Home Community Ramaphosa’s go-slow plan to fix SA

Ramaphosa’s go-slow plan to fix SA


In what is becoming a familiar theme in his third state of the nation address (Sona) since becoming head of state only 16 months ago, President Cyril Ramaphosa spelt out the problems the country is facing but didn’t go into too much detail on how to fix them, reports Moneyweb.

Ramaphosa, for instance, said the economy was struggling, and this was in part a result of power utility, Eskom instituting rolling blackouts earlier this year. While he said the government would “allocate a significant portion” of the R230 billion Eskom needs over the next 10 years, he did not flesh out how this money would be spent.

He said details on how the utility will be turned around, including who its new CEO will be, will be made by Minister of Finance, Tito Mboweni in due course.

The theme of acknowledging a problem but being short on the specifics on fixing it is a recurring one, also seen in the lack of solutions for corruption and poor governance in the country’s state-owned enterprises (SOE), resulting in at least  R178 billion being spent irregularly.

The president also said the creation of the Presidential SOE Council would “address problems of poor governance, inefficiency and financial sustainability”, but did not say what exact steps would be taken to prevent the “corruption, patronage, rent-seeking and plundering of public money”.

Ramaphosa did say he expects the Special Investigating Unit (SIU) Tribunal, which was set up earlier this year, to fast-track civil claims arising from its investigations, which are currently estimated to be around R14.7 billion.

He was, however, conspicuously silent on whether the South African Broadcasting Corporation (SABC) and South African Airways (SAA) would be receiving the billions of rands they have been asking for.

Although Ramaphosa didn’t mention their funding, he did hint that there was not enough money to go around.

“It is time to make choices. Some of these choices may be difficult and some may not please everyone.”

Another issue put on the back burner was land reform. He said the report of the Presidential Advisory Panel on Land Reform and Agriculture had been finalised and will be presented to the cabinet.

Although the panel’s recommendations will “inform the finalisation of a comprehensive, far-reaching and transformative land reform programme”, he gave no timeframe for when this will be completed or even when cabinet will get sight of the report.

On growing the economy, he said implementing the National Development Plan (NDP) would be to government’s efforts but even here, its goals have been pared back. He said the goal was to create 2 million jobs by 2030, but this is sharply down from the 11 million first mooted when the NDP came into being in 2012.

He also said the private sector has committed to invest R840 billion in 43 projects over 19 sectors while creating 155 000 jobs in the next five years.

This commitment, however, has yet to be seen in the economy. According to Statistics South Africa, gross fixed capital formation, a measure of the private sector’s willingness to make long-term investments dropped 4.5% for the first quarter of the year, its fifth consecutive decline.

To the president’s credit, he did commit the government to easing the burden of doing business in SA. He said that companies should not need to wait more than six months for a permit or licence, and new companies should be registered within a day.

“We will continue to reduce the cost of doing business by reducing port export tariffs, pursuing the lowest cost electricity generation options, and making rail transport more competitive and efficient.”

Ramaphosa also said the government would priorities sectors of the economy that had “the greatest potential for growth”.
“Drawing on our successes in the automotive sector, we will implement master plans developed with business and labour in industries like clothing and textiles, gas, chemicals and plastics, renewables, and steel and metals fabrication sectors.”

Some of the sectors he mentioned have had long-standing support programmes. Local clothing retailer, TFG, for example, got a R75 million grant to expand its two factories in the Western Cape in 2015.

Ramaphosa also recommitted the government to expanding the role of spatial interventions like special economic zones – something he said in his previous Sona.

He, however, added that aside from these zones, the state would also be looking to revive “local industrial parks, business centres, digital hubs and township and village enterprises, we will bring economic development to local areas”.

In supporting these business support ventures, the hope is they would boost small and medium-size enterprises.

The struggling construction sector is also set to get a boost with R100 billion set aside to seed government’s Infrastructure Fund.

The goal was to have the fund managed by the Development Bank of Southern Africa, bring in private investors, such as pension funds, and have the newly-configured Department of Public Works and Infrastructure playing an oversight role.

The one issue he was clear on, was the independence of the South African Reserve Bank, this is despite pressure from within his own party that it should fall under government control. “Today we reaffirm this constitutional mandate, which the Reserve Bank must pursue independently, without fear, favour or prejudice.”

The president ended his speech with a call to create a “new, smart city founded on the technologies of the 4th Industrial Revolution”.

He gave no timeline for its creation, where it would be or how it would be funded.