9 February 2023

BUSA Reaction to State of the Nation Address (SONA)

This SONA was delivered amid severe crises across critical economic and social spheres in our country. These include the energy crisis, the logistics crisis, the law-and-order crisis, the water crisis, and the governance crisis. We welcome the President’s acknowledgement of these crises facing our country and for outlining measures to address them. The speech outlined some good ideas, as well as bad ones.

It is of concern to business that the President referred to our nation as being defined by hope and resilience. He also said “better late than never” in the context of delays in implementing numerous commitments. Our nation should not have to depend on hope and, in the crises, we face, we cannot afford to be late in implementation.

The President rightly referred to the devastating impact of Covid 19, on livelihoods, the economy and loss of life. What is different however, is that the crises we face today are primarily because of poor governance and lack of decisive leadership, exacerbated by a weak state that is hesitant to work in a real partnership with business, despite several offers by business to support, and work with, government. The speech provided no detail of how government plans to work with stakeholders such as business and we expect that the details will be provided in his response to the SONA debate next week.

We recognise the positive changes since the SONA in 2022. These include the launch of spectrum, lifting the ceiling on embedded energy, going to market on a further tranche of renewable energy and the announcement of a comprehensive energy plan by the President. However, this is where the “better late than never” issue is problematic. All these positive developments should have been announced 4 years ago and implemented then, something business has consistently been calling for. If the embedded energy ceiling had been lifted 4 years ago, when business called for it, the energy environment would be looking very different today. Despite these delays, business responded positively and urgently and 3.6GW of energy will be on the grid in the next two years from investments in embedded energy.

We welcome the concentration in this SONA on the energy crisis, however we are not convinced that declaring a State of Disaster will help address the crisis. It must be seen as a low point in the life of our society that mismanagement and lack of governance has created circumstances in which a State of Disaster has to be declared. We believe the appointment of a Minister for Electricity in the office of the President is a bad idea that will add to the confusion and turf wars rather than solve the problem. It is yet another example of failure to take bold decisions and opting instead for the soft but expensive option of adding another ministry rather than holding those ministers responsible for the crisis accountable.

Business is concerned about the potential of a repeat of corruption we saw under the Covid-19 State of Disaster, although we welcome the announcement that the Auditor-General will oversee use of resources. We welcome the announcement on rooftop solar panels and that provision will be made in the budget speech to incentivise this. We also welcome the President referring to economic opportunities in an effective just transition pathway. One of the positive ideas from the President is the indication that he will establish a structure for social partners to engage on the energy crisis.

Our view is that unemployment can only be addressed sustainably through attracting investment and putting our country onto a sustainable and inclusive growth path. This requires fundamental reforms in the economy and business has done a lot of work on this, which we are still keen on working with government on.

We urge government to demonstrate its commitment to working with other stakeholders in society such business. Implementation through bilateral initiatives will help develop a workable social compact that is anchored on practical implementation rather than mere words on paper.

We welcome the awarding of road construction contracts by SANRAL but urge that this process stays the course and there is certainty in contracting over the full period of the projects. The allocation of 600 million to Infrastructure SA for project  preparation is welcome, however, we urge that focus should be on 4 or 5 major infrastructure projects that will contribute to economic growth to market rather than many small projects.

We also welcome progress on bringing corruptors to trial and the return of over R 7 billion to the state. There is a concern that so far, the ringleader involved in corruption have not been brought to book.

We are encouraged that the most vulnerable sectors of society will receive protection through the social wage in the budget and welcome the retention of the Social Relief of Distress Grant.

In conclusion, the SONA in our opinion, does not instil confidence that the structure of government is operating efficiently, and lack of performance and delivery will be held to account. We will follow progress on the announcements made, but emphasise that the critical focus must be on an enabling environment for investment and growth creation. Everything must be measured against that. We also await the restructuring of government to see if the President appoints a capable and lean cabinet that is fully aligned behind his vision and ministers are held accountable if they are not aligned. Finally, the priority areas remain energy, law and order, logistics and water. Business continues to urge government to work with us to implement quick solutions to these crises.

 

ENDS

 

Cas Coovadia

Business Unity SA CEO

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For more information, please contact:

Sizwe Maswanganye

Tel: 011 784 8000/0766516444

Email: sizwe.maswanganye@busa.org.za