President Cyril Ramaphosa's state of the nation address on Thursday night ought to be a mix of pomp, celebration and reflection on the sixth administration’s priorities for the year. His job couldn’t be clearer: he needs to use the occasion to urgently resolve the crisis facing this nation’s economy. At the heart of the problem lies a lack of confidence.
The address is taking place against a depressing backdrop that should focus the administration’s mind. The economy, which has been flirting with technical recessions over the last decade, has recently contracted by more than 3% and is not creating jobs, especially for the millions of SA’s youth. Falling tax revenues are threatening the sustainability of social grants, which are the only source of livelihood for the bulk of the 17-million who receive them each month.
Youth unemployment – sitting at an uncomfortable 50% plus - is fast becoming the biggest threat to social stability. Having managed the horsetrading among his alliance partners to form a cabinet, Ramaphosa now needs to spell out priorities for this team. The address should contain sufficient confidence-building measures to breathe life into the economy. Unfortunately, he doesn’t have the luxury of a year or five years to do this – he has three months to show determination.
That the PIC is the subject of a judicial commission of inquiry is no excuse for not hiring a CEO or a competent board after the en masse resignation of its directors.
In the next quarter he should decisively address the crisis at state-owned enterprises (SOEs). These are three-fold: leadership and governance; clarity of mandates; and adequate capitalisation. It is inexcusable that key state-owned enterprises (SOEs) such as the Airports Company of SA, the Public Investment Corporation (PIC) and the Passenger Rail Agency of SA, have been operating without CEOs for months, years in the case of Prasa, which also has an interim board, as does the PIC, which manages R2-trillion of social funds.
These vacancies should be filled as a matter of urgency, as should the new ones at national airline SAA and power utility Eskom. That the PIC is the subject of a judicial commission of inquiry is no excuse for not hiring a CEO or a competent board after the en masse resignation of its directors.
Simultaneously, government needs to resolve the funding issues facing SAA, Eskom and national broadcaster SABC. Of late, government has been the main source of uncertainty. By insisting that further funding for SABC, Eskom and SAA will be dependent on the appointment of chief restructuring officers (CROs), government has ensured that these entities remain untouchable among the debt capital markets.
While it is conceptually appealing to suggest that the state shouldn’t continue injecting scarce cash into badly run SOEs, it is bordering on criminal incompetence that the appointment of the CROs is taking so long. Small firms, which are supposed to be the backbone of the economy by 2030 according to the National Development Plan, have been driven to bankruptcy by the unpaid invoices of these troubled SOEs.
Second, Ramaphosa needs to declare youth unemployment a national emergency. The economics cluster, including the employment minister, needs to fashion a national strategy of defusing this ticking time bomb. The current piecemeal initiatives by social partners – including business, the outcomes of the 2018 jobs summit and government’s plan to waive experience for entry-level public service jobs – are a helpful and commendable start, but they are insufficient to resolve this problem in a sustainable manner.
Third, the president must instruct his communications minister to start a robust and credible process of releasing high-speed telecommunications spectrum. SA’s economy desperately needs this.
Fourth, he needs to urge the sixth parliament to finalise the debate on the issue of land expropriation without compensation. As well as the policy flip-flop around the new mining charter, the land debate has been a major source of uncertainty in the past 18 months. If it remains unresolved it will continue to undermine his drive to recruit $100bn in foreign direct investment (FDI) by 2022 – the other pillar of his presidency.
Fifth, the ANC should suspend further debate on the role, mandate and ownership of the Reserve Bank until its next national general council. In the interim it should commission an empirical study on these issues – the cost of nationalising the bank and how, if at all, its mandate should be reviewed – instead of just relying on gut feel. The bank debate has become the latest textbook example of the proxy battles raging among various ANC factions.
And finally, Ramaphosa should work out and communicate what constitutes SA’s national interest. SA’s foreign policy has been drifting without a central organising idea over the last decade. Once defined and articulated, this should be at the heart of his FDI investment drive and the country’s foreign policy. Otherwise the drifting will continue.
• Dludlu, a former Sowetan editor, is executive for strategy and public affairs at the Small Business Institute.
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