Receive Focus insights straight to your inbox
The overarching tone of the State of the Nation Address (SONA) last night was one of optimism despite many severe problems South Africa faces, as the President tackled these head on and laid out the measures to address them.
The concern is still however on implementation, particularly as many of the issues drag on from the past. A subtle difference in the speech was the growing openness the state now has in working with the private sector to overcome SA’s structural weaknesses in the economy given state capacity weaknesses in a number of areas.
The president highlighted “(a) capable state is not only about the quality of public servants and the efficiency of institutions. It is also, fundamentally, about how citizens are empowered to participate.”
Envisioned private sector involvement includes investigation and prosecution of crime (and corruption), school education and other state infrastructure, catalytic projects, partnerships for the Durban and Ngqura Container Terminals, prevention of cable theft and vandalism on the freight rail network.
Another key theme is the necessary growth of the private sector, and government’s responsibility to enable an operating environment for businesses that will aid them to grow and thrive.
WATCH: SONA— the BIG decision
- Bonang Mohale is the President of Business Unity South Africa (BUSA)
- Investec Chief Economist Annabel Bishop
- Matthew Parks, Deputy Parliamentary Coordinator at COSATU
- Izak Odendaal, Investment Strategist, Old Mutual Multi-Managers
This year’s SONA comes across as dynamic but covers huge areas of concerns and structural issues in the economy that are to be met with either a plethora of plans and actions, or else further analysis and broad consultations, the latter including replacing the SDR with a permanent grant.
However, the SONA also risks being read as a very lengthy wish list and likely with this in mind showed focus remains on the five priorities identified at the 2021 SONA and ERRP, namely:
1) overcoming the COVID-19 pandemic,
2) a massive rollout of infrastructure,
3) a substantial increase in local production,
4) an employment stimulus to create jobs and support livelihoods and
5) the rapid expansion of our energy generation capacity.
Get all Investec's insights on the latest Budget Speech and SONA
Our economists, tax experts, personal finance and investment strategists unpack what the latest fiscal measures mean for income, savings and daily expenses of individuals and businesses.
However, insufficient focus was paid to how the state was planning on improving the capacity and skills deficit in state departments and parastatals without deeper involvement of private sector skills and capacity than was identified for some areas last night.
Indeed, this is likely to be the course of action for other underperforming areas where the state lacks capacity, as the private sector becomes more heavily relied on. The most important outcome of the SONA will remain implementation and government seems to be getting on the right track now by increasing private sector participation and usage of skills.