Hopes are high among economists that President Cyril Ramaphosa will focus on measures to boost economic growth when he delivers his state of the nation (Sona) address in Cape Town on Thursday evening.
It will be Ramaphosa’s first as head of the GNU and analysts hope he will reaffirm his commitment to the initiative which has garnered business and investor support.
However, Ramaphosa will have to walk a tightrope between the demands of his GNU political partners, particularly the DA, and those of the ANC, especially regarding the controversial Expropriation Act and the National Health Insurance Act, both of which the DA opposes and the ANC supports.
Old Mutual group chief economist Johann Els said he was usually disappointed with Sonas as there were no big policy announcements with the focus rather on a long list of achievements.
“This is the Sona [in which] we really need policy announcements but I am not very hopeful. I think it will be more of the same.
“What I would ideally like to see is more on structural reforms. We need much faster reforms around the electricity grid, water supply and Transnet. If the president is really serious about attaining 3% growth as soon as possible we need to see more reforms. We have seen confidence picking up but we need to build on that and anything that he can do to boost confidence will be welcome.
“The noise around the GNU does not build confidence among investors. Confidence is the big issue,” Els said.
Bureau for Economic Research chief economist Lisette IJssel de Schepper would like to see a firm commitment to structural reforms to lift the constraints on the economy and more details on phase two of Operation Vulindlela, the joint reform initiative by the presidency and National Treasury.
“Accelerated progress on this front could have the potential to lift growth prospects and bolster confidence,” she said.
Investec chief economist Annabel Bishop said investors would be looking for evidence the GNU will continue to hold “but the Sona itself tends to touch on the same themes each year, comparing progress against the prior year’s Sona, and much will be made of the ending of load-shedding to date”.
“Investors will, however, focus on the various crises still gripping the country such as very weak growth, the rail, ports and other freights inability to fully meet demand and poor governance at a number of state entities, particularly municipalities.
“The water and sanitation crises, still high unemployment (poverty and weak growth) and gender-based violence will also be in focus, while the president is likely to laud the passing of the Basic Education Laws Amendment Act and Expropriation Act, with the latter seen as a disincentive to investment as it is perceived to weaken property rights and the former part of the growing and heavy regulatory burden.”
Fiscal consolidation
Bishop is hoping Ramaphosa will signal a quicker turnaround on Transnet, which is a key focus for investors, as well as a sharp reduction in red tape and regulatory burdens and a marked improvement in the productivity of various bureaucracies. She would also like a clear plan to quicken the end to the water crises.
That said, Bishop noted the typical blandness of past Sonas suggests an unchanged medium-term budget direction with greater fiscal consolidation needed to return SA to investment grade and inspire business and investor confidence.
She said despite the pronouncements of previous Sonas, there had been limited overall progress particularly on eradicating the various crises gripping the country, except for electricity, this year.
“Unemployment has risen from 21.5% in 2008 at the end of the [Thabo] Mbeki presidency to 26.7% at the end of the [Jacob] Zuma presidency and now is above 32% as the state fails to bring in reforms needed to quicken economic growth through reducing the regulatory burden and improving the environment for doing business,” she noted.
Nedbank economist Isaac Matshego said the most important thing for Ramaphosa to deal with was how to get the economy to grow at a faster pace. The state-owned enterprises had to work better and Transnet would probably need a bailout.
Political consultant Susan Booysen emphasised the need for a focus on the capability of the state to ensure it spent its relatively large budgets effectively. Management and oversight had to be strengthened to ensure better service delivery, infrastructure maintenance and proper law enforcement among other things. What was needed was a state that worked.
Also important, Booysen said, was an acknowledgment of the role of the GNU and an indication that its member parties are able to make a real contribution to policy development.
She was not optimistic about Ramaphosa announcing new ideas or initiatives in what were desperate times.
Political analyst Ntsikelelo Breakfast expected Ramaphosa to principally focus on inequality, poverty, unemployment, femicide and crime, as well as give reassurances about the future of the GNU, while allaying the fears of ANC critics of it. Foreign policy issues such as SA’s role in the Democratic Republic of Congo conflict would be touched on.
“New anti-poverty strategies might be rolled out,” he said.
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