It was a State of the Nation Address (SONA) like there hasn’t been in years: a detailed account of what has happened in the past year, a series of key announcements of what will happen next and a political overview that emphasised unity, hard work and social compacts – yes, Thuma Mina continues to feature large – in the year South Africa’s constitutional democracy marks a quarter of a century.
Re-establishing institutions, particularly in the criminal justice system where the National Prosecuting Authority (NPA) is set to get an investigative directorate for State Capture and corruption – effectively the re-establishment of the Scorpions – but also the South African Revenue Service (SARS), emerged strongly, although the focus clearly fell on the economy.
Most matters economic were specific and detailed. Foreign direct investment had increased to R70-billion in 2018, up from R17-billion in 2017 – an indication the investment conference and presidential investment drive to solicit US$100-billion over five years is paying off. The Employment Tax Incentive or tax breaks for employing youth is extended to 10 years. There were details of rands and cents and numbers of houses and numbers of jobs, although land expropriation without compensation was restyled into accelerated land reform and agricultural development.
The government is allocating R100-billion to the infrastructure fund to leverage further private sector funding to overcome the fragmented planning and infrastructure built programme. Or the joint team to tackle the policy, legal, regulatory and administrative barriers that frustrate investors.
It almost slipped through the cracks, given the details of the presidential speech, but Ramaphosa wants South Africa to move to 50th place, from spot 82 out of 190, in the World Bank’s annual Doing Business Report. And that in the next three years, which is not an unambitious target that relies heavily on the corporate sector and private business to come on board.
Intellidex analyst Peter Attard Montalto said this was “a huge ask”, but it would be a specific benchmarking target against which to hold the South African government to account.
“(This target) necessitates nitty gritty shifts in many different areas around registering and running a business, access to credit and utilities and efficiency of the state. Plans to ease this will be positive, but as stated above we are sceptical on implementation.”
Eskom’s restructuring into generation, transmission and distribution entities was widely expected. The announcement came couched in calls for a better payment culture, tariffs to generate revenue and consultations also with labour, which is opposed to privatisation and retrenchments.
Eskom CEO Phakamani Hadebe, speaking to Daily Maverick after SONA, said what was important was the package of measures around Eskom, not just the restructuring. The power utility was doing its bit to reduce costs – these had come down by R20-billion already – while tariffs were important to generate revenue.
“Government is going to help optimise the balance sheet,” said Hadebe, jargon for the government will take over some of Eskom’s R419-billion debt. That was key as currently, the power utility had to borrow money to meet all its debt repayment obligations.
The options? The government could recapitalise Eskom, or talk a certain percentage of debt into its balance book. Hadebe said that debt swap seemed a better option as it could be done fiscally neutral. Previously, R100-billion was the number raised in relation to a debt swap, but on Thursday Hadebe did not want to comment: “I think we’ll wait for the Budget.”
ANC Treasurer-General Paul Mashatile welcomed the announcement on Eskom – “I am very happy about Eskom… I’m happy with the emphasis on skills and job creation” – and was positive about “the excellent speech”, as had been former president Kgalema Motlanthe.
That was also the sentiment from ANC alliance partner the South African Communist Party (SACP).
“Important steps were taken in the past year to turn the tide against governance decay, mismanagement, maladministration and corruption, and to ensure that State-owned Enterprises and other public entities and agencies function effectively and efficiently. While there is still a lot of work to be done to get things right, there can be no doubt that the steps taken are positive and public confidence in the work of the ANC-led government is progressively being regained,” the SACP said in a statement.
And Cosatu fell in step.
“Cosatu welcomes the increasing levels of investment in South Africa by foreign investors. We appreciate the President’s leadership in this regard. However … local investors need to do more to drive this process. Local business must show more commitments,” the labour federation said in a statement.
However, it added its disappointment that ministers responsible for State-owned Enterprises “are running away” from workers.
Ramaphosa’s second SONA left opposition parties somewhat stumped, except for one point: there must be implementation and there must be prosecutions of those fingered in corruption and State Capture, without fear or favour.
“The perpetrators cannot be sitting on the parliamentary benches,” said DA Chief Whip John Steenhuisen immediately after the president’s speech. “It was long on plans again… I don’t think there are any concrete steps how to get South Africa back to work.”
Freedom Front Plus leader Pieter Groenewald said he’s heard that the economy must grow now for the past 25 years.
“If he continues with expropriation without compensation that will not happen. It’s the reality versus the wish list.”
Cope leader Mosiuoa Lekota said: “You cannot talk yourself clean. We will not gain the confidence of the international community,” adding that Ramaphosa’s reformist measures come after 10 years of damage done.
United Democratic Movement (UDM) Chief Whip Nqabayomi Kwankwa welcomed the announcements, particularly around the intelligence clean-up – and the economy – although the proof would be in delivery and implementation.
IFP leader Mangosuthu Buthelezi shared a similar sentiment, saying no one could fault the president’s good intentions, but “I’ll believe it when I see the Budget”.
It was EFF leader Julius Malema who captured the political tightrope Ramaphosa is treading as president of the ANC and government when he said he was running a risk of running himself out of office by re-establishing the Scorpions.
“If the President is going to do what he’s said he’ll do, he’s not going to finish his term as president of the ANC and that of the country. And if he doubts that, he must ask President Mbeki,” said Malema after the SONA.
“The plan is clear. But will he get the support of his party? I doubt (it). If he continues to do that he’ll arrest half the Cabinet and half the executive committee of the ANC.”
And that’s just it. The balancing act is tremendous.
On Thursday Ramaphosa got the benefit of a show of support – in a standing ovation that just seemed significantly less forced from the floor, but also in the public gallery where for the first time in a while the former presidents Thabo Mbeki and Kgalema Motlanthe were seated for the SONA. And from an opposition that, while sceptical about Ramaphosa’s pledges, was not outright antagonistic.
And so Ramaphosa made the most of it, talking renewal and growth in Thuma Mina 2.0 for 2019.
“Our people have embraced the renewal that our country is going through and are much more hopeful about a better tomorrow. Our people’s hope is not baseless; it is grounded on the progress that is being made.” DM