SONA 2020: FIVE KEY TAKEOUTS
President Ramaphosa’s Sona 2020 was all about working together, especially on growing the economy, managing Eskom’s energy crisis and tackling youth unemployment. It was one of the longer SONAs in recent memory, but deservedly so, because there is much to tackle in South Africa right now.
On the whole, we’re positive, but urge government to give more details on how they plan to deliver on their promises. Talk without action won’t achieve anything. Here are some the main call-out points we’re interested in.
Combatting irregular exposure
“We need to fix our public finances. Our debt is heading towards unsustainable levels, and spending is misdirected towards consumption and debt-servicing rather than infrastructure and productive activity”
The President said the state is working with the Auditor General to reduce irregular expenditure, shifting public spending from consumption to infrastructure investment. The state would also, he said, contain the public wage bill and drive down wastage. We applaud the President’s commitment to reducing irregular expenditure and conducting performance agreements with government employees to manage their duties more closely.
We would also urge government to conduct supply chain management training for all public entities. National Treasury’s frameworks for supply chain management must also be reviewed.
If procurement is not done within the limits of regulation, and if government employees don’t understand what those regulations are, we are simply headed for more of the same.
Managing Eskom’s electricity constraints
“A Section 34 Ministerial Determination will be issued shortly to give effect to the Integrated Resource Plan 2019, enabling the development of additional grid capacity from renewable energy, natural gas, hydro power, battery storage and coal.”
The President said the National Energy Regulator will register small-scale generation under 1MW without a license and fast-track applications by commercial and industrial users above 1MW to 120 days.
We are pleased the President acknowledged that Eskom is fundamental to getting South Africa back on the path to growth. Introducing additional grid capacity from renewable energy, natural gas and hydropower will be welcomed by businesses and new investors. However, funding these models is a challenge. We look forward to the Budget Speech later this month to see how this plan is unpacked. Reenergising the long-stalled Renewal Energy Independent Power Producer Procurement (REIPPP) is ground-breaking for South Africa. It is essential, however, that the REIPPP private sector partners are signatories to the Energy Social Compact to ensure that energy is reliable, sustainable and affordable.
“We are building nine new TVET college campuses this year, in Sterkspruit, Aliwal North, Graaff Reinet and Ngungqushe in the Eastern Cape, and in Umzimkhulu, Greytown, Msinga, Nongoma and Kwagqikazi in KwaZulu-Natal.”
Building nine new TVET colleges is great news for youth development. TVET colleges promote vocational and technical training, preparing students with practical, on-the-job skills they can enter the market with at once. We are especially pleased with a focus on the Eastern Cape and KwaZulu-Natal. We are likewise pleased the President also announced that Ekurhuleni Metro will have its own university to stimulate economic growth within the metro.
Launching a truly post-apartheid smart city
“A new smart-city is taking shape in Lanseria, which 350,000 to 500,000 people will call home within the next decade. … It will not only be smart and 5G ready, but will be a leading benchmark for green infrastructure continental and internationally.”
The focus on smart cities is a model for sustainable infrastructure and services, and ICT firms will be part of the solution here. Financing will be a key issue here, but we are happy that this process is being led by the Investment and Infrastructure Office of the Presidency alongside the Gauteng and North West provincial governments. As long as the outcome of the smart city actually improves the lives of Lanseria citizens, it will be a worthwhile pilot project. This also creates opportunities for consulting firms like BDO to share proven, practical solutions and existing tools to help “smart cities” become “sustainable cities”.
The role of local government in building the economy
We’re pleased that a range of critical work is being done to strengthen local government capacity. However, local government is still a concern for us, as municipalities are not able to meet the social, economic and material needs of the communities under their care. We are concerned there are 40 municipalities in the country that have been subject to the intervention of Treasury and the provincial and national governments. We hope that the District Development Model will allow for sustainable financial growth within the area.
Now that SONA is over, we await the Budget 2020 speech later this month, which should tell if financing the promises of President’s message is a reality.