President Cyril Ramaphosa may announce in his state of the nation address this week that jobs in some sectors of the economy will soon be reserved for SA citizens, in a bid to reverse high unemployment and increasing inequality.
This is one of the proposals on which the cabinet is expected to decide this week, ahead of the address, which Ramaphosa will present to parliament on Thursday evening.
The ANC and its Cosatu and SA Communist Party partners in the tripartite alliance discussed excluding foreign nationals from some local markets at the ANC’s recent lekgotla.
While it remains unclear which sectors of the economy might be reserved, investors could respond negatively to such a signal, which could be seen as xenophobia at a time when the address is being looked to for signs that the government is ready to focus on kick-starting economic growth and speeding up implementation on its long-promised structural reform programme.
Investors will also be closely watching the state of the nation address for clarity on whether the government intends to implement a basic income grant (BIG). But while the cabinet is expected to discuss this, a source close to the president indicated that no decision had yet been taken because financing a BIG is likely to require an increase in VAT.
“Given the rising cost of living, it is still unclear if the BIG is possible. Firm direction is being sought from Treasury,” the source said.
“The president understands that fundamental reforms are required to revive economic growth,” Ramaphosa’s aide told Business Day.
He is expected to present a firm plan around infrastructure funding to kick-start growth, as well as further details of the localisation and industrialisation plans which were set out in the Economic Reconstruction and Recovery Plan, which Ramaphosa presented to parliament in October 2020.
He is likely to use the address to take stock of the reform programme highlighting advances in 2021 in areas such as electricity generation, ports and water, as well as setting out which other reforms can be expected to come to fruition in the near term, such as the auction of broadband spectrum.
He is expected to detail the way forward for reforms to state-owned enterprises, with a specific focus on energy.
This comes after a record year of electricity supply cuts last year, with Eskom resorting to stage 2 load-shedding again last week.
Banning foreign nationals from working in some sectors would lend credence to the perception that the government is yielding to the kind of xenophobic sentiment that is being pushed by some opposition parties. In the local government elections in November, ActionSA, led by Herman Mashaba, won 90 seats. The former mayor of Johannesburg is widely known for speaking out against illegal immigrants and made that a part of his campaign, even though immigration is a national government function.
Two weeks ago, EFF leader Julius Malema, who has previously spoken out against xenophobia, arrived at Pretoria restaurants and demanded that owners reveal the nationality of their staff. Last week, Bloomberg reported that Zimbabwean nationals living in SA are being threatened and coerced into leaving the country.
Capital Economics’ emerging markets economist Virag Forizs said in a report on Friday that Ramaphosa, who faces an
ANC leadership contest in December, is likely to use the state of the nation address to drum up support.
“From the perspective of fiscal policy, this is likely to involve loosening the proverbial purse strings,” she said.
Though accomplishments for him to tout seem in short supply, one positive was the easing of lockdown restrictions, with the fourth wave of Covid-19 subsiding, she said.
Investec economist Annabel Bishop said she expects the state of the nation address to provide insight into the serious problems plaguing SA’s economy, and supportive measures for growth and job creation.
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