Disappointed – This is the general sentiment of business leaders and investors in the wake of President Zuma’s state of the nation address
President Jacob Zuma touched on a lot of the key issues that business told him this week they wanted addressed, but his state of the nation address (Sona) left local corporates and investors disappointed.
Shoprite chairperson Christo Wiese told the SABC that he was looking for something more dramatic from President Zuma.
There was a need for South Africa to focus less on global problems and get “our affairs in order”, he said.
The country would have to suffer some pain to get things on the right track, Wiese said.
Peter Montalto, an economist with Nomura in London, said on Friday: “The key for us was the total lack of any new thinking in wider government policy to boost growth.
“There was only limited recognition of the current economic malaise ... There was no ‘rabbit out of a hat’ moment.”
Sithembile Mbete, a lecturer at the department of political sciences at the University of Pretoria, said her sense was that President Zuma had largely aimed his speech at business.
Despite this, there were very few numbers, details or specifics in the speech, Mbete said.
“It is bizarre [that he did] not mention numbers,” she said at a Wits Business School event on Friday that was held to review the president’s speech.
At the event, Andile Khumalo, Power FM managing director, said that Zuma did not cover any of the substantial economic points.
“Does the president understand the economy?” he asked.
Jan Sluis-Cremer, a Rand Merchant Bank currency trader, said that the rand had been sold off later on Thursday in anticipation that Sona would produce a shock or something unexpected.
“There was nothing in Sona, so the rand firmed a bit on Friday, but remains stuck in a range between R15.75 and R16.25 against the US dollar,” he said.
Earlier in the week, President Zuma met with a number of top chief executives in Cape Town.
“We have had fruitful meetings with business, including the high-level meeting with CEOs on Tuesday this week,” Zuma said.
Ralph Mupita, Old Mutual CEO of emerging markets, said on Friday: “It was not possible for the president to give
very specific action to the points raised on Tuesday.”
Khanyisile Kweyama, CEO of Business Unity SA, said that the points that business had raised with Zuma earlier in the week included stimulus projects, job creation – especially in the small, medium and micro enterprise sector – the credit rating, strong fiscal discipline and increasing levels of tax.
Zuma mentioned small and medium-sized enterprises and the black industrialist scheme in his speech.
On the topic of fiscal discipline, Zuma said that government had undertaken to spend funds wisely and to cut wasteful expenditure, but without compromising on the core business of government and the provision of services.
Finance Minister Pravin Gordhan would announce further details in his budget speech on February 24, Zuma added.
DA leader Mmusi Maimane said that Zuma could not just cut food and travel costs; he also needed to reduced the size of his Cabinet and could have already saved R4.2 billion by doing so.
Turning to the country’s credit rating, Zuma said: “Our country seems to be at risk of losing its investment grade status from ratings agencies.”
Power FM’s Khumalo said that it would appear that Zuma failed to send a signal to the ratings agencies to avert a downgrade.
Kristin Lindow, Moody’s lead sovereign analyst for South Africa, said: “President Zuma’s state of the nation speech acknowledged the country’s deep economic challenges and provided hints of future budget savings.
“The markets’ attention in the short term will turn to the 2016/17 budget … and whether the measures announced will succeed in steadying confidence.”
Kweyama expressed concern about the management of state-owned enterprises.
However, Zuma glossed over the issue and said that many of the state-owned enterprises were performing “well”.
Zuma chose the example of the SA National Roads Agency Limited, which is subject to a lot of scrutiny related to its failed e-tolls project.
He also made no mention of selling any of the state-owned enterprises or of selling stakes in state-owned enterprises.
Maimane said the government should sell state-owned enterprises and key assets.
Kweyama said that immigration policy was a key issue for local business, including its effect on tourism and on attracting skilled workers.
“We have heard concerns from companies about delays in obtaining visas for skilled personnel from abroad. The draft migration policy will be presented to Cabinet during the course of 2016,” Zuma said.
Kweyama said there was a need for the review of legislation as the legislative environment impeded investment.
Zuma said the government had heard the appeals for policy certainty in the mining sector, especially with regards to the Mineral and Petroleum Resources Development Act.
“The bill was referred back to Parliament last year,” the president said. “We await Parliament to conclude the processing, which we trust will be done expeditiously.”