16 Feb SONA 2022: Same Story, Different Day

SONA 2022: Same Story, Different Day

South Africans tuned in on Thursday, 10 February 2022 to hear President Ramaphosa’s State of the Nation Address 2022.

The annual address provides a summary of the previous year’s events, actions, successes and failures faced by the South African Government and its initiatives, and a broad outlook of Government priorities for the next 12 months.

The responses to this year’s address have been mixed, with many people thinking the presidency fell short on addressing certain key points. Let’s take a look.

Key outtakes

President Ramaphosa opened his address by referring to a new consensus, indicating that the Government is working with labour, business and communities to determine actions which must be taken to build such consensus. Whatever such consensus may be or what authority it will hold, the Government has given themselves 100 days to finalise a “comprehensive social compact to grow our economy, create jobs and combat hunger.”

If the only thing this vague statement is setting the tone for the rest of the address, at least it has succeeded in one thing. The entire Address seems to be a two hour pledge of sorts – something which could either be recited around a boy scout campfire. A frivolous indication of intent with no concrete, actionable or measurable markers to which such intent can be pinned.

Covid

In a rehash of statements made over the past two years, the president gave a rough rundown of private sector donations to the solidarity fund, noted an extension of the R350 social grant until March 2023, and offered statistics around vaccinations.

The real message South Africans wanted to hear – an estimation for the official end of lockdown – was unsurprisingly omitted.

More on the ghastly misappropriation of Covid-19 funding later…

Electricity

The only positive about the Eskom debacle is perhaps that loadshedding gives us an intermittent hiatus from the broken record of promises the President keeps playing.

Noting a shortfall of 4000 MW of electricity, President Ramaphosa noted – for the umpteenth time –  that steps are being taken to bring additional capacity to the grid, including:

 – Over 500 MW from the remaining projects in Bid Window 4 of the renewable energy programme, which are at advanced stages of construction.
 – 2 600 MW from Bid Window 5 of the renewable energy programme, for which the preferred bidders were announced last year,
 – up to 800 MW from those risk mitigation power projects that are ready to proceed,
 – 2 600 MW from Bid Window 6 of the renewal energy programme, which will soon be opened,
 – 3,000 MW of gas power and 500 MW of battery storage, for which requests for proposals will be released later this year,
 – an estimated 4 000 MW from embedded generation projects in the mining sector,
 – approximately 1 400 MW currently in the process of being secured by various municipalities.

Eskom will purportedly complete its unbundling by December 2022. Given the promises made about Eskom and other corrupt Government bodies in 2019 and 2022, no one’s really waiting with bated breath for this one.

It should be interesting to see the approved amendments to the Electricity Regulation Act, 2006 which awaits public commentary.

Transnet

Transnet is but one of the dead horses the Presidency can’t seem to stop flogging (along with our other SOEs.) While the President indicated that the parastatal is addressing challenges with its ports and freight rail network, no clear indication was given as to how this will be achieved.

It was noted that Transnet will incorporate private partners and allow third parties into its freight network later this year. While this is, perhaps, the only way in which operational challenges will be resolved, it’s also alarming that South Africans are paying our Government enterprises who are increasingly making use of private enterprises to deliver their services.

The question on everyone’s lips is how the Government can justify continued (and increased) collection of South Africans’ funds aimed at serving as a primary service provider, while acting increasingly as an intermediary. While few people are opposed to the use of private contractors and providers, it seems a large portion of conventional SOE services has become redundant, which would logically require a suspension of direct funding for functions which the respective Government entities no longer perform. In the very least the historic definition and ambit of each department and the resource allocation for each should be reviewed to compare their roles and functions on establishment with their current roles and functions.

As for the state of passenger rails, these are purportedly under review and rehabilitation. How and by when such rehabilitation would transpire was not mentioned. 

Analogue to digital

The President mentioned the switch from analogue transmission to digital, noting that this is a necessary change for South African people and its municipalities.

He noted that the Government will continue to subsidise low-income households with access to “set top” boxes and make the switch to digital TV. This is frustrating since many people had hoped that the President would address the failure of TV licensing, and deem the continued subsidisation with a switch to digital to mean that South Africans will indefinitely pay for TV licences even though traditional TVs and broadcasting will become obsolete.

While the SABC is just another one of our failing government bodies, it doesn’t seem like the Government has any intention of relieving the headaches it’s causing.

High frequency spectrum

The President also noted that ICASA will commence auctioning of high frequency communications spectrum approximately 3 weeks from SONA (for the first time in a decade).

A rather confusing part of this undertaking is that high-frequency spectrum had already been temporarily made available to certain network providers as part of lockdown regulations. Since lockdown is still in force, one would have to see how ICASA will manage the allocation of spectrum under two different sets of rules.

Alarm bells of credit extension

One particularly worrying point was the intention to allow “development finance institutions and non-bank SME providers” the rights to offer financing. Additionally, the eligibility criteria and types of financing will be adjusted to encourage greater uptake.

