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Zuma faces nagging doubts  Comments
November 25, 2009

By Donwald Pressly


  • For a Jacob Zuma photo gallery - click here

  • To view a time line of the highlights of Jacob Zuma's first six months in office - click here

  • To view five fast facts about Jacob Zuma - click here

    Jacob Zuma has done a reasonable job in his first six months in office of stabilising the economy and providing a friendly face of government to business.

    However, nagging doubts remain about whether high costs of state personnel, poor education, high levels of crime and the growing bill to the taxpayer – state welfare grants – are sustainable.

    VIDEO: Jacob Zuma makes his inaugural speech as President of South Africa at his inauguration in Pretoria on 9 May 2009.



    Political and economic analysts tend to agree that despite a resurgence of the left – in the form of the SACP and Cosatu – the basic elements of prudent financial management are in place.

    VIDEO: Jacob Zuma announces his cabinet



    The able leadership of Trevor Manuel at the National Treasury has been replaced by Pravin Gordhan, who is described by Impumelelo Innovations Award Trust - which grants awards to public-private upliftment projects - chief executive Rhoda Kadalie as “even better than Manuel.”

    Gordhan, drawn from the ranks of the SACP but who is no longer a member, was “not a showman. He quietly gets things done and is thorough.”

    Kadalie, a former member of the human rights commission, noted that he had transformed Sars into a revenue generating machine.

    Mike Schussler, economists.co.za chief executive, said the appointments of Gordhan and, more recently, Gill Marcus were “inspired”.

    Sanlam chief economist Jac Laubscher said clarity was needed about new departments including the oversight department of Collins Chabane and the economic development department of Ebrahim Patel.

    He said while some old hands lent stability to the government, at the same time there was “a heightened level of noise around policy positions” and it made it difficult to determine what one should take seriously.

    Zuma’s pledge of creating 500 000 jobs by the end of the year appears far off target.

    Kadalie says: “I don’t think they (the government) have a clue how to create jobs.”

    Skilled teachers, doctors, nurses and engineers were leaving the country. She argues that the focus should fall on niche job creation such as tapping into the arts and synergising the relationship between small business and the labour market.

    “We need a more relaxed labour regime.” She cites the example of China where one can register a new business within a week.”

    Tony Twine, Econometrix economist, said Zuma’s decision to keep Manuel in the cabinet had worked to maintain confidence “in the structure of cabinet”, even though there had been “some cage rattling” from the alliance partners articulating their “clear distaste for the Trevor Manuel brand of social democracy.”

    Twine put down the debates articulated by Ebrahim Patel, economic development minister, as “kite flying where you put up a policy for debate and see what the reaction is in the market place.”


    One of the examples was whether there was an appropriate value in the money market for the rand. It remained to be seen if there would be interventions to reduce its value. Patel’s training layoff scheme, at least, had made it into a policy position irrespective of how successful it had been implemented, noted Twine.

    A policy that targeted the exchange rate of a currency in an economy “as small as ours and as open as ours … is attempting to nail jelly to the ceiling.” It was an “impossible ambition,” Twine argued.

    In 1998 the SA Reserve Bank had made the mistake of trying to “slug it out” to maintain the value of the rand. SA ended up with a R25 billion net open forward position. By 2001 under then Governor Tito Mboweni decided not to enter the fray. The currency fell but over the next three years it regained “considerable ground” without support.

    If one wanted to alter the exchange rate of the rand, the only way to do it was “to create an economic environment here in South Africa.. that is relatively weaker than the rest of the world,” notes Twine.

    This must be ill-advised as it would be characterised by higher inflation, a lower desire by foreigners to invest, lower fixed investment and lower levels of fixed capital stock, lower levels of employment and lower levels of growth. This would be contrary to the desires of organised labour.

    Laubscher agrees that there is little concrete that the government could do to weaken the rand, but he noted that much of the clamour for a weaker rand actually came from business, rather than labour.

    Schussler believes Zuma has been better for the economy than most commentators ever thought he would be, yet there had been a ham-handed approach during his presidency to the parastatals.

    However, many of the problems had their roots in the Thabo Mbeki administration.

    A long list of parastatals or state entities had acting chief executives – including SAA, Transnet, the SABC, Eskom and Armscor.

    This was happening at a time when these enterprises should be operating at optimum efficiency, noted Schussler.

    Kadalie agreed. “They have been used as cash cows for politically correct people,” she said, noting that people were put in posts at the top for political reasons. At Eskom the chief executive should have acted on the Olsen report which warned of looming supply problems.

    Twine believes that the Zuma administration had acquitted itself reasonably well by sustaining the macro-economic formula that had supported accelerating growth since 1994.

