President Thabo Mbeki will kick off the political year on Sunday when he delivers his January 8 statement marking the 94th anniversary of the African National Congress (ANC). The occasion will also be used to launch the party’s manifesto for this year’s municipal elections.

A month later the president will give his state of the nation address to a joint sitting of Parliament.

Contrary to his political style, Mbeki will have to acknowledge the paralysis brought to his government last year by the dismissal of former deputy president Jacob Zuma.

However the president and his minders choose to handle his two pivotal annual pronouncements, it will be a year with weighty issues requiring his attention at government and party level.

Government has to be at the forefront of efforts to end poverty, reduce unemployment, fight crime and corruption, improve service delivery and find a strategy to rescue local government from near collapse. Most of these challenges will rest on the performance of the economy. Government has said it needs growth of more than 6% a year to meet its goals of halving unemployment and poverty by 2014. While statistical indications are that SA’s economy is on its way to achieving this target, it is not yet clear that 6% growth is the elixir that will fix SA’s problems of endemic inequality and deprivation.

It should also worry Mbeki and his economic team that the robust growth achieved over the past few years has been on the back of a consumption boom led by the new black elite and middle class. This year’s elections should remind Mbeki that SA cannot continue to rejoice in a boom that excludes at least half of the population.

The Accelerated and Shared Growth Initiative (ASGI), parts of which were articulated last year, will go some way to showing how government plans to move ahead. Linked to the articulation of an industrial policy, ASGI should chart a new trajectory for the economy.

SA’s economic challenges have necessitated a rethink of the role and form of the post-1994 democratic state. From Thatcherite minimalism of the 1990s, government has come to recognise the role of the state, not just in alleviating poverty, but in ending it through sustained and targeted interventions.

Mbeki’s challenges this year also include finally grasping the skills nettle. The massive skills shortage has profoundly affected the scale and quality of service delivery at every level of government. Government will have to go beyond talking this year and find ways to replenish lost skills inside the bureaucracy and in the economy generally.

This year will see an acceleration of Mbeki’s efforts to reconfigure the state, from government departments to the role and form of the provinces. The process of integrating the three spheres into one super public service has already begun. This year we will see more detail on what government plans to do with the provinces. The deputy president, the finance minister and the minister responsible for provincial administration all hinted last year that an overhaul was on the cards before the next general election.

And if government is over its Zuma paralysis, we should also see significant progress around the reorganisation of certain ministries, which was first mooted in the Forum of South African Directors-General report last year.

Any attempt to reconfigure the provincial boundaries of 1994 will run the twin gauntlets of constitutional guarantees on the one hand, and a restless ANC on the other. Provincial and Local Government Minister Sydney Mufamadi hinted last year that government might drive through a constitutional amendment to circumvent the right of provinces to approve any legislation affecting them.

This could prove easier said than done, as the constitutional court has previously shown an unwillingness to be a handmaiden for executive gerrymandering. Mufamadi could achieve his aims by seeking consensus from affected provincial elites instead of playing around with the country’s constitution.

Mufamadi’s tone in threatening a constitutional amendment is unfortunately typical of the top-down Mbeki presidency. It also indicates that Mbeki and his close lieutenants realise they would not have the political backing of their provincial counterparts for any changes.

That brings us to the political quagmire that awaits a provincial reorganisation inside the ANC. With the party seemingly all but lost to Mbeki, it is unlikely many provincial power brokers will surrender their fiefdoms for nothing in return. This, more than anything, explains Mufamadi’s constitutional sabre-rattling. Mbeki’s only power bases in the provinces are the premiers he personally appoints, but many of these are isolated from their provincial executives and are without mass appeal. After the Zuma saga and issues of succession, the looming fight over control of the provinces will be the ANC’s bloodiest going into its 2007 national conference.

Mbeki’s grip on the ANC was severely tested last year when he fired Zuma. The move left him isolated. This has undermined his attempts to “modernise” the party along the lines of a western political party. If anything, last year’s national general council meeting was the beginning of the unraveling of this project, as ordinary ANC members, for the first time, spoke out openly against what they saw as Mbeki’s iron grip on the party. Among their objections was a call to put an end to his power to appoint ANC premiers. The ANC will therefore look unfavourably on any moves to centralise power in his hands further.

This year Mbeki will have the almost impossible task of rebuilding trust and confidence in his leadership of the party. While Zuma might be down and out as a presidential successor, his supporters are many and will be keen to frustrate Mbeki at every turn.

• Brown is political editor and Mde is political correspondent.

With acknowledgements to Karima Brown, Vukani Mde and the Business Day.