Wednesday, April 27, 2016


This article first appeared in the Business Times section of The Sunday Times on 14 February 2016 

Watching President Jacob Zuma's state of the nation address this week reminded me of my favourite orator, Winston Churchill, who was once quoted as saying: "A good speech should be like a woman's skirt: long enough to cover the subject and short enough to create interest."

True to form, the president did speak for a very long time, even if you exclude the "points of order" preamble. Unfortunately, the demonstrations by the opposition parties have become the key attractions of the annual address, and have overshadowed the actual content delivered on the day. That speaks volumes about the real state of our nation.

When the "Honourable Speaker" eventually dealt with the EFF, Zuma proceeded to deliver what I thought was a long speech that didn't cover any real detail and certainly didn't create interest - at least not the detail and interest we needed.

A key precursor of Sona 2016 was a meeting between the president and the business community. Business has felt consistently left out by the government in policy and strategy formulation, especially as it relates to economic growth and transformation. Fair assertion or not, it is clear that South African business and politics have had an acrimonious relationship characterised by an elephant-sized trust deficit.

The CEOs apparently gave the president eight specific initiatives that can help the economy recover, and many of these were practical and measurable.

On the back of this, I hoped for a state of the nation address that would give some detail on the initiatives the government is considering to help ignite the economy and avert potentially crippling rating agency downgrades.

Excitement grew when I heard the president say: "A resilient and fast-growing economy is at the heart of our radical economic transformation agenda and the National Development Plan.

"When the economy grows fast it delivers jobs. Workers earn wages and businesses make profits. The tax base expands and allows government to increase the social wage and provide education, health, social grants, housing and free basic services - faster and in a more sustainable manner."

At this point I thought the president was preparing South Africans to understand and internalise the tough economic reality we are in.

I thought he would then follow up with something like "Compatriots, the opposite is also true. Without a fast-growing economy we cannot achieve radical economic transformation in the time frames we hope to. We cannot deliver the jobs we hope for. Workers cannot earn the wages they hope for and businesses will make less profit, some even losses; and the tax base will contract, making it difficult for government to sustainably deliver services."

But that didn't happen.

Instead, Zuma tried to give us a false sense of comfort.

After highlighting the challenges faced by the domestic economy, and the risks attached thereto, including the fact that the situation requires an effective turnaround plan from us, he said: "Our country remains an attractive investment destination. It may face challenges, but its positive attributes far outweigh those challenges. We must continue to market the country as a preferred destination for investments."

It was a missed opportunity.

It would have been beneficial to categorically state that 0.7% GDP growth is not an attractive investment return. We are not in a good space. On the face of it, and for some time to come, we are not an attractive investment destination.

However, the good news is that GDP growth rates are cyclical. We won't be here forever. We need to counter this slump with actions that quickly get us back to being attractive again. We need to highlight the long-term investment prospects of our country to investors, while showing empathy for the current poor performance of our economy.

This would have displayed much-needed empathy to an investment community that has more reason to exit its South African positions than to hold. C oming from our head of state, it would have gone a long way to reassure foreign direct investment cheque signatories that, notwithstanding the current economic slump, the government of South Africa is in tune with the realities and working hard to address them.

Another missed opportunity was Eskom. This state-owned enterprise has often been on the unfair side of criticism for the way it has reacted to the "energy crisis" that had grabbed the headlines. The headlines are no more. That is no coincidence. It is the fruit of hard toil by the company and its shareholder, the government.

Yes, the president did talk about the R83-billion invested and gave a short update on Ingula power station. However, he had an opportunity to pause and remind us all about the fears that existed just a year ago, and how the government got to work, put together a plan, and executed on it and now has actual results to show for its swift action. While still a work in progress, Eskom can be a very important case study that shows our capability in times of crisis.

But all is not lost. We have one more shot at this. Over to you, Minister Pravin Gordhan.

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