The upcoming State of the Nation (Sona) address by President Cyril Ramaphosa could be one of the most important ones in his tenure with the 2024 elections looming.
Ramaphosa has a tough task ahead of him as the country battles a cost-of-living crisis along with load-shedding woes.
Business Leadership South Africa (BLSA) CEO, Busisiwe Mavuso, said in her weekly newsletter on Monday that the Sona is a key agenda setter for the work of government.
“In an election year, there is probably more pressure than ever to demonstrate success and make bold commitments to action.
“I hope President Ramaphosa’s speech this week will show a clear commitment to the hard work of reform implementation, rather than sloganeering.
“Last year the president focused his speech on the recovery from the Covid pandemic. We have moved on and now our focus is much more on improving the performance of our economy, which is held back by factors that have nothing to do with Covid.
“Our electricity crisis remains a significant constraint, despite progress made, and our logistics system has rapidly become a disaster for our economy, requiring urgent intervention,” Mavuso said.
The lobby group CEO said that last year restoring energy security was the president’s “most immediate priority”, and a year later it is fair to say that there has been progress.
“There has been a dramatic increase in private investment in large-scale electricity generation according to registrations with the electricity regulator.
“Partly, thanks to incentives from the government, there has also been massive investment by households and businesses in rooftop solar.
“Eskom’s operational performance, which the president promised would improve in his speech last year, remains frustratingly far from target with the energy availability factor so far in January below the average of last year.
“However, with the growth of private supply, electricity security can be achieved anyway,” she added.
“This progress has been thanks to focused efforts by the Presidency, working in tandem with business via the National Energy Crisis Committee.
“But despite the progress, we are still suffering through load shedding. The end is visible on the horizon if we maintain momentum.
“We need to complete the restructuring of Eskom to set up an independent grid operator to allow for an open electricity market, and to drive increased investment in the grid, ensuring it has capacity for new generation.
“Progress on this has been made with the appointment of a board and licensing of the grid operator. I hope the president recommits to driving hard on concluding the restructuring process, and the rest of the Energy Action Plan,” Mavuso said.
Investec’s chief economist Annabel Bishop said that the Sona will signal the continuation of state private sector partnerships in electricity, freight and crime/corruption fighting.
“This year’s Sona is likely to show more populism creeping in, particularly on the healthcare side.
“The impending NHI Act seeks to eradicate private sector healthcare, with the majority provided by the state, which has ranked among the worst healthcare providers for many years in the World Bank’s global competitiveness survey.
“With the most likely emigration of most private sector doctors and specialists under the NHI, business leaders, skilled workers and entrepreneurs would in the main emigrate too, and international tourism collapse under state healthcare as the only option.”
Meanwhile, Mavuso went on to say that in the president’s speech last year, he made limited comment on South Africa’s logistics system.
“He did note that underperforming rail and ports would be addressed. But the logistics crisis has rapidly worsened as the performance of rail and ports has deteriorated.
“Jobs are being lost simply because miners and others cannot get their output to ports. We are right now watching shipping traffic – diverted around Africa because of the Red Sea crisis – pass us by, choosing Walvis Bay or Maputo, because our ports are incapable of providing a decent service to them,” the BLSA CEO said.
“The logistics crisis has seen a galvanised response from business and the government, with the establishment of the National Logistics Crisis Committee modelled after Necom.
“It has already produced a logistics roadmap that represents the best thinking on how to improve our logistics performance.
“But it now needs focused attention on implementation, ensuring all parties, particularly Transnet, are aligned in doing so. The president can add the political momentum necessary to accelerate progress,” she further stated.
Mavuso also said that official figures showed public spending on infrastructure has continued to drift downward, while investment from the private sector has grown markedly in the last 18 months.
“In an election year, there is always political pressure for populism. I feel that the National Health Insurance scheme is one example of populism over practicality, as it is never going to work.
“The president said last week that it would be signed into law before the election – that will just be the start of litigation to block it.
“The president seems to feel that putting an unworkable law on the books would be an achievement – it will not be,” Mavuso said.
“A genuine and deep improvement in the health system would be, but the NHI Bill will do the opposite, by driving doctors and other medical staff out of the country and damaging the private healthcare sector without any improvement in the public system. Yet the president seems determined to drive it through.
“An election year obviously adds a dynamic to Sona. Business’s main interest is in supporting economic growth, and slogans do not deliver it.
“We need the hard work of reform implementation to continue, and I hope the president uses his speech this week to assure us that it will,” Mavuso added.