President Cyril Ramaphosa delivered his fourth state of the nation address (SONA) on Thursday evening, looking to inspire the country with words of hope and deliver promises of progress after a year in which it was ravaged by the Covid-19 pandemic and nationwide lockdown.
While the president hit some of the right notes – like extending support to businesses and employees who continue to suffer the effects of lockdown – some of his message fell flat when projected onto the economic reality of the country.
Talk of ‘post-apartheid’ cities seems a fantasy when existing cities are falling to mismanagement and disrepair; and hopeful words on growing the economy and resolving a decades-long power crisis ring empty as rolling blackouts continue, and debt levels shoot up as the government dithers over reforms.
General response to the SONA, as was the case in 2020, was thus a mixed bag, with political parties, civil and business groups, analysts and economists weighing in.
The running theme, though, is that it was very much “more of the same” from last year.
Businesses, which were a big focus of the speech, felt encouraged by the president’s commitment to helping dig them out of the Covid-19 hole, but most commentary would only swing into optimism with great caution, knowing that it hinges on successful implementation.
Civil groups and analysts that have been tracking government’s moves for years are acutely aware of how words do not necessarily lead to action, and had a more muted response to the speech.
On the opposite side of the spectrum, Ramaphosa’s political opponents derided the president’s words as just more of the same rhetoric that has been delivered from the ANC-led government for well over a decade.
Markets – SONA 2021 was a non-event
The SONA was a non-event in terms of currency movement, said Bianca Botes, executive director at Peregrine Treasury Solutions.
The rand held steady as the president delivered his speech, and showed no significant swings in the hours after.
Focus will now shift to the Budget Speech planned for later in the month, she said.
Quiet markets reflect the trend that has been seen over the past few months, where the rand has been affected more by global factors such as US stimulus plans, liquidity, risk-on sentiment and the hunt for yield.
Markets were on the lookout for any indicators of economic policy shifts or changes around SOEs and government spending, but these were largely absent from the president’s speech.
Businesses – Encouraging direction
A host of small businesses, business groups and organisations provided their take on the president’s speech, with most finding the commitments to entrepreneurship, buying local, and support for Covid-hit enterprises as positive and encouraging.
Strong points for businesses were the promise of the digital migration, which would boost opportunities in tech; visa reforms which would help the tourism and hospitality industry; cutting red tape around business registration; commitments to local procurement; and pushing youth unemployment and entrepreneurship.
Misgivings include a lack of consultation with businesses in setting agendas and reforms, as well as not enough being done, generally, to help businesses and the most vulnerable in the country who have lost their jobs or livelihoods as a result of lockdown.
“While the state of the South African economy always meant that president Ramaphosa would have presented a more circumspect State of the Nation Address, few would’ve expected things to be this sobering a year ago,” said Aisha Pandor, CEO of SweepSouth.
“The measures announced in the speech may provide some measure of relief, but more needs to be done to help those worst affected by the economic turmoil brought about by Covid-19. The businesses that create jobs and income streams for the country’s working-class population must be supported and incentivised if we are to reduce unemployment and income inequality.”
For entrepreneurs, there were significant positives to be found in president Ramaphosa’s address, said Philani Sangweni, managing partner, Entrepreneurs for Entrepreneurs (E4E) Africa.
“The intent to support local production and supply chains should open opportunities for entrepreneurs willing to embrace them. It will, however, be key that local technological solutions supporting manufacturing and supply chains are also given sufficient backing.
“The success of the BizPortal business registration platform also represents an important step forward as does the ability of the National Youth Development Agency and Department of Small Business Development to provide grant funding and support to 1,000 young entrepreneurs.”
“Finally, the long-awaited start of digital migration should be welcomed. Freeing up spectrum will make connectivity cheaper, growing potential markets for digital entrepreneurs as well as making it easier for entrepreneurs in lower-income areas to build and innovate new businesses.”
OUTA – Uninspiring and recycled
Civil group Outa said that the president’s speech failed to inspire hope and restore public trust in the government – instead opting for recycled rhetoric and meaningless highlights.
“This year’s SONA listed a few achievements that were far short of spectacular and what the public expected of their government,” said Outa head Wayne Duvenage.
