Zuma outlines five key priorities in SONA
Some of the areas identified include decent work, crime, health, rural development and education.
He was speaking to a joint sitting of the National Assembly in Cape Town.
The president was met with ululation and clapping as he arrived at the parliamentary precinct.
After extending condolences on the sudden passing of IFP stalwart Ben Skosana, Zuma moved to the death of Nelson Mandela saying, "This is the first State of the Nation address to take place in the absence of our founding president, his excellency Nelson Rolihlahla Mandela.
A soldier stands guard at the Wall of Remembrance with a picture of Nelson Mandela at Parliament in Cape Town ahead of President Jacob Zuma's state-of-the-nation's address, Thursday, 13 February, 2014. Picture: SAPA
Zuma's speech comes as the country marks 20 years of democracy.
The areas of importance identified by Zuma include decent work, crime, health, rural development and education.
He said although South Africa is a better place than before, he acknowledged that challenges still remain.
The president spent a lot of time reflecting on the ANC's successes.
He said 15 million people had jobs in South Africa today - the highest number in the country's history.
The president says despite government creating more than 650,000 jobs last year, it's still not good enough.
On average, South Africa's economy has grown by 3,2 percent from 1994 to 2012.
Zuma says youth unemployment remains unacceptably high, as it is throughout the world.
"We are taking a number of measures including the Employment Tax Incentive Act, which encourage employers to hire young workers," he said.
Regulations will be passed to ensure older employees are not affected by youth incentive scheme, he said.
Further measures were contained in the National Youth Accord signed in Soweto in April 2013, the president said.
Zuma said the Expanded Public Works Programme and the Community Work Programme continue to be an effective cushion for the poor and youth.
He says government, business and labour must continue to work together to create more jobs.
"Fortunately, this collaboration is already taking place at Nedlac [National Economic Development and Labour Council], which is one of the key institutions of cooperation in our democracy between government, business, labour and the community.
A number of key sectors were identified to accelerate job creation.
These include mining, tourism, agriculture, the green economy, infrastructure development and manufacturing.
On the infrastructure front, Zuma says harbours and ports have been upgraded.
An extra 1,500 kilometres of new roads and lanes have been built.
He also says construction is continuing at new power stations.
"In Medupi in Limpopo, Kusile in Mpumalanga and Ingula near Ladysmith, these stations will employ more than 30,000 workers."
Zuma says the overall crime rate has decreased by 21 percent since 2002 and work is ongoing to make communities safer.
One of the key focus areas is to eradicate violence against women and children.
He says a number of measures were introduced to address the issue, including the reopening of the family violence, child protection and sexual offences units as well as the sexual offences courts.
Zuma also touched on the issue of rhino poaching.
He says law enforcement agencies are working hard to stop the scourge.
The president says agreements were reached with China, Vietnam, Kenya, Mozambique and other Southern African Development Community countries to address the issue.
Zuma says South Africans are now living longer, thanks in part to government's HIV/Aids programmes.
He says the turnaround is one of the biggest achievements of his administration.
South Africa is used as a model country by the United Nations Aids Programmes (UNAIDS), Zuma says.
Government has more than doubled the number of people who're receiving anti-retroviral drugs from one million to 2,4 million people in 2013.
"More than 20 million South Africans have taken the HIV test since the launch of the campaign in 2011, which indicates confidence in the health system."
Over the past five years, 300 new health facilities were built, including 160 new clinics.
Ten new hospitals were built or refurbished in a number of areas across the country.
The president says there's been a huge increase in the number of pupils enrolled in schools and universities.
The number of children attending Grade R has more than doubled, moving from about 300,000 to more than 700,000 between 2003 and 2011, Zuma says.
A Draft Policy Framework for Universal Access to Grade R has been gazetted for public comment, with a view to making it compulsory.
The president also acknowledged the increase in the matric pass rate.
It has gone up from around 61 percent in 2009 to 78 percent in 2013, with bachelor passes improving each year.
Sign language will also be offered at schools from 2015.
Student enrollments at universities increased by 12 percent, while Further Education and Training (FET) college enrolments spiked by 90 percent.
The National Student Financial Aid Scheme (Nasfas) budget was increased to R9 billion to meet the rising demand, Zuma says.
Two new universities were established in the Northern Cape and Mpumalanga.
Around 12 new FET colleges will be built in Limpopo, Mpumalanga, KwaZulu-Natal and in the Eastern Cape.
Zuma further detailed that since 1994, almost 5,000 farms have been transferred to black people in South Africa.
Good progress has been made in government's land reform programme, the president says.
"Nearly 80,000 land claims totaling 3,4 million hectares have been settled and 1,8 million people have benefitted."
For a full transcript of the speech click here.