Transcript of interview with President Jacob Zuma in Davos by Carina Kamel of CNBC, January 29 2010

Carina Kamel: We are live here at the World Economic Forum in Davos, the theme for this year is "Improving the State of the World; Rethink, Redesign, Rebuild".

Lots of people are coming here to figure out if they have learnt the lessons from the financial crisis. Are there red flags that we should be looking out for in the years to come? Are we missing the warning signs of another crisis? These are some of the things being discussed here by two and a half thousand people from 90 countries 30 heads of state.

One of those heads of state is joining me now. I am delighted to have with me President Jacob Zuma of South Africa. It is an absolute pleasure to have you, thank you so much for being with us live here from Davos today.

President Jacob Zuma: Thank you very much.

Carina Kamel: One of the things we are discussing here in Davos is the recovery that we are seeing, the road to recovery. We have moved from recession, in fact, to a global economic recovery of sorts. From what you are seeing, do you think that the recovery signs that we have seen so far are in fact sustainable?

President Jacob Zuma: Yes, from our point of view we think they are sustainable. I think that the financial crisis did make everybody look at what was happening in the economy and I think all of us tried to do whatever we could to try and help the economy recover. I think it is a recovery that has come as a result of effort put in it, so I think it is sustainable.

Carina Kamel: One of the things we are also discussing here is the rise of the emerging economies, led by China of course. A lot of people are concerned that China's economy might in fact be overheating given the record growth we saw, 10.7 percent last quarter. Are you concerned about that and tell us your thoughts about China's expansion into Africa, something that is viewed with some scepticism in European circles specifically?

President Jacob Zuma: Well, I am aware that it is viewed with some scepticism, but there have been economies before that have grown and indeed impacted on the world. The United States of America's economy for an example did grow over the old Europe and became very big and impacted on the world. I think in the nature of the growth of the world, there are going to be big economies that are going to dominate and I think it is time for China to do so.

I think there is also the Indian economy that is emerging. I think we are all of us in the world, relating to the Chinese economy. I think even the United States of America was impacted by the Chinese economy. So no-one, if there is a bigger economy growing in the world, is going to escape its impact. But I think Africa is very much aware of that, bear in mind that Africa has an experience in dealing with economies that impact on them. China is one of them at its own time. We are very much aware we are dealing with China in a particular way. From our point of view, it is the rules that govern the markets, and China has decided to be part of the markets of this world. And I know that people are concerned about it, but I think we will deal with the issue as we have done with many before.

Carina Kamel: President Zuma, let's talk about rescue packages. Governments around the world, more specifically perhaps in Europe and the United States of America, had dedicated trillions of dollars through stimulus, financial rescue packages. What is your view on these packages that we are seeing in Europe and the United State of America and do you think that money has been well spent?

President Jacob Zuma: Well, I wouldn't have the details of how it was spent in specific terms, but of course the comment I would have on this is that there has been indeed very huge rescue packages. Our concern thus far has been that they have tended to be more national than international. They have not tended to follow the belief that we are now in a globalised world.

The recession for an example was triggered in the developed world and impacted on everybody else, but when those packages were made they did not include the developing countries. They were very exclusive, very national and perhaps smaller (indistinct) of certain countries. I am not certain whether there were conditions put to these packages, to how the banks should behave so that they don't take us back to this problem. I hope those kind of conditions were there. But also what is important to us is that we must not just pay lip service to globalised world when it is all nice. When there are difficulties, globalisation is put on the back burner. We need to be saying, once we have the economies coming, or anything globally, we must be able to deal with it.

I was happy when I arrived here, because I heard comments being made that look, we need to look at these packages in a different way, that they should be actually take into account in particular the plight of the ordinary tax payers. I think that is what should have been taken into account. But of course, I am sure the fact that the economy is now picking up, is recovering, is because among others of those packages, but I am saying we could have done better. But of course they have helped to some degree.

Carina Kamel: Lets turn our focus inward a little bit to South Africa and I know the question I am going to ask you is something that you get asked a lot, but I would like to talk about the idea of job creation. 500 000 jobs was the number that you mentioned as a target. Clearly a lot of jobs have been created through the extended public works programme and the infrastructure investment on the part of the government, but clearly also a lot of jobs have been lost in the past year. Where do we stand at the moment? What is a realistic figure, what are you targeting right now?

President Jacob Zuma: At the moment we are aware that there has been the creation of jobs to a large extent, whilst at the same time there are jobs that have been lost, and we accept this, that our targets therefore were not necessarily met at the point at which we have said the job opportunities would be 500 000 etc. Now given the recession that we have gone through, I don't think it has been therefore easy to say this is what we are doing. We know for example there are still jobs being lost, because whilst the economy is picking up, the jobs that will follow will not immediately turn the corner as the economy turns the corner, and therefore the question of the exact numbers is what we are looking at, and you are aware that it is a challenge.

But as you know we have established the Department of Economic Development. One of its tasks is actually to look at the job creation. And we are doing everything to ensure that we do not lose sight of that. We have R700 billion that we have put aside for the infrastructure. That makes us look at the possibility of creating more jobs as we roll out the infrastructure programme in our country. So we are very optimistic that we will be able to make it.

