President Zuma, presented his State of the Nation Address to South Africa on the 14 February 2013. The historical celebrated Valentine's Day. No love story was given. In this usual fashion he continued with business.
GDP growth is expected to be down to 2.5 from 3 of last year. A program for development is once again on the cards.
Expectation was in the air about how he was going to deliver on job creation to stimulate the economy and satisfy the throngs of young people desperate for work. Unfortunately in the four years of President Zuma serving in office, progress has not been quick enough to satisfy the demand. This year he has confirmed R3 billion has been approved for job creation incentives. These incentives are expected to be paid out to business owners who can employ new youth as part of the scheme.
Education was another hot topic on the agenda. Has enough been done to attend to the education needs of our children? Concerns over the state of schools in rural areas continues to be a problem. Our concern should not be the schools and what they look like but rather that whether the children are receiving the education they need to prepare them for life? Are we growing young entrepreneurs for the future who can create the jobs? 98 new schools have been repaired and established replacing mud schools. Emphasis was placed on the Grade 12 pass rate which is on an upward trend. More to improve Maths, science and technology are high on the agenda. These skills need to be developed in schools. Education is an essential service for our nation. We need to take education more seriously. Remuneration investigations of teachers' salaries, has become a priority.
Health care was a focus in the last year and hospitals around the country are being upgraded. Unfortunately the service levels within most hospitals remain low. Are we educating and equipping our nurses with the self-motivation to care for their patients? President Zuma commented on the implementation of the national health plan in 2013. There have been 533 clinics developed and improved in 10 in pilot areas.
Land reform is a highly emotive topic in South Africa. One that needs to be resolved within constitution. We need to be mindful of food security and farmer training when implementing land reform, said President Zuma. The government has not been able to meet land reform targets. The willing buyer willing seller system will be done away with. An adequate compensation system will replace this.
Almost in the same breath, President Zuma raised the fact that urbanisation increased to 63 percent of the population. He seemed to intimate that it is more crucial to develop urban areas than it was to implement land reform. Due to the fact that most young South African people are more interested in business in urban areas, than having to work on rural farms. He emphasised the need to help municipalities develop urban areas.
Rail development was a major point from the previous State of the Nation address. There has not been much visible effect since last year's speech in the development of rail in South Africa. Majuba rail is to begin soon. Initial work on port in Durban has begun. A plan is still in place to develop rail. R860 billion has been spent on infrastructure in the past year. Other ports development has begun. Airport development has also begun. There is however talk of long term plans to develop rail throughout Africa to connect the country. Using natural resources in Africa to power such an effort. How is Africa going to pull together to make this strategy a reality?
Electricity infrastructure is developing at the same time, with some green energy in the basket.
The focus this year is on implementation.
President Zuma commented that the mining sector has had a difficult period. Nationalisation concerns have been laid to rest. A tax system review will be done, to see that it supports public spending requirements. This will include a review of the mining sector taxes.
International companies are going to need to invest and work in Africa to develop the infrastructure required. Is South Africa ready for trading companies of international status or is Mauritius going to take the lead in the SADC region with more favourable tax regimes? South Africa has previously mentioned implementing more favourable tax systems to become the trading hub of Africa but we are yet to see a competitive proposal.
The president still has a long term, 20 year, infrastructure development plan for South Africa. The country has to keep on track from year to year to achieve this. This year's budget speech appeared to have less promise and more of let's get down to business. Implementation is the key.
Written by Sheldon Conway of Business Soul Accounting in Hilton.