07/03/2018
Comments on the 2018 State of the Nation Address
The State of the Nation Address (SONA) was delivered on Feb 16th by newly elected President Cyril Ramaphosa. Before the time there was great expectation that he would say all the right things about corruption, state capture, job creation, the economy and various other matters and indeed he did. He also mentioned several steps to be taken to deal with various issues. Some of these measures will involve the participation of the private sector. Among others these measures include
• A Jobs Summit to deal with the high unemployment rate which is especially bad among the youth
• An investment conference to promote investment in the country
• Promotion of the re-industrialisation of the country to bring manufacturing back
• Development of Special Economic Zones
• The establishment of a Digital Industrial Revolution Commission
• A social sector summit
• The number of government departments to be reduced
• A Commission of Inquiry into Tax Administration and Governance of SARS
• The intention to intervene to stabilize and revitalise state owned enterprises (SOE’s)
• Actions to combat corruption and other crime
• The introduction of the National Health Insurance bill in the near future
• The intention to tackle various health issues
However, he also raised some negative issues such as expropriation without compensation (EWC), transformation, free tertiary education and National Health Insurance (NHI). He did not say how these measures are to be implemented and financed. Nor did he soothe the fears of minorities.
He says that EWC will be implemented in a way that does not destabilise the economy or endanger food security. Logically this is impossible and therefore suggests that maybe they won’t go ahead with EWC in which case certain radical constituencies will react very strongly. On the other hand if they go ahead with EWC then those opposed to EWC will react very strongly. This looks like an issue that the ANC can only lose. Not to mention the reaction of the foreign investment community.
Similar problems surround the issues of transformation, free tertiary education and NHI. Radical Economic Transformation (RET) is likely to be resisted from minorities but if it is not implemented there could be problems from the black community. Free tertiary education is going to cost an enormous amount of money that could be spent elsewhere. The same applies to NHI. Free tertiary education and NHI policies are more appropriate for countries having strong growing economies. The South African economy is not one of these.
How the ANC is going to handle the above contradictions remains to be seen. Unless the ANC have some very special tricks up their sleeve the objectives in SONA are likely to be nothing more than a wish list. We could be in for a very bumpy ride but lets hope things work out well for all our sakes.
