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Sunday Read: Can Ramaphosa yank SA from the doldrums? Here’s what business can expect from this week’s SONA

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Sunday Read: Can Ramaphosa yank SA from the doldrums? Here’s what business can expect from this week’s SONA


With growth contracting faster than economists had predicted at -3.2% in the first quarter of 2019, business is now looking to President Cyril Ramaphosa’s state of the nation address on June 20 for indicators of stimulus measures and plans to yank the economy from the doldrums. 

Based on the ANC’s lekgotla in May, it is possible to draw up a picture of his key messages. Here are areas to watch out for: 

Social compacts

Ramaphosa is likely to foreground the idea of a social compact between the private and public as well as the civil society sectors as key for growth and for the developmental state. The ANC lekgotla devoted a significant amount of time to the idea of a social compact and how to define the South African state as developmental. It also heard recent analysis by the Statistician-General Risenga Maluleke into the widening inequality gap which suggests this will also be a theme. While news out of the lekgotla has given the markets a fright that sent the rand tumbling, the discussion included some frank talk like this, “Focus all levels of government on being able to execute policy and projects efficiently, quickly and with high quality” and “An effective developmental state depends on an effective, active and passionate bureaucracy and reducing bottlenecks.”  Ramaphosa is likely to use language like this.

Be world-class. Don’t take on too much.

The ANC lekgotla documents made this following observation: “We can be world-class (for example tobacco legislation and implementation; HIV/Aids programme; building and maintaining roads)…But, we try to do too many things at once, we underfund projects…We must therefore be prepared to make hard choices for what to do first and communicate why we made them to the people affected.” Ramaphosa is likely to use this kind of talk in his address. 

Fourth Industrial Revolution

Ramaphosa is likely to spend time on what this means for South Africa. The ANC lekgotla document shows a lot of time was spent on discussing this era of robotics, algorithmic intelligence and automation. He wants to: “Fund a few things fully and sustain the investment for a long period, so that we develop world-leading expertise and capabilities, building on where we are currently strong.” The party acknowledged some focus on the fourth industrial revolution can be “hype” but noted that “it is changing the world”.

Economic stimulus 

The president is likely to focus growth stimulus measures in the following sectors:  Industrial: automotive, clothing and textile, gas, chemicals and plastics, renewable (energies), steel and metal fabrication and pharmaceuticals. On tourism (notably visa reform; high-tech sectors; mining; agriculture and agricultural processing; creative sector and the oceans economy). A lot of work has been done by CEOs and directors-general, working with peace mediator Roelf Meyer and Professor Nick Binedell of the Gordon Institute of Business Science, in devising sectoral growth strategies and this holds the best hopes of lighting up the economy which has been knocked by too much serial bad news to have much life left in it.  

Reducing inequality; broad-based empowerment 

“Transformation” as an economic concept appears to have given way to the broader imperative to reduce inequality through broadening asset and land ownership; broad-based black ownership and employee share ownership schemes. The next few years are likely to see an emphasis on (and no doubt a debate about) employee share ownership as the pendulum swings away from share transfers to individuals.  

Youth unemployment 

Ramaphosa has put a stake in the ground on youth employment. Expect for this to come up as a constant. Government wants to help 100 000 young people who are interested in business to start entrepreneurial ventures. This is on top of the youth employment schemes which are peppered all the way through the document.

Health, property sectors and providers of fibre networks – here’s news for you

With a new health minister in place, the ANC lekgotla promised again to implement “the next phase” of the national health insurance scheme, to pass the bill (to enable the system) and to establish the NHI Fund.   

There is some good news for the beleaguered property sector in the ANC lekgotla documents and which may filter into the SONA. Government promises “50 catalytic projects, densification, social housing and rental accommodation, (to) upgrade informal settlements, title deed backlog, new smart city.” Government promises to “roll out fibre in townships to strengthen internet access starting with cities that already initiated initiatives like Soweto – Johannesburg; Umlazi – eThekwini; Mdantsane – Buffalo City; Polokwane, Tlokwe and Thabo Mofutsanyane”.

Government’s Universal Services Agency (Usasa) does not have the capacity to roll out fibre, so this could be contracted out to private providers.    

The ANC lekgotla did not spend a lot of time on what government will do with Eskom, which Ramaphosa has previously said would be split in three. A presidential task team is still working on this and there may be some clarity in the SONA address. The intercine battle in the ANC on the SA Reserve Bank is unlikely to get much airtime in the national address; the final lekgotla documents tamp it down to methods of aligning macro-economic (fiscal and monetary policy) with the ANC’s election manifesto.

Land expropriation without compensation is not mentioned in the ANC’s final lekgotla document and this is likely to give way to discussions about how to speed up land reform.  


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