“The State of the Nation Address (SONA) delivered by President Cyril Ramaphosa to Parliament on 10 February was a candid and realistic assessment of the current socioeconomic challenges faced by South Africa and the urgent need to effectively address them.”
In commenting on the SONA, Prof Raymond Parsons, economist from the Business School of the North-West University (NWU), says a cause for optimism was the basic recognition in the SONA that the government does not create jobs, but that it is business that can sustainably generate the bulk of jobs.
“The private sector is thus being entrusted with economic recovery and therefore needs to be nurtured by tangible moves, but the business sector can only fully respond if there is a climate of policy certainty and predictability within which it can operate.”
Prof Parsons says the SONA agenda offers a platform from which this becomes possible. “The reaction of the business sector will be key in turning the SONA intentions into real investment and growth, including the strong encouragement of small businesses. Smart tape must replace red tape.”
According to him it is the responsibility of the government to create a policy environment that encourages the private sector to promote job-rich growth and help achieve the necessary economic development.
“An enlarged role for the private sector was therefore a welcome feature of the SONA. A positive aspect of the SONA was the wide-ranging announcement of various economic reforms and in particular the extent to which there is a commitment to timelines for delivery and accountability for outcomes.”
Prof Parsons says these timelines must be enforced to ensure credibility and confidence. This is required to build the investor confidence needed to unlock South Africa’s real economic potential and promote job-rich results. While it is necessary to extend the special social grant of R350 per month for another year, the goal in the long run must be to move people out of welfare and into work.
“There remain questions around the feasibility and affordability of a permanent basic income grant (BIG). Inclusive growth is not merely a government responsibility, but indeed requires collaboration from all key stakeholders in the economy.”
He believes the big test remains to ensure that the reforms announced in the SONA and the good governance needed will now yield outcomes – and that implementation risks to various policies and projects will indeed be progressively reduced.
“Drift is the enemy of delivery. The energy crisis as the Achilles heel of the South African economy is recognised in the SONA. There was also tough talk on state capture and corruption in the SONA. Coordination and coherence in policy and projects nonetheless remain imperative.”
Prof Parsons says the aspirations of the SONA are evident. “If successfully realised, the SONA could be a step change in the economic reconstruction and recovery of South Africa. The economy is not on cruise control. With various authoritative forecasts indicating that by 2024 South Africa’s growth potential may only be about 1%, there is a sense of urgency to ensure that the key reforms announced in the SONA are implemented sooner rather than later to improve the economy’s growth trajectory.”
