Interview: President Jacob Zuma
What steps are being taken to ensure more inclusive economic development in South Africa?
PRESIDENT JACOB ZUMA: From 1994 onwards, the democratic government sought to address poverty and inequality primarily through expanding social assistance programmes and improving labour laws. Prior to 1996 our social assistance programmes benefitted fewer than 2.4m South Africans, whereas in 2013 our social grant programmes helped just under 16m people. In addition to this, they also expanded the coverage of minimum wages to most low-wage sectors and strengthened labour laws.
The impact of social grants has been a critical factor in reducing absolute and relative poverty levels, but given fiscal constraints, they have had limitations in terms of reducing inequality. Similarly, the improvement of minimum wages and labour laws have had limited impact in the face of high unemployment, especially in very poor households.
Ultimately, the only way to bring about a more equitable economy in South Africa must be through government programmes of radical economic transformation. The following measures are included: the speedy rollout and expansion of public employment programmes as an integral part of a suite of policy interventions to aid employment growth and reduce poverty; more consistent efforts to encourage investment and diversification in economic activities and industries that could realistically sustain employment creation on a very large scale, as identified in the National Development Plan and backed-up by key policy interventions of the New Growth Path and Industrial Policy Action Plan; continued support of infrastructure investments that aid community services improvements in townships and rural communities, and act as a catalyst for private sector investment; much stronger support for rural development, including large-scale land reform, in ways that expand economic opportunities for households in the former Bantustans in particular; continued support of improvements in working conditions for low-paid and informal employment; broadening ownership both by strengthening social capital and by supporting collective action by poor communities and workers, such as through the Community Work Programme; and much more equitable provision of education and health care, which in turn demands a fundamental restructuring of existing systems.
How are structural challenges being resolved to ignite growth and create jobs?
ZUMA: The Cabinet has devised a five-point plan to deal with the electricity crisis and has set up an energy “war room” to implement it. The war room’s technical team is working intensively to implement the Cabinet’s five-point energy plan, and the government will provide R23bn ($1.99bn) to public utility company Eskom in the 2015 fiscal year to improve its finances and to minimise load shedding. The five points of the plan are: Eskom’s maintenance and capacity improvement programme, new generation capacity through coal, cogeneration contracts with the private sector, introduction of gas-to-power and acceleration of demand-side management. The negotiations on cogeneration power will be concluded during the first half of 2015. These efforts are directed at diversifying our country’s energy sources. In this regard, state-owned companies are accelerating the exploration for oil and gas. A number of exploration wells will be drilled over the next 10 years in partnership with the private sector, which will mean building more refining capacity, pipelines, storage tanks and also port terminal facilities.
In terms of nuclear energy, the government has signed inter-governmental agreements and has carried out vendor parades with five countries (the US, South Korea, Russia, France and China). In the 2015 financial year we will select a strategic partner to undertake the nuclear build programme, in keeping with the approved Integrated Resource Plan for South Africa 2010-30. Furthermore, in line with Eskom’s capacity improvement programme, testing of Medupi power station’s unit six is progressing well, and it is expected to provide its full load in July 2015.
In regard to labour, we are currently promoting meaningful social dialogue through bodies such as the National Economic Development and Labour Council (NEPAD) and trade unions to build systems that will ensure long-term bargaining agreements as we did with the public sector in 2012. Wage negotiations are afoot in various sectors, and we will endeavour to forestall any protracted adversarial labour relations like those witnessed in the mining sector in 2014, which had a negative effect on foreign direct investment. We are also engaging with the mining sector to examine how best to offset proposed staff cuts at various companies.
How can South Africa encourage greater economic integration on the continent?
ZUMA: South Africa is committed to regional economic integration and development in line with continental objectives and strategies set out by the African Union (AU) and the New Partnership for Africa’s Development. South Africa gives particular attention to integration and development work in Southern Africa through the Southern African Customs Union (SACU) and the Southern African Development Community (SADC). In advancing integration in both SACU and SADC, it is increasingly clear that trade integration must be combined with determined efforts to build diversified production capacity in the region. This is essential if the opportunities that arise from more open regional markets are to be shared equitably. The South African approach towards SACU is to transform the union from an organisation held together by a common external tariff and revenue sharing formula into a vehicle for deeper integration, through coordinated economic development strategies. We envisage SACU as an anchor for deeper integration in SADC, and in engaging the rest of the world as a unified trading bloc.
In SADC, the focus is on consolidating the achievements of the Free Trade Area (FTA), and working to extend African integration through the pursuit of the tripartite FTA negotiations between SADC, the East African Community (EAC) and the Common market for Eastern and Southern Africa. The success of these negotiations would give South Africa market access to potentially 1.1bn people (the estimated total population of Africa). Additionally, we are going to continue to engage with the EU to ensure that economic partnership agreements support rather than disrupt integration in Southern Africa.
The integration project is also underpinned by a strong bilateral country agenda. The Department of Trade and Industry pursues strategic and technical missions to identify precise areas of cooperation with partner countries. These generally include infrastructure development, trade and investment, and offers of technical assistance, particularly for institutional and policy building. This work will continue, in conjunction with stronger involvement and coordination with the South African business sector, ensuring that our engagement in African development activities has a broad base.
Infrastructure development in Southern Africa, particularly through Spatial Development Initiatives (SDIs) is a key priority. The success achieved in deepening and extending SDIs in the region has laid the foundations for extending the programme across Africa in support of AU-NEPAD infrastructure initiatives such as the Programme for Infrastructure Development in Africa, the Presidential Infrastructure Championing Initiative, chaired by me, and the North-South Corridor project that I am champion of.
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