5 urgent interventions President Zuma must bring to SONA 

12 June 2014

President Jacob Zuma must use next week's State of the Nation Address to restore confidence in our economy, and avert a recession. 

This is a crucial moment in South Africa. We face very difficult economic conditions, and could be on the verge of entering into a formal economic recession. If this happens, hundreds of thousands of South Africans could lose their jobs as the economy shrinks. 

Allowing the economy to fall into recession would be a catastrophic step in the wrong direction. We need to all pull together to avoid recession and job losses. 

This is not a time for party political point scoring. It is a time for patriotic South Africans to work together to turn the economy around, and to create more jobs. 

Government, businesses, labour unions, political parties, think tanks, the media and all other stakeholders have to contribute positively to this cause in what will become a difficult time. 

As things stand today, our mining and manufacturing sectors are in free-fall. Business confidence is approaching an all-time low. Vehicle sales, chemical sales and other key manufacturing indicators point to recession. At the same time, we face mounting inflationary pressure and therefore the potential of further interest rate hikes. 

This is a toxic mix of unfavourable economic variables. 

Things are made even more difficult by the strike on the platinum belt. The situation there has deteriorated unacceptably. Billions are being lost in revenue and wages. Lives are being destroyed. Government should have been much more proactive in addressing the platinum belt crisis, and they should have been there much earlier. 

More of the same now from President Zuma will be catastrophic. It could condemn the economy to recession, which will lead to damaging job losses. He cannot continue to act like a bystander on major economic issues. The time has come for active and outspoken leadership on key economic challenges.

The fact is that while the world economy experienced a major downturn in 2008, recovery has been steady in so much of the rest of Africa, Asia and other comparable economies. Yet in South Africa we face a continued slowdown now, which can only be attributed to man-made factors, through poor policy direction and a complete lack of leadership on managing our budget deficits or reducing our reliance on debt to fund spending, making it more difficult to grow businesses and to start small businesses.

During next week's SONA address, the President has to do 5 things:

1) A direct appeal to all involved in the platinum belt crisis:

The time has come for President Zuma to openly address the nation on the platinum belt crisis. AMCU must accept that it will have to compromise. The employers must accept that they will have to compromise. Government will have to compromise by providing more support to mining communities in the long run. A deal must urgently be made. The President must call for shared sacrifices to resolve the crisis in the interests of the nation. He must show strong leadership, without intervening in the labour process.

2) Directly tackle corruption at all levels of government:

Our economic challenges are continually made worse by corruption. It ruins confidence, undermines the credibility of government and drains resources. We expect to see tomorrow that ratings agencies will cut South African credit ratings, a day after the World Bank cut our economic growth predictions for 2014 by 0,7%, down to just 2% growth. This will directly affect our economic attractiveness. Much of this is due to the perception that corruption thrives unchecked in South Africa, and starts right at the top.

While the President must offer Parliament, the nation and the Public Protector an explanation for why he benefited unduly from the upgrades to Nkandla, he must also put real measures in place to stop corruption in government at large. He has to push for the implementation of a law that would stop government employees from doing business with the state, like the DA has done in the Western Cape. And he must push for a new ministerial handbook to be published to stop wasteful expenditure in government. We can't turn the economy around if government is itself wasting billions of rands every year.

3) Make a commitment to reducing budget deficits through real austerity:

Under President Zuma we have seen a ballooning and bloated administration around the President, at all levels of government. This has happened while measure after measure shows that, despite drastically increasing the size of government, performance of this government on economic, labour, social, industrial and developmental outputs has been dismal, while education, healthcare and safety of citizens are close to crisis.

We must cut the costs of running government, and spend state resources on infrastructure that facilitates growth. Instead of a large government, large cars and large houses, let us rather see large projects to improve this country, while saving wasted expenditure through tighter controls on spending by opening tender processes and making expenditure transparent. The president must arrest a growing budget deficit and spiralling debt servicing costs.

4) Announce improved foreign trade relations:

We currently face a massive trade deficit. South Africa simply exports too little and imports too much. It places pressure on our economy. The President must prioritise the fast-tracking of the Tripartite Free Trade Area in Africa, which will boost trade with other African economies. It would also greatly if the president is able to negotiate the renewal of the African Growth and Opportunity Act (AGOA) agreements with the United States. The USA remains the world's largest consumer market. We need AGOA to be renewed to stimulate trade with the USA.

5) Urgent action to contain inflation where possible:

The President must lead the fight on inflation by committing to keeping administered prices as low as possible. Government controls the prices of key strategic goods and services such as port charges, electricity, fuel, water, toll charges and others. These prices must be contained or lowered to moderate the cost of living for ordinary South Africans and the cost of doing business for potential investors.

If the president tackles these five challenges, he will begin to address the key threats to our economy. He will improve confidence, he will put us on a path to resolving the platinum belt crisis, he will help to improve the trade deficit, he will help to tackle inflation and he will start to put the brakes on rampant corruption.

Until now, President Zuma has unfortunately been missing in action on our economic challenges. He has been "telling the good story" but not delivering it.  The time has now come to tell hard truths and show real leadership. 

We can all work together to avert recession and get the economy growing, so that life can become better for more South Africans. But that requires Jacob Zuma to show the leadership expected of the President of the Republic.

We can only hope that he will live up to the moment, and address the real economic challenges head-on.

Statement issued by DA parliamentary leader, Mmusi Maimane, June 12 2014

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