February 11, 2016 / 1:36 PM / in 2 years

South Africa's Zuma eyes foreign investors as opposition disrupts speech

CAPE TOWN (Reuters) - South African opposition members interrupted the annual state-of-the-nation speech by President Jacob Zuma on Thursday, repeatedly jeering a leader they accuse of mismanaging the flagging economy.

Members of the opposition Economic Freedom Fighters (EFF) party leave the parliamentary chamber as South Africa's President Jacob Zuma delivers his State of the Nation address in Cape Town, February 11, 2016. REUTERS/Schalk van Zuydam/Pool

Zuma’s speech highlighted policies to revive the economy, at a time when the president is under fire over a taxpayer-funded security upgrade to his private home that cost 250 million rand (then $23 million). Anger at the spending was heightened by a sharp downturn in the economy.

The central bank has forecast growth will reach only 0.9 percent this year and unemployment is at 25 percent. The worst drought in a century is forcing Africa’s top grain producer to import maize. The mining industry, hit hard by slowing demand from China, is shedding jobs and shutting unviable mines.

After months of denying wrongdoing, Zuma has promised to repay money spent on improvements unrelated to security. Opposition parties this week asked the country’s top court to rule on whether the president broke the law.

Julius Malema, the leader of the far-left opposition party Economic Freedom Fighters (EFF), which has 25 members in the 400-seat parliament, lived up to its promise to disrupt Zuma’s speech, just as he did last year when EFF members had chanted “Pay back the money”.

“Zuma is no longer a president that deserves respect from anyone ... he has made this country a joke,” Malema said before walking out of parliament with his fellow members, sporting their trademark red overalls and hard hats. They chanted slogans calling for Zuma to resign as they left. The president sat composed during the shouting.

Lawmakers from the opposition Congress of the People party had left the chamber earlier, demanding that Zuma resign.

The opposition is hoping public anger over the upgrade and the nation’s economic woes will translate into votes in upcoming local elections.

Earlier, police fired stun grenades to disperse crowds outside parliament before Zuma’s speech as opposition protesters clashed with Zuma supporters.

In his speech, Zuma said the government was working to attract foreign investment.

“Our country seems to be at risk of losing its investment grade status from ratings agencies. If that happens, it will become more expensive for us to borrow money from abroad to finance our programs,” Zuma said.

In its November review of South Africa’s credit status, Standard & Poor’s left its rating one notch above sub-investment grade.

AUSTERITY

Zuma also announced that the government would implement austerity measures to cope with a weak economy and asked parliament to look into whether it could still afford state offices in both Cape Town and Pretoria.

However, he failed to address why he fired two finance ministers in one week in December. Minister Nhlanhla Nene was replaced by relatively unknown lawmaker David van Rooyen, sparking a selling frenzy in the markets. Zuma swiftly replaced van Rooyen with the respected Pravin Gordhan.

“Rating agencies want two things: austerity and improved economic growth. I don’t think the speech went the whole way in addressing these concerns,” said Bureau For Economic Research’s economist Hugo Pienaar.

“I think the president failed to instill confidence in the people of South Africa,” the opposition Democratic Alliance leader Mmusi Maimane said after Zuma’s speech.

South Africa’s rand hit a record low of 17.9950 in January after weakening by more than a quarter to the dollar last year. Trading was volatile after Zuma’s speech.

Additional reporting by Zandi Shabalala in Cape Town and Tiisetso Motsoeneng; Writing by James Macharia, editing by Larry King

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