South Africa plans big infrastructure campaign

[February 10, 2012]  JOHANNESBURG (AP) -- South Africa's president announced ambitious infrastructure projects Thursday, laying out his plans for creating jobs and hope in nation harder hit than most in Africa by global recession.

"The massive investment in infrastructure must leave more than just power stations, rail lines, dams and roads," Zuma said in his nationally televised state of the nation address to parliament in Cape Town. "It must industrialize the country, generate skills and boost much needed job creation."

His plan spanned the country, from a dam in the southwestern homeland of former President Nelson Mandela to a rail and road network and new water systems to boost prospects for mining in Limpopo, a province in the far northeast that is among the nation's poorest and often pointed to as among the most corrupt.

He did not say how much the program would cost. His finance minister may offer details in a budget speech later this month.

Zuma was elected in 2009 to a five-year term, taking office just as the global recession hit South Africa, which is sub-Saharan Africa's biggest economy but has been burdened by high rates of poverty, unemployment and inequality despite years of buoyant growth. Across Africa, the recession had been delayed, leading many to initially think Africa would be spared.

Zuma was applauded during his speech when he mentioned unemployment figures of 23.9 percent released earlier in the week. The figure, for the end of 2011, would spark panic in the West, but represented the biggest growth in employment for South Africa since its 2009 recession. Government statisticians said that 365,000 more South Africans were working in the fourth quarter of 2011 than in the fourth quarter of the previous year.

Zuma's African National Congress party in 2010 set itself a daunting target of creating 5 million jobs by 2020. But its own finance minister has estimated that would require growth of over 6 percent a year. South Africa has been and is predicted to continue to be well short of that, in part because of the global recession.

Zuma spoke hours after Greece struck a deal to make deep cuts in government jobs and spending to help ward off a default, and perhaps calm the economic storms that have buffeted Europe. While the immediate danger appears to have passed, the future for Greece and the rest of Europe remains uncertain.

Europe is the second biggest market for South African exports, after China.

South Africa has not only sub-Saharan Africa's largest economy, but its most developed infrastructure and most skilled work force, Ajen Sita, chief executive officer for Africa for Ernst & Young, told reporters recently. That has made South Africa more attractive to Europe than other African countries, so Europe's troubles have hit South Africa harder, Sita said. South Africa exports not just minerals, but cars and car components, clothing and agricultural products.

Across Africa, Ernst & Young expects GDP to grow between 4 and 5 percent in 2012, compared to 2.7 percent for South Africa. In either case, the prediction is rosier than a growth rate of close to zero expected for Europe.

Europe is experiencing "a crisis of low growth and no jobs," said Mthuli Ncube, chief economist of the African Development Bank.

In an interview, Ncube credited fewer wars and more elections in Africa for the continent's resiliency amid a serious worldwide slowdown. He also pointed to painful economic reforms imposed on African governments in the 1980s and 1990s. Now, Ncube said, reform is being forced on European governments, such as the fiscal austerity plan for Greece mandated by the European Union, the European Central Bank and the International Monetary Fund. Greeks have regularly and sometimes violently protested austerity measures, and voters will get a chance to have their say in an election expected in the next few months.

Sita, of Ernst & Young, urged South Africa to work harder on developing markets in and attracting investment from Asia and other developing regions to counteract the impact of crisis in Europe. He also said South Africa needed to ensure it remained competitive, by investing in building its infrastructure and training its work force and by tackling corruption.

"We can't rest, because we are in a competitive world," the Johannesburg-based Sita said.

Earlier this week, South Africa's Industrial Development Corporation said South Africa's performance has global implications.

"It has now fallen on the emerging and other developing economies to sustain the world's growth momentum, since a contraction is forecast in the eurozone, while the USA and Japan are expected to record only modest growth," Jorge Maia, head of research for the corporation, said in a statement accompanying a report focusing on South Africa's key mining sector.

Maia, saying South Africa was lagging behind other countries in getting minerals out of the ground, called for "significantly higher levels of investment, supported by major improvements in the energy and transportation infrastructure."

[Associated Press; By DONNA BRYSON]

Donna Bryson can be reached at http://twitter.com/dbrysonAP.

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