President Cyril Ramaphosa’s wide-ranging State of the Nation Address (SONA) delivered to parliament on 7 February 2019 recognised the importance of promoting higher and inclusive economic growth, together with structural reforms, if South Africa is to create a bigger, stronger and better economy.

This is according to renowned economist Prof Raymond Parsons from the North-West University’s (NWU’s) Business School.

“The key references in the SONA – to making it easier to do business in the country, reducing policy uncertainty and removing constraints on investors – are therefore welcome,” he says.

“These are essential requirements if South Africa is to be a preferred investment destination.”

According to Prof Parsons, the challenge to rebuild confidence nonetheless remains the effective implementation of policies and projects and creating the necessary state capacity to do so, in collaboration with the private sector where necessary.

He says South Africa will have to dramatically raise its economic game if the growth and employment targets outlined in the SONA are to be achieved, and challenges of unemployment, poverty and inequality are to be more adequately addressed. “'We must get the economy working again' is just the initial point of departure towards a better economic dispensation.”

Prof Parsons says fixing Eskom was understandably a “big ticket item” in the SONA address, which correctly referred to the Eskom situation as a “crisis” requiring urgent attention to promote investor confidence.

“The intended measures announced in the SONA to refinance and restructure Eskom are steps in the right direction, but further details are needed to see how successful they will eventually be in stabilising Eskom,” he adds.

“The latest SONA confirms that South Africa’s political economy remains complex. Against a backdrop of muted economic growth and the dynamics of the upcoming elections on 8 May, there is inevitably still much 'unfinished business' on the country's national agenda. This ranges from the forthcoming budget to the outcome of the land reform process, which could be sources of continued policy uncertainty this year.”

“It therefore seems likely that the South African economy, although in recovery mode, will remain basically in a 'holding pattern' for most of 2019, until certain political and economic issues are resolved or trends become clearer,” he concludes.