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SoNA: Business bodies welcome certainty on energy but plead for urgency

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SoNA: Business bodies welcome certainty on energy but plead for urgency

President Cyril Ramaphosa

14th February 2020

By: News24Wire


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Organised business groups have cautiously welcomed some of the economic promises in President Cyril Ramaphosa's State of the Nation Address on Thursday, but called for a greater sense of urgency and the articulation of a clear long-term vision to boost South Africa's struggling economy.

Business Unity South Africa (Busa) – which advised "far-reaching economic structural reforms" ahead of the SoNA – said it was pleased the president had touched on many of the issues its members viewed as important, such as energy, public expenditure, and holding Cabinet to account.


However, it also expressed a number of concerns.

"We are happy the President referred to several of our recommendations and announced some movement in some of them. However, we need to see a sense of urgency in addressing the structural challenges in the economy," Busa said.


The president delivered his address two days after Statistics South Africa announced that the official unemployment rate for the fourth quarter of 2019 remained unchanged at 29.1%, the highest level since the global financial crisis of 2008.  

Busa praised Ramaphosa for acknowledging the country's fiscal crisis and need to reduce public expenditure, his honesty about the continuation of load-shedding, and his announcement that the state would be speeding up licensing and create more certainty around the generation of electricity by independent producers.

State bank 'inexplicable'

But Busa said the announcement of the creation of a State bank was "inexplicable" given that many State-owned enterprises are suffering financially. 

"We must also question what a State bank can do that the private banking sector can’t, if government plays an appropriate enabling role.

"We are also concerned about references to a sovereign wealth fund, which is fine in principle, but we can’t talk about this until we address growth and the budget deficit."

In his address, Ramaphosa said a sovereign wealth fund was a "means to preserve and grow the national endowment of our nation" while the State bank would help "extend access to financial services to all South Africans". Finance Minister Tito Mboweni will provide details in his Budget later in the month.

While Ramaphosa used his address to defend the success of a major investment drive he initiated in April of 2018, Busa said that the R664-billion in investment commitments the president heralded on Thursday could not be interpreted as "real investment".

"The latter will only happen if the underlying conditions inhibiting investment and growth are addressed urgently," it said.

The business lobby group said it would continue to engage with the president and reiterated an offer of private sector help "to assist in building a capable state, provided he demonstrates decisive leadership".

The South African Chamber of Commerce and Industry (Sacci), meanwhile, said in a statement that it hoped Ramaphosa's promises around energy generation would "receive the level of attention promised in the address".

Ramaphosa said the State would be taking measures to "rapidly and significantly" increase generation capacity outside of Eskom, including by making it easier for independent producers to get certification to build and run plants above 1MW. 

The State would also start the procurement of emergency power from projects that can "deliver electricity into the grid within three to 12 months from approval," and would allow municipalities in good financial standing to procure their own power from independent power producers.

Spectrum woes

Sacci cautioned, however, the date given by Ramaphosa for the auction of high demand spectrum for the South African telecoms industry was still too far away. The chamber urged Ramaphosa to bring the auction forward to no later than end June 2020, instead of the end of 2020. A lack of available spectrum has been a long-running complaint by South African telecoms groups, who say that it is needed to reduce data prices.  

"This is a critical enabler in the telecoms infrastructure space and we cannot wait any longer to tool up in such a critical area. If this means a 24/7 work cycle by the officials involved, so be it," said Sacci. 

The chamber added that while Ramaphosa had shown himself to be serious in addressing the short- to medium-term challenges hobbling South Africa's economy, the country still lacked "very clear long-term vision".

"If SA is to move from being a developing economy to a developed economy and consequently, address the triple challenges of poverty, unemployment and inequality, it would be those long-term plans that should serve as a template for future annual SoNAs."

The South African Wind Energy Association's CEO, Ntombifuthi Ntuli, meanwhile, said on Friday that the industry was "immensely relieved to receive such strong support from the president".


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