Ramaphosa’s Sona will be determined by what unfolds in this year
By Frank Blackmore
On Thursday evening the president gave his State Of the Nation Address (Sona) titled: A Nation that works for all.
Given the duration, as well as number of areas that were touched on by the President in his speech, gives an indication to the size of the headwinds facing the country at this point in time.
Anything from domestic infrastructure to foreign policy were touched on by the President to a certain degree.
He started his speech by highlighting that South Africa must chart a new path for the country and he emphasized 3 main areas around this to take place.
1.Inclusive growth and job creation
2.Reducing poverty and high cost of living
3.Creating a capable state
He began his speech talking about how we can create a capable state, focusing mainly on getting municipalities productive again - municipalities being the core face of service delivery.
If municipalities are not working and services are not delivered, therefore it is special attention would be paid around municipalities, such as government working in order to ring fence budgets for utilities.
In other words earmarking part of the budget for specific expenditure items and therefore not allowing them to be spent elsewhere and also reviewing the funding model for municipalities, which has been an issue for a number of years.
Also under the capable state and reformation, he was speaking about corruption and a number of initiatives to deal with corruption.
Before moving onto economic growth, he said it would be underpinned by massive investment in infrastructure.
He mentioned the figure of R940 billion being spent over the next three years on variety of infrastructure, energy, roads, bridges, ports, railways, etc. He also mentioned the importance of pulling private sector into a lot of these infrastructure initiatives that were underway or approaching finalization.
The President stressed the importance of getting the load shedding problem of electricity behind us and which would still require quite a bit of work on the part of both government and the private sector to continue in order to create a competitive electricity market and complete the reform of the energy sector.
He also emphasized the role that private sector would play in investments in the transmission network, which would allow more sustainable energy to reach the grid.
Other issues that he touched upon was our continuation to support climate change in the just in energy transition at a pace that was suitable for us.
He stressed issues such as the water crisis, investing heavily in the availability of water without being too specific in that regard.
He mentioned the progress made in Home Affairs and specifically with the visa application process and said there would be a launch of a digital visa application process for tourism soon, indicating that the country is open for business.
President ramaphosa also mentioned the transformation fund of around R20 billion a year that would promote the black-owned businesses and highlighted things such as job creation and the high level of unemployment, and the number of government initiatives that had yielded certain results since last year.
He stressed certain sectors of the economy – mining, agriculture. green economy, medical services, business processing, data centres etc, and also highlighted the importance of South Africa being part of the global economy as well as the importance of trade with the rest of Africa.
Under poverty relief, he mentioned the importance of the grant system as well as the SRD grants - social relief of disgraced grants would become the basis for a basic income grant for the unemployed.
I think he dealt with those issues very well, of course the opinion on the number of items that were on his “To Do List” is very high and the chances of success over all of these is not so great.
I think the place for government more likely is to create the environment in which economic growth can take place, in which that attracts investment from overseas, as well as local private sector and ensuring they are high quality public services in the form of you education.
The workforce needs to be educated, the workforce needs to be healthy and a workforce needs to work in an environment that they feel safe and secure in.
These are all public goods, I think in which the governments emphasis should be placed at this point
Key Messages from SONA
I think the key messages in the SONA are well received, with the emphasis being on economic growth and how to create that higher economic growth. This is a necessary condition for improving the life of all South Africans, although it's not a sufficient condition - a lot of other things need to be in place in order to be successful even at the higher level of economic growth,
But that being the case, I thought that was an important take away from the speech, also working together - the fact that the private sector was often included in many of these initiatives and I would say that both the African as well as global context that the President often referred to throughout his speech that we don't want to insulate ourselves from the activities of the rest of the world.
We want to be part of the rest of the world but we want to do it in a manner that and that we would be happy to represent at that level.
All in all the SONA and the success thereof is not determined by what they said tonight but of course what is delivered over the next year, if not few years and it's this implementation area in which we have slipped up in the past but hopefully we can take some of the successes that have been put before us tonight.
Frank Blackmore, Lead Economist at KPMG South Africa
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