Cyril Ramaphosa’s State of the Nation Address (Sona) delivered this week has attracted widespread criticism, with many saying the president tried too hard to campaign for the ruling party.
With the 2024 elections looming, Ramaphosa, throughout his speech, told the nation about the government’s achievements over the past 30 years.
He also gave a strong indication government would stick to its new-found policy of relying on the private sector to fix the country’s energy and logistical crises, which are hindering economic activity.
Ramaphosa said government would seek private sector players to plough money into expanding the country’s electricity transmission grid to accommodate additional renewable energy.
Last year, National Treasury decided to shoulder R254 billion of the more than R400bn Eskom needed to relieve its balance sheet amid the unbundling process, on condition the struggling power utility did not take on new debt or invest in new generation capacity, but focus on maintenance and transmission infrastructure.
“We have implemented sweeping regulatory reforms to enable private investment in electricity generation, with more than 120 new private energy projects now in development. These are phenomenal developments that are driving the restructuring of our electricity sector in line with what many other economies have done to increase competitiveness and bring down prices,” Ramaphosa said.
“Through all of these actions, we are confident that the worst is behind us and the end of load shedding is finally within reach. But we are not stopping there,” he said.
Ramaphosa went on to state that for the country to never face a similar energy crisis again, the government would be reforming the energy system “to make it more competitive, sustainable and reliable into the future”.
Ramaphosa said in his address that government was working to fix the rail and port infrastructural logjams, including Transnet appointing an international operator to run and expand the major terminal in the port of Durban.
He said Transnet was also going to allow private operators to access the rail system and introduce improved rail services.
With the rising conflict in the Red Sea, many ships were now opting to steam round the Cape instead of using the Suez Canal, and this was going to provide bunkering and other opportunities for South African companies, he said.
NWU Business School economist Professor Raymond Parsons said the Sona acknowledged the importance of expediting solutions in collaboration with the business sector and civil society, in order to overcome the serious on-going obstacles that continued to weaken the country’s economic performance.
“In particular, the partnership with business in resolving the wide-ranging problems of energy [and] logistics, as well as crime and corruption, must remain of the highest priority. A large part of the economic resilience South Africa has nevertheless exhibited so far clearly owes a great deal to the positive engagement and commitment of the private sector in expediting public delivery,” Parsons said.
Looking ahead to Budget 2024
Next week, Finance Minister Enoch Godongwana will deliver his National Budget Speech, which will prove tricky.
Parsons said: “Beyond the broad expectations of the Sona, nonetheless, remains the tough financial realities and difficulties in the Budget on February 21. Fiscal space has now shrunk markedly.
“A strong combination of weak growth, rising debt and excessive spending have posed serious risks to the fiscal outlook. Given the unresolved fiscal vulnerabilities apparent in the Medium-Term Budget in November 2023, the bar will be set high for the main Budget later this month.”
Parsons said the 2024/25 Budget needed to embody tangible outcomes that built credibility, against a background in which fiscal targets had consistently been missed.
“South Africa is already at the outer limits of what it can reasonably do to curtail its debt burden and stabilise its public finances,” he added.