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President Jacob Zuma has for the first time admitted that the ambitious target set out in the National Development Plan to grow the economy at 5% a year by 2019 will not be achieved.
Painting a gloomy picture as he focused on the economic woes of the country in his state of the nation address tonight, Zuma said that the economy was expected to grow less than 1%.
“Given the economic conditions I painted earlier on, it is clear that we will not achieve that growth target at the time we had hoped to achieve it.
“The tough global and domestic conditions should propel us to redouble our efforts, working together [in] all sectors. In this regard, it is important to act decisively to remove domestic constraints to growth,” he said as he delivered his address.
A significant part of his speech centred around the economic woes of the country, which the World Bank said was on the brink of recession. The bank cut South Africa’s growth forecast for this year to 0.8%.
Zuma was under pressure to make amends after his decision to fire Finance Minister Nhlanhla Nene, replace him with little known backbencher Des van Rooyen, and then change his mind and replace him with Pravin Gordhan after a public outcry and revolt by business.
The rand plunged to new lows against the dollar, causing the country a R500-billion loss. Credit rating companies downgraded South Africa’s debt because of growth risk
Zuma placed the blame on electricity constraints in the country and the global economic situation, which saw a drop in the prices of commodities such as gold, platinum and coal sold to the rest of the world.
“The economies of two of our partners in Brics – Brazil and Russia – were expected to contract this year. The third, China, will not register the kind of robust growth that it is known for,” he said.
“Because our economy is relatively small and open, it is affected by all of these developments.”
Zuma said nothing could be done to change the global economic conditions in the country, but urged everyone – including business – to together to change the local conditions.
“Let us work together to turn the situation around. It can be done. A resilient and fast-growing economy is at the heart of our radical economic transformation agenda and our National Development Plan.
“The situation requires an effective turnaround plan from us.”
There were plans to shut down state-owned companies that were no longer relevant to the country’s developmental agenda.
Zuma emphasised the need for those that remained to be properly governed and managed.
“We have to streamline and sharpen the mandates of the companies and ensure that where there are overlaps in the mandates, there is immediate rationalisation,” he said, adding that the government must move to implement the recommendations of the presidential review commission on state-owned enterprises.
Deputy President Cyril Ramaphosa was tasked with its implementation.
The recommendations outlined how the institutions should be managed.
“We all have a lot to do to turn the economy around and to cut wastage. We will go through a difficult period for a while, but when the economy recovers, we will be proud of ourselves for having done the right thing,” said Zuma.
