lesotho Highlands Water Project was to be launched soon; and,
  • Construction was continuing at three new power stations – Medupi in Limpopo, Kusile in Mpumalanga and Ingula near Ladysmith – employing more than 30 000 people.

Success and challenges

Zuma said his State of the Nation covered what the government had achieved and the challenges it had encountered “over the past five years in particular and over the past 20 years in general”. He said the programme of action for this financial year would be presented by the new government after the elections.

“To prepare for that first State of the Nation Address by the incoming administration later in the year, we have, over the past year, been working on a Medium Term Strategic Framework. The framework has been designed as the first five-year building block of the National Development Plan, from 2014 to 2019. It also incorporates key targets of the Industrial Policy Action Plan, the New Growth Path and Infrastructure Plan,” he said.



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