Azar Jammine, chief economist at Econometrix. Picture: FINANCIAL MAIL
'LEFT UNINSPIRED': Azar Jammine, chief economist at Econometrix. Picture: FINANCIAL MAIL

PRESIDENT Jacob Zuma touched all the right bases in his state of the nation speech on Thursday night, but failed to come up with any fresh ideas on how to address the challenges facing South Africa, analysts said.

Business organisations were pleased with Mr Zuma’s focus on infrastructure development and his willingness to tackle the contentious issues of corruption, education and land reform.

But the only unexpected news in his speech was an announcement that Finance Minister Pravin Gordhan would commission a study into the "appropriateness" of current tax policies — which suggested that tax increases were in the pipeline.

"It left me uninspired. Yes, it did cover a lot of different areas that need to be addressed but I am left dangling — is there anything new?" said Econometrix chief economist Azar Jammine.

"It led me to believe that it’s just business as usual and we will plod along as we have been doing," he added.

The government is battling to boost economic growth to a level that will help eradicate unemployment, poverty and inequality. Mr Zuma pointed out that the economy needed to grow by more than 5% a year to create more jobs — double its present pace of growth.

Nedbank economist Isaac Matshego described Mr Zuma’s detailed description of all the infrastructure projects under way in South Africa as a "progress report".

"Overall it was more of the same, though not in a negative way," he said.

There had been widespread anticipation that Mr Zuma would provide details on how the National Development Plan (NDP) — seen as a credible road map for South Africa’s economy — would be implemented.

But apart from mentioning the relevance of the plan at the start of his speech, there was no clarity on its implementation. This puts the onus squarely on the Treasury’s national budget, which will be unveiled on February 27.

"Business is expecting to see how the NDP would be financed, as this would be a challenging task in finding workable solutions to the challenges of unemployment, poverty and inequality," Business Unity South Africa (Busa) said in a statement after the speech.

Both Busa and the South African Chamber of Commerce & Industry (Sacci) welcomed Mr Zuma’s emphasis on the government’s aim to make its departments pay small, medium-sized and micro enterprises (SMMEs) within 30 days — a yardstick that has often not been met.

"He surprised us on the positive side — he addressed nearly every item on our expectation list, but of course delivery is key," said Sacci CE Neren Rau. "The only area where we felt he could do more was on the SMME support and development side."

Sandile Zungu, spokesman for the Black Business Council, said he was pleased with the emphasis the speech gave to infrastructure development, which was needed for economic growth and employment creation.

He was also encouraged by the priority Mr Zuma assigned to the development of black industrialists and enterprises.

KPMG economist Lullu Krugel said her concern was that any new tax policy should focus on broadening South Africa’s tax base, rather than taxing the individuals and businesses already in the net.

Mr Zuma said part of the planned tax policy study would evaluate the current royalties regime for the mining sector, which is under pressure from weaker global demand, labour unrest and rising input costs.

"They should handle that very carefully," Ms Krugel said.

The Cape Chamber of Commerce and Industry also expressed its disappointment.

"The president gave no clear policy direction. While alluding to very important topics, all the speech did was increase the frustration of business that the national policy vacuum continues," said chamber president Fred Jacobs.

Mr Jacobs said that quite simply, business did not respond well to uncertainty. An example of continuing policy challenges was Mr Zuma’s call for 100% broadband internet penetration by 2020, while the Department of Communications remained in a leadership malaise that had lasted for more than three years.

"We have an incumbent (Communications Minister Dina Pule) who still holds control of the backbone of our delivery networks and a majority shareholder in the government that, if anything, is increasing its meddling tactics," Mr Jacobs said.

Similarly, calling for the private sector to absorb 11,000 further education and training graduates, without addressing the skills gap that existed between graduates and what business needed, was further evidence of the government’s naivety, he said.

Mr Jacobs said the address contained a few high points, such as a call for higher teachers’ salaries and for harsher action against those participating in strikes that result in damage to property. "After repeated calls from business for this to happen, we are heartened that, in these instances, we have been heard."

With Paul Vecchiatto