Though certain individuals and businesses will welcome this, it seems a counterintuitive move given South Africa has taken drastic steps to reduce over-indebtedness and tighten eligibility criteria in the past decade. Not only had the regulator introduced obligatory credit risk assessment criteria to be used by qualifying credit providers, but a portion of debt for those who were over-indebted was purposely written off.

If these measures are to be relaxed once more, and allow easier access to financing for those who could not previously qualify, would this not invariably fuel the very cycle of poverty we’d been trying to eradicate? The treasury had, in fact, announced deliberate steps to address and reduce public debt in its 2020 National Budget Review. It seems a great many previous Government announcements can be considered notional at best.

Regulatory reform

Noting that SA reached our highest unemployment record in 2021, the President noted that the Government is currently reviewing the Business Act, 1991 (Act 71 of 1991) as well as other legislation with the aim of reducing regulatory burdens to doing business in South Africa for micro, medium and large enterprises.

One particularly exasperating piece of red tape the Government plans to eliminate is the bureaucratic hassle of doing business with Government itself. The President has appointed former CEO of Exxaro Resources, Mr Sipho Nkosi, to head up the new team which will manage the cutting of red tape across Government. What this team is called is not exactly clear, but a welcome mechanism they will institute is the payment of suppliers within the required 30 days of billing.

While this will be a welcome change for anyone who does business with the Government, a cautionary niggle in the back of our minds also wonders if ‘cutting red tape across Government’ wouldn’t also pave the way for more streamlined corruption and cronyism.

Infrastructure development

Infrastructure development was once more brought to the fore, with a noted budget allocation of R100-billion over 10 years for student accommodation, telecommunications, water and sanitation, transport and social housing.

The President mentioned several ‘catalytic’ projects to be executed this year to the value of R21 billion. Whether or not this can be labelled a Government undertaking is up for debate, given that R18,4 billion of this investment will come from the private sector.

Likewise, seven private sector projects to the value of R133 billion will be unlocked by Government, who will make an initial R1,8 billion investment in bulk infrastructure for these projects.

State Capture

Stating what South Africans have known all along, the President noted that the first two parts of the report of the Commission of Inquiry into State Capture had indicated that there was indeed state capture and criminal infiltration of the South African Government and its SOEs.

He indicated that he will present a plan of action in response to the commission’s recommendations no later than 30 June. While the President reiterated protection of whistle-blowers, the public ousting of one such whistle-blower in the past few months is still fresh on our minds.

The Presidency is furthermore building a framework which will allow private sector cooperation with the National Prosecuting Authority to be managed by the National Treasury.

As an extension of State Capture, the corrupt dealings of officials and institutions under Covid-related contracts has seen 45 cases (R2,1 billion in value) reported to the Special Tribunal. A further 224 Government officials and 386 cases were referred to the NPA for disciplinary action or possible prosecution.

Land Reform

The Expropriation Bill will be approved during this year along with the establishment of the Agriculture and Land Reform Development Agency.

This means that land reform will become a very real part of our lives going forward. As one of the first initiatives, the Department of Public Works and Infrastructure will transfer 14 000 hectares of state land to the Housing Development Agency.

SOE reform

Given the dire state of SOEs, it’s no surprise that the President once more noted tackling the inefficiencies and ill health of these parastatals. Under the Presidential SOE Council (established in 2020), the President hopes to separate State ownership functions from policy-making and regulatory functions, much in the same way it aims to unbundle Eskom.

While aspirational, many South Africans are sceptical of the outcome of such intended reforms. Time and again South Africans have been told that this is ‘the last straw’ and that SOEs would not merely be cut off from further funding, but held to account for their mismanagement and wasted funds. Yet time and again these enterprises receive more bail-outs and slaps on the wrist. It seems the only thing we have to prove for all these years is a long list of commissions of inquiry and special councils doing reviews and making recommendations which are rarely implemented.

In contrast to the unbundling, the Government will continue implementing the DDM which will essentially allow for integrated planning and budgeting across all spheres of Government and improve integration of national projects at a district level.

A rather odd mention of the damaged state institution, SARS, which was badly affected by state capture notes that SARS has collected R16-trillion since its formation. The statement seemed odd given state capture hardly spanned the entirety of SARS’ existence, and no reference is made to the actual losses incurred by SARS, the President merely noted that they’ve made progress in restoring their integrity and performance.

Crime and National Security

One such panel as mentioned above is a group of experts who reported on the cause and outcomes of the social unrest in July 2021. The panel found that while there were several entities at fault the primary blame for the unrest lies with the Cabinet.

In a rather dreary response (given the socio-economic impact of the unrest), the Presidency has claimed responsibility and aims to drive a national response plan to address weaknesses. What such response plan entails is rather vague, but we can rightfully assume that it will involve the establishment of several special task teams.

The Presidency further aims to expedite employment in vacant roles within security agencies and to improve training for the SAPS. This includes making resources available to train and employ an additional 12 000 new police personnel.

