CAPE TOWN - South Africans and the global community are on the wait to hear what the new South African president Cyril Ramaphosa will promise the Republicans when delivering the State of the Nations Address (SONA) on Friday.
PwC economists say Ramaphosa would have to address the following economic issues in SONA 2018:
1. The strategies behind the radical economic transformation remain opaque. Investor confidence will depend on having more information on how the economy would be transformed.
"This economic transformation has been part of South Africa’s economic policy discourse for the past two years. President Ramaphosa has also committed himself to accelerate the transfer of ownership and control of the economy to black South Africans towards supporting economic development and a decline in income inequality. However, the strategies behind this economic transformation remains opaque: Investor confidence will depend on having more information on how the economy would be transformed," PwC said.
2. PwC economists said, "In South Africa, the unemployment rate of people with a tertiary qualification is less than half of that for adults with only primary education. This makes the funding of tertiary education not only a fiscal matter, but one of much greater influence on the South African economy. Students and tertiary institutions need more clarity over the phasing in of subsidised higher education over the next few years".
3. President Ramaphosa’s "New Deal" is planning for the creation of one million jobs over the next five years, with the manufacturing sector set to take the lead. He is expected to explain the plan of incentives for this.
4. The restoration of State-Owned Enterprises (SOEs) as drivers of economic growth and social development is a key commitment set out in a 10-point action plan revealed by President Ramaphosa in November 2017.
"Financially sound SOEs will reduce pressure on the fiscus and support economic growth going forward. The SONA should reflect on progress made so far and further efforts," economists said.
5. Investment in the mining industry. PwC point out that the Chamber of Mines commented earlier this month at the Mining Indaba that it expects mining investment to rise this year if the Ramaphosa administration is able to offer more regulatory certainty. For this to happen, the stalemate between the government and mining industry regarding the Mining Charter needs to be resolved.
6. Apart from drought conditions weighing on crop production, the farming industry and rural areas in general are also experiencing regulatory uncertainty which is hampering the normal functioning of the agricultural sector.
It is understood that Ramaphosa indicated in December 2017 that he is in favour of expropriation of land without compensation, while at the same time indicating that this land reform must be done without undermining agricultural production and food security. SONA 2018 should elaborate on this.
Ramaphosa's commented at the World Economic Forum (WEF) 2018 in Davos that "The wheels of change are moving now and they are going to start speeding up". Therefore the global economic and investment community is all eyes in South Africa.