Economic data expected during this week, just before the SONA, are will confirm the dire crisis SA is in.
The following is pertinent in this regard:
- Mining is expected to contract 3.5% year-on-year, after a fall of 3.1% in November
- Manufacturing figures for December are expected to decline an annualised 4%
- Retail sales are only expected to grow by 0,6% for 2020
- Stats SA’s Quarterly Labour Force Survey for Q4/19 is likely to show unemployment remained unsustainably high, with unprecedented retrenchment in the first month of a year announced to be over 5000 people.
- BUSA has consistently appealed to President Ramaphosa and his government that they need to take hard decisions to attract investment and put the economy onto a sustained growth path. We have recognised, and applauded, some progress in areas of addressing corruption and rebuilding institutions, but have lamented the fact that there has been no movement on the economy, which is central to addressing the crisis we are in.
- SA is in the throes of a severe fiscal crisis. National Treasury predicts our debt will be R 4.5 trillion in three years. This means we will be expending more on debt service, thus having less for expenditure on social services.
- The SONA, to be delivered on 13th February 2020, is a critical opportunity for President Ramaphosa to send out a clear message that his government recognises the crisis the country is in and is ready to take the hard decisions to address the crisis. We continue to talk about progress on process and procedure, but this is not real progress: starting a process to make licencing independent producers easier, is not the same as issuing a licence so that building can begin. Hence the need for hard decisions!
BUSA would like to see the following in the SONA:
- Urgent pronouncements on far reaching economic structural reforms, with the key aim of unleashing economic growth and attracting investments. These reforms must also ensure an inclusive economy and expedite legislation to enable this.
- A clear statement that public expenditure will be tempered in the Budget to be presented on 26th February 2020. This is in the context of addressing the fiscal crisis we are in. Other measures to address this must also be announced, including control of expenditure, tightening up procurement processes, reducing wasteful and irregular expenditure, etc.
- A clear position on a strategy to address the SOE crisis. This must include decisions on which SOE’s are of strategic importance, role of the private sector, poor governance and management and a lack of qualified people. The statement must also assure the public there will be no political interference in the operations and governance of SOE’s.
- A clear position on ESKOM. This must include the appointment of a capable and independent board, to be put in place urgently! The board and CEO must be tasked with addressing the governance, management, staffing and other operational crises at ESKOM, positioning ESKOM to be A player in a more diversified energy supply industry, as well as looking at options to address the funding crisis.
- An announcement that the Minister of Minerals and Energy will urgently put into place regulations to enable private sector energy generation at scale, so that the grid can be relieved to an extent. Such regulations must include making the Ministerial New Generation Determinations necessary, in concurrence with NERSA, to initiate renewables and gas procurement as required by IRP19. This will enable Round 5 of the REIPPP to be implemented immediately. Schedule 2 of the Electricity Regulation Act must also be amended immediately to lift license exemption from 1MW to 10MW.
- An announcement that the President will publish clear and precise implementation milestones for members of Cabinet to achieve the above and a review process to ensure delivery and accountability. This must be seen within the context of building a capable state. Business has expressed its commitment to assist the President in building a capable state.
- An announcement that the President will ensure his government operates cohesively and there will not be mixed messages from different parts of government. A clear example of such mixed messages, and the damage caused, is the current debacle around SAA.
- A position that the President will ensure positive messages from all of government in order to attract investment and promote growth. Further, that all of government will be instructed not to introduce legislation that further erodes confidence at a time SA needs to build confidence in potential investors.
- A clear message that law and order in our country is seriously compromised and this will not be tolerated any longer. The President must instil a sense of urgency and strategic intent to deal with the serious law and order crisis in our country. Government must inculcate respect for law and order and ensure the safety of citizens, businesses and visitors. There must be urgent action to identify critical areas of criminality and to establish professional units to address these.
- The President must emphasise the criticality of respecting the justice system and not undermining it.