Lifting the economy onto a faster growth path will be a key government priority over the next five years, President Jacob Zuma said on Tuesday, announcing a number of far-reaching measures to stabilise the mining industry, address the country’s energy constraints and remove obstacles to investment.
Delivering his State of the Nation address to Parliament in Cape Town, Zuma said that, as South Africa entered the next phase of its transition from apartheid to a national democratic society, “radical socio-economic transformation” was needed to address the challenges of poverty, unemployment and inequality.
“The economy takes centre stage in this programme. It remains our strong belief that the most effective weapon in the campaign against poverty is the creation of decent work, and that creating work requires faster economic growth.”
Earlier this month, Statistics SA reported that South Africa’s gross domestic product (GDP) had contracted 0.6 percent quarter-on-quarter in the first three months of the year – its first contraction since the second quarter of 2009, when the world’s economy dipped as a result of a global recession.
Zuma said the government had set a growth target of 5% by 2019, and would embark on various measures and interventions to jump-start the economy, focusing on domestic conditions that were slowing growth, namely the protracted and at times violent strikes in the mining industry, and a shortage of energy.
Deputy President to head up mining talks
A lengthy strike in South Africa’s platinum mining sector has brought production to a standstill, and the economy almost to its knees, with the threat of job cuts looming.
Zuma said that Deputy President Cyril Ramaphosa – who has a wealth of experience in both labour and business stretching back many years – would step in to lead a fresh round of talks between mining companies and labour unions, within the ambit of the National Economic Development and Labour Council (Nedlac).
Zuma said the social partners would need to deliberate on the violent nature and the duration of the strikes, as well as on wage inequality.
The government, for its part, “will during this term investigate the possibility of a national minimum wage as one of the key mechanisms to reduce income inequality”, as well as push for the implementation of the Framework Agreement for a Sustainable Mining Industry that was agreed on by labour, business and government last year.
Zuma said he would take over this process himself, to ensure that the government implemented its undertaking, as part of the agreement, to build housing and other services to revitalise mining towns, with a focus on the mining areas of Motlosana, Emalahleni, Sekhukhune, Lephalale, West Rand and Matjhabeng.
An inter-ministerial committee on the revitalisation of distressed mining communities, under the leadership of Minister in the Presidency Jeff Radebe, had been established.
At the same time, the government would pressure mining companies to meet their Mining Charter targets in order to improve the lives of mineworkers.
“Companies are expected to convert or upgrade hostels into family units, attain the occupancy rate of one person per room and also facilitate home ownership options for mine workers,” Zuma said, adding: “We urge the companies to meet the 2014 deadline for these targets and extend this right to dignity to mine workers.”
Removing obstacles to investment
Another major constraint to economic growth, Zuma said, was the current low level of investment in the economy by the private sector.
“We are determined to work with the private sector to remove obstacles to investment. We would like to see the private sector showing as much confidence in the economy as the public sector.”
The government would continue to engage business on this issue, Zuma said, adding that he would soon convene the next meeting of the Presidential Business Working Group.
“After the last meeting of the Working Group last year, six work streams were established, and these have been discussing solutions to various obstacles to doing business in South Africa.”
The issues had also been raised by company CEOs during three working sessions hosted by Zuma in November and December.
“The next meeting of the Working Group will take forward the partnership for inclusive growth and sustainable development,” the President said.