Clear commitment to reform implementation needed in SoNA – Mavuso

5th February 2024

By: Schalk Burger

Creamer Media Senior Deputy Editor


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Business organisation Business Leadership South Africa (BLSA) CEO Busi Mavuso has urged President Cyril Ramaphosa to show a clear commitment to the hard work of reform implementation during his State of the Nation Address (SoNA) on Thursday evening.

South Africa's electricity crisis remains a significant constraint, despite some progress having been made, and its logistics system has rapidly become a disaster for the economy, requiring urgent intervention, Mavuso said in her latest weekly newsletter on February 5.

“Eskom’s operational performance, which the President promised in his speech last year, would improve, remains frustratingly far from target, with the energy availability factor so far in January below the average of last year, but, with the growth of private supply, electricity security can be achieved anyway,” she said.

“We need to complete the restructuring of Eskom to set up an independent grid operator to allow for an open electricity market, and to drive increased investment in the grid, ensuring it has capacity for new generation. I hope the President recommits to driving hard on concluding the restructuring process and the rest of the Energy Action Plan.”

Additionally, in his 2023 speech, the President noted that the underperforming rail and ports would be turned around.

"However, the logistics crisis has rapidly worsened as the performance of rail and ports has deteriorated. Jobs are being lost simply because miners and others cannot get their output to ports.

“We are watching the shipping traffic diverted around Africa because of the Red Sea crisis pass us by, choosing Walvis Bay or Maputo instead, because our ports are incapable of providing a decent service to them,” said Mavuso.

"The logistics crisis galvanised responses from business and government. The National Logistics Crisis Committee has already produced a logistics roadmap that represents the best thinking on how to improve our logistics performance.

“What is needed now is focused attention on implementation and ensuring all parties, particularly Transnet, are aligned in doing so. The President can add the political momentum necessary to accelerate progress,” she said.

Similarly, the President's 2023 SoNA speech included many promises of increased investment in infrastructure, including logistics, bulk water and roads.

“Official figures show that public spending on infrastructure has continued to drift downward, while investment from the private sector has grown markedly in the past 18 months.

“The public sector is still struggling to invest in infrastructure. There have been some positive moves to consolidate the infrastructure effort in National Treasury and I look forward to hearing from the president about how this problem will be unlocked,” Mavuso said.

Further, creating a genuine and deep improvement in the health system would be an achievement, while the signing into law of an unworkable National Health Insurance Bill would not be an achievement because it would drive doctors and other medical staff out of the country and damage the private healthcare sector without any improvement in the public health system, she said.

Additionally, crime and corruption is another front where progress was promised.

“There has been some progress, for example reforms are improving South Africa’s compliance with global money laundering regulations, but we continue to struggle to prosecute those implicated in serious corruption, while crime and sabotage are a major contributor to our electricity crisis,” she highlighted.

Meanwhile, tax collections have been weak owing to poor economic growth and South Africa cannot afford to expand spending recklessly, whether on the public sector wage bill or on social grants.

“National Treasury’s grip on the fiscal position has given business and investors confidence, and the President can signal his support for discipline,” said Mavuso.

Further, unemployment is one of the country's most serious challenges, despite a modest decline in recorded unemployment in the past year.

“[Ramaphosa's] presidential Youth Employment Service initiative has delivered several positive interventions to support youth employment. However, it is only when the private sector is galvanised to employ more people that we will see a large-scale change in employment.

“This cannot happen without reforms that address labour market regulation, which the President’s government has not touched. This is one reform he should be bold about. Reforms are possible that maintain worker rights while freeing up employers to take on more staff,” said Mavuso.

“In an election year, there is always political pressure for populism, but business’s main interest is in supporting economic growth, and slogans do not deliver it.

“We need the hard work of reform implementation to continue, and I hope the President uses his speech this week, which is a key agenda setter for the work of government, to assure us that it will,” she asserted.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online



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