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Crisis of confidence as President Ramaphosa delivers hi...

Business Maverick


Crisis of Confidence: It cannot be business as usual when President Ramaphosa delivers his State of the Nation Address

Old habits die hard: The securocrats will once again make sure security is in place for Thursday's low-key State of the Nation Address in Parliament. (Photo: Gallo Images / Brenton Geach)

President Cyril Ramaphosa’s State of the Nation Address on Thursday comes at a critical time. Everything he proposes will depend on having a developmental state that has capacity and is free of corruption. The president needs to say what is being done to rebuild what were once functioning government institutions.

The upcoming State of the Nation Address (Sona) by President Cyril Ramaphosa should set the tone for the government’s work with the sole objective of addressing the severe health and socioeconomic challenges facing South Africans.

The president will need to be daring in implementing the alliance’s policy positions. We want a concrete government programme to address poverty, unemployment and the health crisis. The current austerity economic framework has led to a decline of public services and strangled the economy.

Sona should speak to the urgent need to restructure and transform the economy and diversify it from its neo-colonial development trajectory. 

Business as usual will not work.

We need to manage the public debt trajectory levels. The challenge is to balance many competing needs and prioritise correctly. The most critical challenges now are to defeat Covid-19, stabilise the economy and save jobs, rebuild collapsing SOEs and place the economy on a sound footing. 

Critical to stabilising the public fiscus is to plug the many holes through which 10% of the budget is lost annually to corruption and wasteful expenditure.

A growing economy will give government some room to breathe, but we need to come up with sustainable economic growth. Dealing with corruption and wasteful expenditure will reduce the billions borrowed every week to keep the lights on. Rebuilding Eskom and key SOEs will stem economic disruptions and lessen the need for bailouts.

The problem with Treasury’s austerity-driven approach is the belief that the sole challenge facing the economy and state is public debt and that resolving it is the solution to all our problems. This is equivalent to selling the horse and hoping the cart will pull itself.

Cosatu’s secretary in the Western Cape, Tony Ehrenreich, addresses protesters outside Parliament on 27 September 2017 in Cape Town. (Photo: Gallo Images / Brenton Geach)

Many key state institutions are struggling under the current austerity regime. Organisations like the Hawks, NPA, public protector and the CCMA cannot cope with these severe budget cuts. Sona needs to resolve this problem and fast.

The time for planning is over: we need implementation details and time frames that speak to the Economic Reconstruction and Recovery Plan (ERRP). The collective ideas that have been developed should be given a chance and implemented without delay.

Providing relief to the unemployed and distressed workers, consumers and businesses is non-negotiable. The private sector has been missing in action and this needs to be addressed by government.

The federation wants to see more work being done to increase public procurement by all government departments, public entities and SOEs. The private sector needs to be incentivised to embrace this idea. 

More work needs to be done by state institutions like GCIS working with Proudly SA to encourage consumers to buy local. Organised labour is already designating local procurement champions in trade unions to support this.

Some work has been done on developing sectoral master plans in many sectors to unlock economic growth and create jobs. Progress has been made in auto manufacturing, poultry, clothing and textile, and sugar master plans, with green shoots emerging. But this needs to be shifted into a higher gear, especially in sectors like renewable energy, hemp, mining, digital communications, and technology. 

Sona needs to deal with regulatory impediments and the bottlenecks that continue to hobble these sectors.

The ERRP provides a clear infrastructure plan with more than 150 projects. Sona needs to give more details on the work done, especially on the modernisation of our ports, upgrading freight rail and rebuilding Metrorail. We need to invest in water and agriculture.

Scene outside the State of the Nation Address on 13 February 2020 in Cape Town. (Photo: Gallo Images / Misha Jordaan)

Cosatu’s Eskom social compact has been adopted and Sona needs to report on progress on improving generation capacity, accelerating maintenance and eradicating corruption and wasteful expenditure. The economy needs a stable and affordable electricity tariff regime.

The chaos in most SOEs undermines their developmental economic role. What is not clear is the vision for these SOEs and a road map to ensure their shift from being burdens to the state to enablers of economic growth and job creation. The state of deterioration and collapse in many SOEs is sending innocent workers into the unemployment queue.

The president needs to outline government strategy to mobilise domestic and international private sector funding for impact investments in infrastructure that will spur economic growth and job creation, and provide essential public goods. SARS needs to be strengthened to stop billions from being lost to tax and customs evasion.

Everything will depend on having a developmental state with capacity that is free of corruption. Covid-19 has shown the need for a well-functioning state. Sona needs to say what is being done to rebuild what were once functioning government institutions.

It is encouraging to see that government seems to have been jolted into action by trade unions and civil society on the vaccination programme. This is to be welcomed, but we need more transparency on the rollout plan and should continue to aim higher. 

We cannot afford periodic economic lockdowns. 

The National Health Insurance (NHI) bill needs to be expedited. We cannot postpone the implementation of the NHI and the overall transformation of the health system.

Government also needs to prioritise investing in education. The transition to the Fourth Industrial Revolution has resulted in job losses. Upskilling workers to save jobs is key.

President Cyril Ramaphosa arrives at the State of the Nation Address on 13 February 2020 in Cape Town. (Photo: Gallo Images / Brenton Geach)

Workers also need to hear government plans to provide farmworkers with land and equity. The land reform issue is central if we are to bring 12 million unemployed people into the economy.

The elephant in the room that Ramaphosa has been trying to ignore is the public service wage dispute. The conduct of government on the wage bill is a recipe for labour market strife. None of the Sona commitments will be realised if this issue is not resolved. A disillusioned public service will not be useful in fixing the myriad problems facing government. 

But Ramaphosa’s biggest challenge is addressing the prevailing crisis of confidence and legitimacy that the government is facing. 

We hope he is up to the task. The future of the country depends on it. DM

Matthew Parks is Cosatu’s parliamentary coordinator.


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