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7 game-changers ahead of SONA

Marc Ashton shares his views on the issues Jacob Zuma needs to tackle in tonight's SONA.

Preparations are underway for SONA 2014.  Picture: GCIS

JOHANNESBURG - Tonight President Jacob Zuma will present the 2014 State of the Nation Address (SONA) at the opening of Parliament in Cape Town.

The address comes less than three months ahead of the fifth democratic general elections in South Africa, after which he will deliver a second SONA.

It also comes amidst growing concerns and frustrations with the country's economic standing.

Finweek editor-in-chief Marc Ashton shares his views on what role the biggest issues in our economy should play in the speech.

1: WEAKENING CURRENCY

South Africa has seen the rand tumble against the US dollar and other major currencies in recent weeks and months.

Ashton says this might seem to conflict with the strength we're seeing at the Johannesburg Stock Exchange (JSE), but what is the reality?

"There are a couple of things to look at. One is what is happening internally in South Africa and that is what the businesses are feeling. We look at our stock market and it feels like we're actually rich, things are going alright, record levels, all these fine things. But, fundamentally, you look around and talk to companies and they just don't feel very confident," he says.

"You have this total disconnect between what the currency is doing to the stock market - dragging up the share prices - and what's happening at an operating level. At some point in that disconnect, you start to feel it."

Companies may be seeing their stocks rise but, for most of them, a struggling currency means struggling companies and this eventually hurts workers and consumers alike.

But Ashton says we shouldn't feel too worried as we are not alone in this dilemma, with other emerging markets experiencing similar problems. However, that isn't an excuse the president should rely on in his address, he says.

2: DETERIORATING EMPLOYMENT

South Africa's labour market has become somewhat stagnant in line with the sluggish economy.

Ashton says the announcement this week that Barclays Africa grew earnings while its parent company announced plans to cut around 12,000 jobs internationally - including in its successful South African centres - is another sign of the disconnect in the economy.

"If you ask around a dinner table, people are worried about their jobs. There's no job security. Companies don't have that confidence at the moment."

He says it's unlikely this will change anytime soon.

"We're not going to be adding a hell of a lot of jobs, particularly going into the elections."

3: POLITICAL AND SOCIAL PESSIMISM

Ashton suggests South Africans are becoming increasingly pessimistic about the political and economic situation of their country. While they may be participating in the democracy more than ever, they are also willing to sit back and watch disasters unfold daily.

"I think what frustrates South Africans at the moment - and I know this is just a flashpoint we looked at yesterday - but we became totally infatuated with the idea that the DA was going to march on Luthuli House, with the ANC lining up there, and we kind of have this morbid curiosity that we can see ourselves walking into an absolutely chaotic situation," he says.

Democratic Alliance leader Helen Zille addresses the crowd during the DA march in Johannesburg CBD on 12 February 2014. Picture: Picture: Reinart Toerien/EWN.

"Then you have Jessie Duarte coming out and saying 'street rules apply', which gets reported in the media and gives us the guidance that we're more interested in politicking than we are in coming up with a plan. All that South Africans want at the moment is a plan."

4: CORRUPTION

While corruption is nothing new in South African politics, citizens appear to becoming ever more frustrated with the problem, says Ashton.

"We saw the Labour Minister in the UK hire an illegal immigrant and step down the moment he took criticism. We have this situation where we sit there and look at what is perceived as corruption and we say, 'somebody has done something wrong'. But there is no accountability.

"We want to see a president that stands up there and says, you know what, there are things that are wrong - we accept that - but here's what going to happen. And, at the moment, that's not being felt."

5: SERVICE DELIVERY

Ashton notes a personal example of service delivery frustration, which he wrote about in a column for magazine.

He recalls that the outage of a single traffic light in Linden added around 45 minutes to the commute of everyone in the area, saying this is merely a minor example of the daily nuisances and true struggles for South Africans in all walks of life.

Protesters in Hebron block roads during violent service delivery protests on 7 February. Picture: EWN.

"We just seem to have accepted this. But the frustration is creeping in and you can see it happening," he says.

"We've been able to say, great, we're making promises - we've promised, we've promised, we've promised… But what's happening now: people are saying, 'Yes, but you came with this line last year, you came with it four years ago, and I don't have it. I want somebody to give me what you promised, now'."

6: E-TOLLS AND FUEL COSTS

Gauteng residents last year saw the launch of e-tolling on the province's major freeways.

The controversial e-tolling system was launched on Gauteng's roads on 3 December. Picture: EWN.

This, along with continuing fuel prices increases and the fact that petrol is now at its highest ever level in South Africa, has come very close to being the last straw for many road users.

"It's expensive to do anything in this country at the moment," says Ashton. "But economist Mike Schüssler is doing a lot of talk around how our salaries shape up relative to the rest of the world and, you know, we're relatively well-paid in the broader scheme of things.

"But, when you ask, 'What am I taking home?' It's nothing."

He says whatever excess average consumers may have enjoyed just months ago has likely dried up by now.

"I think that is where people are getting frustrated, because they're saying there's just nothing left to give. And we've been threatening this for the last two years: 'You're going to break the middle-class taxpayer who is law-abiding, who doesn't burn down things, who doesn't go on strike when things don't go their way. They carry on doing it and, unfortunately, they've reached the point where there's just nothing left to give."

7: GENERAL INFLATION:

"I was listening to [Reserve Bank Governor] Gill Marcus when she made the interest rate announcement and you almost got the sense that she felt frustrated with the infatuation with the Reserve Bank's mandate around inflation," says Ashton.

Reserve Bank Governor Gill Marcus. Picture: EWN.

"They talk to the six percent - the top of their bracket - but that's not what people are feeling on the ground, that's not what they're feeling in their wallets.

"The thing is, it's this vicious cycle because businesses are way ahead of the curve and they're saying, 'I know what's coming and I'm going to get ahead of the game. I don't want to be caught out down the line and I'm going to raise prices.' We're just stuck in this cycle of zero confidence and prices are going to rise faster than the consumer can keep pace with."

'GIVE US REAL CHANGE'

"Last week," Ashton concludes, "26 economists when polled said there was not going to be a rate hike. Suddenly, something happened overnight - panic in the international markets - and we have what appeared to be a knee-jerk reaction based on the guidance given to us. What you want to see tonight is not knee-jerk reactions.

"You want to say, 'There was always a plan in place, we acknowledge what's happening internationally, here is the State of the Nation as it's going right now, here is our plan for the year.'"

As interviewer Bruce Whitfield then remarked, if you're Jacob Zuma's speech writer and you haven't included all of these topics in the State of the Nation address, the script had better change.

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