On 10 February 2022 President Cyril Ramaphosa delivered his sixth State of the Nation Address (SONA) since he took office in 2018. This was a highly anticipated address, and it is aimed at informing the general public and all relevant stakeholders on the government’s progress in the year that has passed, while detailing the plans and directives for the year ahead. This year’s address came against the backdrop of South Africa having to deal with a global pandemic, factional battles within the African National Congress (ANC), a never-ending fight against state capture and, above all else, a struggling economy that has failed to deliver significant inclusive growth for the past two decades. South Africans were therefore really eager to see if the government realises the extent of the challenges that lie on the socio-economic horizon, while gauging its policy responses in this regard. Mr Jacques de Jongh and Dr Precious Mncayi discuss the five main socio-economic insights from the president’s address.

1. Job creation: This is arguably South Africa’s biggest socio-economic concern at present. The narrow national unemployment rate is at almost 35% (the expanded rate is 46,6%) and more than half the population is living below the poverty line. Young people are even worse off, with those aged 15 to 24 years enduring an unemployment rate of 66,5%, and those aged between 25 and 34 years recording 43,8%. In this regard, the president detailed several initiatives, including the increase in the value and the expansion of the criteria for the employment tax incentive for young people. This furthers the social employment scheme to create 50 000 temporary employment opportunities, as well as a new small business loan guarantee scheme to enhance access to financing. Most important, though, is that the president acknowledged that these initiatives alone will not suffice in tackling the challenges of unemployment, poverty and inequality. To do so will require a private sector that has support from the government. To this end, creating a conducive environment with less red tape and an ease of doing business will help facilitate the creation of the jobs needed. 
2. State-owned enterprises (SOEs): With much of the focus on state-owned enterprises directed at Eskom, the address highlighted the threats an unstable electricity supply holds for economic and social progress. For this reason, the implementation of fundamental changes to the sector will take place in the coming year. This most notably includes the establishment of an independent state-owned transmission company as part of the unbundling of the electricity provider. Other initiatives highlighted include the drive towards more private-public sector collaborations, especially for Transnet, in order to provide quality transport infrastructure. In addition to this, a new centralised shareholder model for SOEs was announced, which seeks to separate the state’s policy functions from its ownership tasks to minimise political interference. The only thing left is to see whether such initiatives actually materialise.
3. Corruption:  In the state’s ongoing battle with state capture and corruption, the president focused on the progress made by the State Capture Commission. Until now, the first two reports by the commission have identified the infiltration of key state institutions by a criminal network seeking to loot public funds. While it has had a significant impact on the state’s capacity, corruption will always have the most significant effect on the most vulnerable members of society. In dealing with this, policy responses from the address mainly focused on strengthening institutions such as the National Prosecuting Authority (NPA) and its investigating directorate, as well as the Special Investigating Unit (SIU). The truth is that corruption distorts and destabilises economies to the disadvantage of its citizens, therefore it is crucial to strengthen institutions and the rule of law, and enhance existing anti-corruption architecture in order to bolster economic growth.
4. Universal basic income grant (UBIG): Prior to the address, the basic income grant was among the most anticipated public topics, but the president did not allude specifically to it. He did announce that the R350 social relief of distress grant (SRD) will be extended until March 2023. The address acknowledged the positive impact this grant has had, especially in the past two years of the pandemic. With respect to the prospect of broadening the scope of such a social protection measure, it was made clear that any proposal must first pass the test of affordability, taking into account the extreme fiscal constraints the economy is facing at present.
5. Crime and social unrest: Following the unrest of July 2021, the president was quite frank that the government’s response to the situation had been inept and that he himself and the cabinet had to take full responsibility. In response to this, as well as to the significantly high crime levels that continue to damage key economic infrastructure and to negatively affect the living standards of all South Africans, a number of changes in state security agencies are to be prioritised. Initiatives in this regard include enforcing critical leadership changes in these agencies while improving the capacity of the South African Police Service (SAPS) through adequate training and resource support directed at filling a substantial number of vacancies. 

In the light of these insights, the president’s address hit the right notes for the most part. It did not shy away from the numerous challenges facing the country at present, nor did it attempt to portray anything else than the understanding that as a country, we are at the crossroads. He called it a new consensus that is needed, one which places collaboration between the state and the private sector, each with its own distinct functions, at its heart with the purpose of unleashing the underlying potential of the South African economy. In this sense, the president gave his cabinet no longer than 100 days to establish a new social compact (between the government, business and civil society), one that has the ability to change the lives of millions of South Africans and create a growing and inclusive economic landscape.

However, the message of a new dawn has been repeated and promised for the past four years. Optimism and belief in the wider social community is therefore low, and scepticism is rife. While a part of addressing a problem is acknowledging that there is one, so too does it require the political will, leadership and urgency to implement the actions tabled in response to it. This is what is ultimately required: action and implementation. Without these requisites, the country and its people will find themselves in a continual struggle with the reality of excessive hardship largely associated with the social ills of unemployment and poverty.