12 February 2013

South Africa: SONA Expected to Improve Business Mood

Photo: GCIS
President Jacob Zuma puts the final touches on his 2012 State of the Nation Address (file photo).

South Africa's economic growth in 2013 will remain positive but unbalanced, Business Unity South Africa (BUSA) said yesterday.

This as President Jacob Zuma prepares to deliver the State of the Nation Address (SONA) in Parliament this week, with many hoping he will highlight progress on government's implementation of the infrastructure programme announced last year.

"There are relatively low levels of investor and business confidence but the SONA and the Budget Speech may improve business mood," BUSA's policy advisor Raymond Parsons told reporters in Johannesburg.

Zuma will address the nation at a time Cabinet had just adopted the National Development Plan, which makes far-reaching proposals to direct the country's development.

"We would like to hear more details as to how the private sector will be part of the National Development Plan. There will be trade-offs and there will be tough decisions but we must take the long view. This is the opportunity to take the country with you and share the vision.

"We want to see the roll out infrastructure programme more aggressively to improve the state capacity and activate the private sector because infrastructure development will make a great impact into our growth," he said.

He said the overarching concern for business was to ensure that South Africa narrows the gap between policy formulation and implementation.

Parsons said business felt that Zuma's speech on Thursday and the budget address, to be tabled by Finance Minister Pravin Gordhan later this month, should help prevent another rating downgrade.

"Negative investor perception could result in higher borrowing costs and decline in short term capital inflows needed to finance the trade deficit."

Despite a bumpy 2012, BUSA believes things will stabilise in the economic front and there will be jobs created projecting a GDP growth of about 2.6% but with downside risks.

Last year was "economically disappointing" for SA's economic performance thanks to both external and internal reasons. These include the negative impacts of the slowdown in Eurozone on SA exports. Recruitment company Adcorp's employment index, released on Monday, fell by an annualised 3.2%, reflecting that the economy shed 51,495 jobs during the month.

BUSA says it is crucial that there is a buy in from all partners for the successful implementation of the country's NDP, with a potential to maximise development and job creation.

"We would like to see how the president will tell us how the government will work with the private sector to implement the National Development Plan. In addition to that we would like to see policies that are focused to realise the NDP expectations," said chief executive Nomaxabiso Majokweni.

"Implementation of the NDP should therefore start to reflect in the budget allocations. The proposals in the NDP have a major impact on state expenditure and yet the NDP itself lacks the overall financial framework in which the planed expenditure will take place," Majokweni said.

She added that the NDP would only work if the private sector can create jobs quickly enough.


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