President Cyril Ramaphosa’s annual State of the Nation (SONA) speech ahead of the February budget held very few surprises, but he highlighted some key areas where economic growth can be realised.
It is quite telling that the president firstly tackled the biggest elephant in the room, namely Eskom and how it has been thwarting any plans by government to rebuild the economy and to create jobs.
He acknowledged that Eskom has been unable to deliver because of its debt, lack of capacity and state capture and that it will need some time to restore its operational capabilities.
He sets out government’s plans to mitigate the – as he himself called it – the debilitating effect of load shedding on the country.
Ettiene Retief, Chairman of the National Tax Committee at the South African Institute of Professional Accountants (SAIPA), says there is still no clarity as to how long it will take Eskom to get its house in order. There is no clearly defined timeline or strategy that would allow companies to weather the current impact.
There is a lot of “we will” statements in his speech, but very little on how it will be done. It is critical to get a better sense of what the strategy and implementation framework will be, says Retief.
He says procurement of emergency power from projects that can deliver electricity into the grid will happen within three to twelve months from approval. However, it remains unclear how long it will take to get the approval, or at what cost.
Ramaphosa singled out the agricultural industry as a key area for economic growth and job creation. However, he also talks of land reform and expropriation without compensation. The emphasis should be on sufficient support for farmers on productive land, with sustainable water supply, instead of the shift of ownership.
“Agriculture is heavily dependent on water and infrastructure. If we get that right it talks to economic growth and sustainability,” says Retief.
In acknowledging the biggest challenge facing the country, which is the high rates of unemployment, with almost half of the youth being unemployed, the President announced a two-pronged solution is – the creation of opportunities for youth employment and self-employment.
There seems to be a plan that the government has mapped out with the implementation of the Presidential Youth Employment Intervention. These priority actions will be laid out over the next five years to reduce youth unemployment, such as, growing a national network reaching 3 million young people, preparing them for the working world differently, supporting youth entrepreneurship and self-employment, expansion of The Youth Employment Service – which to date says it has created over 32 000 jobs, establishing programmes that will give young people the opportunity to earn an income and 1% of the national budget that will be reallocated to finance youth employment initiatives.
The concern that we have, says Faith Ngwenya Technical and Standards Executive at SAIPA, is that we have seen similar plans being introduced in the past, but they have not made any dents in the unemployment.
Another highlight to the 2020 SONA which SAIPA is watching with keen interest is the introduction of the She TradesZA, a platform aimed at assisting women-owned businesses to participate in the global value chain. There will be R10billion set aside by the Industrial Development Corporation over the next five years for women empowered businesses. It is imperative that such commitments are accompanied by policies and regulations that are enabling in nature. The challenge that comes with such promises, is that they lack in implementation. The red tape that comes with the projects makes the benefits inaccessible to the grassroots levels thus resulting in the status quo where very few of the targeted women empowered businesses end up benefitting from the initiatives.
True to the President’s words in the SONA the cabinet approved the Public Procurement bill for comment on the 18th February which is hoped to provide more flexible legislation for preferential procurement.
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