“The president’s address was by and large very disappointing and there appears to be a general view that little was mentioned regarding new solutions designed for substantive positive outcomes.”
Duvenage said the speech missed the mark on many questions that need decisive answers, and lacked hard deadlines for plans and programmes that the country needs right now.
Some of these include: renewable energy programmes; the Covid-19 vaccine rollout; financial situations at SOEs; procurement process transparency; the public sector wage bill; and anti-corruption measures.
“We needed inspiration and leadership that can build public trust in our State’s ability to take meaningful and decisive action to turn our economy around. SONA 2021 did not provide this,” Duvenage said.
Property market – Good words, but lacking substance
Realtors were broadly positive over the address, lauding the extension of benefits and grants to those who continue to be impacted by the Covid-19 lockdowns, while remaining cautiously optimistic about the promises made by the president.
However, a vein of cynicism and doubt shoots through much of the response, given government’s poor track record of following through on promises.
Berry Everitt, CEO of Chas Everitt International said that the update on progress being made amid the Covid-19 pandemic will help boost business confidence, and noted that businesses are working a lot closer with government now, which will pay off in the future.
Gerhard Kotzé, MD of the RealNet said that the speech was “generally encouraging”, but said that the jobs crisis needs to be addressed with urgency – particularly through a successful vaccination programme.
Yael Geffen, CEO of Lew Geffen Sotheby’s, said that the speech lacked substance to back up government’s lofty goals.
“What we needed to hear this year was a detailed plan for economic recovery, but much of Ramaphosa’s speech may as well have been a copy and paste of last year’s SONA, and the one delivered the year before, which is both disillusioning and discouraging,” Geffen said.
Intellidex – Some good news, and red flags
Intellidex analyst Peter Attard-Montalto said that the president’s speech generally beat expectations, but this was coming off a really low base.
Cutting through the rhetoric, there were commitments to key measures – such as releasing the critical skills list, setting up a water regulator, and some energy reforms – but much was lost through hyping up ‘fantasies’ like the R500 billion stimulus, or over-promising on things that do not fit South Africa’s economic reality.
While last year’s speech focused on promises of delivery ahead, “which generally failed, independent of Covid,” the analyst said, this year’s speech took a shorter view on things being delivered now.
However, Attard Montalto said that infrastructure promises were at odds with government’s sense of action, while forward-looking commitments were nothing new.
A big takeaway, he said, is there were two ‘hidden’ aspects to the speech that would likely be missed.
The first is that Operation Vulindlela (Ramaphosa’s reform implementation vehicle) has been far busier than it lets on – a positive for the country, as reforms are desperately needed.
The second is that National Treasury was absent, which raises red flags, considering the budget speech is coming in two weeks.
“The market should be alert to the flip side – the budget in two weeks being divorced from the rest of government,” Attard Montalto said.
Political parties – Same old talk on failed policies
South Africa’s two biggest opposition parties, the Democratic Alliance and the Economic Freedom Fighters, both had takes on the speech – neither of which were positive.
The DA called the speech “unworkable” and rooted in failed ideology. The party’s gripe was that Ramaphosa focused on plans and promises that are rooted on the ANC being in power and managing them, while failing to account for that party’s numerous failures and broken promises.
“South Africa is in deep, deep trouble,” said DA leader John Steenhuisen. “We needed to hear about real progress on real solutions to our real challenges. (Instead, Ramaphosa) used beautiful words and soothing tones to offer empty promises and impractical plans.”
Steenhuisen said the president should have delivered a detailed Covid-19 vaccine rollout plan, an actionable strategy to grow the economy, and commitments to holding the government accountable.
The EFF meanwhile, described the speech as “nothing new”, with party secretary general Floyd Shivambu saying the president’s address matched the definition of insanity. “Insanity is doing the same thing over and over again, expecting a different result,” he said.
Shivambu said Ramaphosa was trying to “hide the dead horse”, giving no direction for the battered economy or millions of South Africans who lost their jobs in the past year.
He said the president’s quoted figures of hundreds of thousands of job “opportunities” were questionable, and a drop in the ocean compared to the two million people who “went back to poverty because of joblessness”.