In a bid to eliminate criminal gangs who extort, invade, steal and vandalise, the Government has established (you guessed it) specialised multidisciplinary units to address these issues.

Other topics

Other topics which may interest readers include:

 – NHI is going full steam ahead.
 – The establishment of a new National Water Resources Infrastructure Agency
 – Investment in irrigation, hydroelectricity and water treatment plants.
 – Reviewing the policy and regulatory framework for industrial hemp and cannabis, with the aim of creating 130 000 jobs.
 – Reviewing labour market regulations for smaller businesses
 – Building 95 bridges per year under the Welisizwe Rural Bridges Programme, overseen by the South African National Defence Force engineers in bridge construction.
 – Establishment of a Special Purpose Vehicle to deliver critical school infrastructure.
 – Establishment of a green hydrogen pipeline in the Northern Cape.
 – Focus on local manufacturing.
 – Trading under the African Continental Free Trade Area agreement can commence.
 – Expanding and investing in local vaccine, mask and ventilator production projects.
 – Finalising mining exploration strategy and a focus on new strategic mineral mining for clean energy.
 – Climate targets finally on target for limiting warming to 1,5%
 – R131 billion deal with the EU, UK and USA through the Presidential Climate Commission focused on repurposing coal plants. 
 – Investment in electric vehicles and hydrogen.
 – Renewed and further focus on social stimulus and the Social Employment Fund.
 – Call on the private sector to support hiring and job creation for the poor.
 – Expanding farming input vouchers to reach 250 000 small-scale farmers in 2022.

Responses to the address

Intellidex market analyst Peter Attard Montalto noted that SONA 2022 was mostly just a rehash of SONA 2021. As evident to most viewers who watched the Address, there is clear positive intent for reform, but Montalto notes that the ‘dial is not shifting’. In the same article by BusinessTech, they note Business Leadership South Africa’s CEO Busi Mavuso calling the speech a missed opportunity.

Mavuso along with many other business commentators seem to feel that the fuel of intention on which businesses have run for so long has all but run out, and the noted lack of palpable action and effort is simply urging professionals to call the Government’s bluff.

These sentiments were echoed by opposition leaders such as ACDP leader Reverend Kenneth Meshoe who noted the President repeating past promises, and Good Party MP Brent Herron noting that there were no measurable targets or mention of achieving targets with regards to job creation. Freedom Front Plus leader Petrus Groenewald stated that the Government seems ever adept at identifying problems, but inferred that they are equally incapable of implementing workable solutions. It’s no surprise that the DA MP Natasha Mazzone was dismayed at the repeated promises without delivery – much like the Presidency’s promises, the DA’s response to SONA has been a rehash year-on-year.

In an opinion piece for the Daily Maverick, Paul Hoffman (Director of Accountability Now), notes that President Ramaphosa has a preference for delaying, deflecting, deferring and ducking responsibility. Hoffman notes contradictions in the President’s address – such as noting that the economy cannot move forward until corruption is addressed, but then delaying his feedback on corruption by a further four months. This is especially frustrating given those who are involved in the R1,5-trillion State Capture thievery are still employed within the President’s party and Cabinet.

South Africans have been up in arms over this point for many years. If the only point of special investigations and inquiries is to formally point out common knowledge without any tangible outcomes, prosecutions and/or recovery of funds, then what on earth are their actual purpose?

Hoffman noted points which Rand Rescue was also cognisant of while watching SONA 2022 – the notable lack of reference to initiatives and actions mentioned in the groundbreaking SONA 2020 and 2020 Budget Speech as well as subsequent public announcements.

What happened to the immediate action against corruption which we were promised? What happened to holding SOEs to account and no longer footing their bills? Where are the publicised and disseminated notices of Government employee mandates and income, or their performance appraisals? Why is SOE reform tallying indefinitely? Why have we not recovered any funds which have been stolen while evildoers have been undisputedly fingered?

Leader of the EFF Julius Malema questioned why the President is telling people about his shoes and cheap suit while he can’t expedite the hiring and procurement of the local resources he claims to support. While the DA’s John Steenhuisen once more noted the lack of reliable electricity, water and safety as barriers to investment, Steenhuisen’s critique is perhaps just as ill-defined as Ramaphosa’s address. The IFP’s treasurer general Narend Singh was more specific in his rebuke, stating that the Cabinet claiming responsibility for last year’s security failures should see heads rolling. It’s unclear whether ‘the Cabinet’ in this context comprises various MPS from various parties, or if it’s predominantly made up of the ruling faction.

In conclusion

For most South Africans the State of the Nation has not progressed since those promising first few months of 2022, and these sentiments were reflected by our President whose vague affirmations lack any credibility or definitive plan. Everything seems under review, in progress, in the pipeline, or assigned to a new task force, unit or directorate whose mandate seems as undefined as their powers.

We’ll wait to see what the 2020 Budget holds later this month, but there’s every likelihood that it will merely echo the President’s statements, if not provide some shocks and upsets as well.

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