Carina Kamel: Now on the subject of governance, just coming back to the World Economic Forum for a moment, the financial crisis exposed a severe lack of governance around the world. South Africa has grappled with this issue itself. What input does South Africa have as we rethink global governance?

President Jacob Zuma: Our input is that we really have to do the right thing seriously, and I am very happy with the rethink, the re-imagination, the innovation, etc. because we have been saying the global setting has reached a point where global governance needs to be changed, particularly financial governance.

As South Africa, we are very confident with our financial system, it is strong, and it has withstood the test of the recession, so nobody could just say we were just talking about it. What we have been saying for example, the global financial institutions need to be changed. So the rethinking process must look at very specific issues and one of which should be how do we change these institutions in terms of their representation, because it cannot continue as it has been in the past.

Secondly, within its governance, the question of regulations and the manner in which decisions are taken, in other words functions must be considered. Just to make this example clearer, if we take the world body called the United Nations, which has the General Assembly to which the majority of the world belongs, but within it you have the Security Council. Whilst the body is there and looks at representative, the manner in which the final decisions are taken is a problem, because there are countries which have a veto. Now even the financial institutions should not be operating in the manner where there are people, countries with bigger votes within and that have an almost undeclared veto. So that change must be thorough going so that we can therefore balance the governments in the world. I think that time has come.

That is why I am very happy with the thing here, to improve the world, rethink and rebuild it is very important. The question is: what do we mean by that in reality, what I have just said, to us? That is an issue. Whilst we are rethinking, we should not leave Africa out of the equation, because Africa has suffered, Africa has been lagging behind, Africa was always been lagging behind, we also believe that the change now must begin to put everybody into the basket.

Carina Kamel: Speaking of rethinking, President Zuma, do you think South African labour laws need to be rethought, given that many economists sometimes blame those rather rigid labour laws, for the lack of jobs growth since liberation?

President Jacob Zuma: That I am not certain about, because we came from a different type of laws that were very racist and were very discriminatory. We had to solve that kind of problem, and I think it was important for us to do so. And of course, look at the South African economy, which in the manner it was handled historically created two economies. It is a question of how do you bridge these two? How do we encourage the economy to become one economy, so that we are in a better position to move forward?

I know there is a debate about the labour laws in South Africa, but if you take into account some aspects of it, for example: domestic workers were not recognised as workers, farm workers were not recognised as workers. Now if the new administration since 1994 has put these workers, who were otherwise, cut off from the system, in the system, began to say "this is what we need to do". We do not think we have done the wrong thing. We believe we have been in a position to make every South African who is a worker to be in a sense recognised to be part of it, and there may be issues that people are raising, but that talks to the nature of the South African economy, which is as a part of the pyramid which is very sharp at the top. And that is perhaps something to do with how do we then relate to the labour laws as well.

Carina Kamel: Speaking of internal issues in South Africa, I know this is something that you get asked a lot as well, is the issue of the mining sector. What do you see for the future of the mining sector and on the issue of privatisation, nationalisation rather, what is the current government policy on that issue?

President Jacob Zuma: We are looking at the mining industry in South Africa as a factor that is a remaining factor that will influence, as it has always done, the economy of South Africa. We are looking at innovation, how do we make it even more relevant and even more beneficial to the population of the country and how do we balance the public and private sector with regard to the mining.

On the issue of nationalisation, that issue is not an issue that has been discussed by government, or by the ruling party. There are people who have raised the issue but it has not been discussed formally for us to take a decision. So it is not a decision that is being debated right now. Some people have made a point of saying we think nationalisation is the route to go, but we are waiting for that discussion to come. To those who are saying so, they must motivate what is it that needs to be done in order to better the economy of the country in order to make the population of the country benefit out of it. So the matter has not been put for scrutiny, for test in a debate so to speak. It is an issue therefore that is being talked about in the media, rather than in formal structures.

Carina Kamel: Speaking of South Africa and the situation in the economy, investments clearly suffered over the present financial crisis, it has obviously improved dramatically in the preparation for the world cup. I would like to look beyond that though. A lot of people are asking you about the preparations, we know that you are really ready. Beyond 2010 though, people need to see South Africa as an investment destination, you know, after the world cup ends. What are you doing in order to make sure that you promote the investment opportunities, what message are you bringing here to Davos?

President Jacob Zuma: Of course you are saying, firstly, South Africa has indicated that is capable of facing challenges. One of them of course has been its state of readiness to host the 2010 FIFA World Cup. I don't think that anyone doubts that. If there was any single thing that has marketed South Africa, it is that one. Everyone is clear that South Africa is capable of rising to the occasion.

But of course the infrastructure that we have got has brought in new economic activities, precisely because we knew that we were dealing with this infrastructure, but also that South Africa itself needed the infrastructure to expand because it was beginning to suffocate the economy. And therefore that is why we put aside R700 million to roll out the infrastructure. That to us is a very significant element of investment that you need to bring. It also indicates that we are looking big in terms of what do we do after 2010. So we are ready, we are calling the investments to come in (indistinct).

Carina Kamel: On that note, President Zuma, I would like to thank you very much for being our guest today live from the World Economic Forum in Davos.

Issued by: The Presidency

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