    Even during the recession, SA had done better “at a macro level” that most of its trading partners.

    Yet there were worrying micro-economic matters such as the planned imposition of the national health insurance scheme which was unsettling the health industry.

    The competition commission crackdown on market place collusion was also, he believed making the ability to do business in SA “extremely tricky”.

    He noted that quarterly figures for petroleum sales and cement sales had been stopped “as a result of the competition rulings that data should not be pooled”.

    The aim may be to protect consumers but the result was throwing the baby out with the bathwater, he argued. “The irony is that the theoretical requirement for perfect competition is perfect information. Our competition law appears to be interfering with the information flow.”

    Laubscher said what worried him dearly was the increased cost of public servants. The public sector wage bill had risen by about R12 billion and this would prove difficult to manage in future budgets.

    It also meant that less money was available for high priorities – such as the estimated extra R10 billion needed for land transformation.

    Kadalie said the social cost of crime remained high, education remained poor for most and there was more noisy debate about economic issues than usual under Zuma. But she believes that Zuma has done a reasonable job in stabilising the country and providing confidence in the economy. He allowed his left alliance partners "to prattle on" but then "he puts his foot down".

    Website links

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    (2) Presidency
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    Showing page 1 of 1 comment pages, 10 total comments
    10 Weeks ago Gypsy wrote :
    What Revolution? Are you all still living in the past? Since when was J.Z. a revolution in our country common people this is such provocative language it seems the ANC is hell bent on continuing this type of rhetoric to the point of ridiculous it is time you all grow up and move on.....Oh and by the way I read in this article that China issues business licences in a week well I have news for you buddy that that is simply not true it can take up to two years or more to acquire such a license if you are lucky...I know cos I live there. Get your facts straight!!!!
    10 Weeks ago Don wrote :
    Very sorry to tell you this "Vusi" no one has any need to eat "HUMBLE PIE" as the washing machine still hasn't fulfilled one of his promises... so all he's generated is a load of hot air. Let's have a look at some of those promises: Still no 500k jobs, crime still rampant, government spending still excessive, etc.
    10 Weeks ago Nick wrote :
    Vusi, we are all sons of the soil or are you implying JZ is a farmer? Who are these enemies of the revolution you speak of? Another mindless free t-shirt and free KFC lunch pack goon with internet access.. Zuma has done OK but I still want to see him deliver on election promises. Somehow I doubt that will happen though.
    10 Weeks ago Rodney wrote :
    I still think that JZ won't meet to the promises he made on his Campaign and first speech, One has to realise that Intelligence is acquired while wisdom is given. The is lack of service delivery, first being the 500k jobs by end of the Year. He is trying to much to charm and let people accept him but one thing i know charm does not build a country. He is the first President to have Ministers in Planning, one might think that he recognises his shortcomings. I mean there are fairly number of people who have made it in the business sector with having MBA's. All it takes for one to rule is pure determination and being transparent, and all i see in this New Cabinet they are trying to prove a point. My views as a young youth in SA are still uncertain, as the plans which JZ stated none of them have been 100% achieved thus far.
    10 Weeks ago Lennon wrote :
    Uhm..... Vusi? Who are these "enemies" of JZ and the "revolution"? Are they the enigmatic "Third Force"? If so, who are they? Are there also First and Second Forces (must be, if there is a "Third Force")? It would be nice if you ANC loyalists could explain you rhetoric to the rest of us so that we can understand things more clearly. Surely this would be of great benefit to the "Social Democratic Revolution" that you guys always talk about (but also never explain)?
    10 Weeks ago African wrote :
    Well, like FW said; Zuma will confound the prophets of doom.
    10 Weeks ago Simon wrote :
    VUSI, I know its all the rage to refer to JZ's rise to power as a revolution, but that is a bit much... But more to the point, I think JZ has done a sterling job and look forward to the future! I hope he remains objective and whittles his woodworker into a more refined shape!
    10 Weeks ago Anonymous wrote :
    Dream on Vusi as long as he got his hang on's like the shakes he'll fall hard .
    10 Weeks ago Son of the Soil. wrote :
    Reality check! While he may have provided the requisite PR rhetoric & sound bites, he's yet to provide us with any evidence of strong leadership decisions; instead it appears that our president is a front for some behind the scenes leaders who are using the image of the president to front their agenda. You can spend a lot of time "listening" & trying to satisfy too many people; at some stage you're actually going to have to do some real leading!
    10 Weeks ago VUSI wrote :
    It is very interesting to see that Msholozi is gradualy proving all his enemies wrong and very wrong for that matter.We told them that JZ is very intelligent and forthrigt also very enganging but firm. We congratulate this son of the soil for making the enemies of the revolution eat a humle pie.
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