Stellenbosch University economics professor Nicola Theron says the implementation of the measures set out by President Cyril Ramaphosa in the 2021 State of the Nation Address (SoNA) will be key for South Africa.

With “sober realism”, she stated on February 16, that there was “not much new” said during the SoNA, and that there now needed to be “a focus on fixing the fundamentals” in the country, foremost of which should be excellence in planning and execution in government.

While Ramaphosa did acknowledge the challenges surrounding the country’s State-owned entities and related stresses, Theron lamented that the President spoke about “things that are not really new”, such as South Africa’s rising unemployment rate, which last saw numbers this high in 2011.

Political economist and Presidential Economic Advisory Council member Ayabonga Cawe shared similar sentiments to Theron, but noted that while the SoNA “didn’t bring any new stuff”, the President remained encouragingly clear on South Africa’s apex priorities – defeating Covid-19, accelerating economic recovery and reconstruction, as well as implementing reforms that can ensure inclusive growth, while simultaneously dealing with the “scourge of corruption” and strengthening the State at all levels.

These priorities were all cited in line with the injunction to create a developmental State, he added.

While he agreed that South Africans did not get the “fireworks” that were expected in this year’s SoNA, Cawe noted that Ramaphosa provided more clarity in terms of what needs to be done in South Africa.

“The President spoke to a continuation in terms of what [South Africa has] planned before, and [he gave] some progress on implementation,” he said, though he acknowledged the fact that the last 12 months had also thrown up numerous challenges, or opportunities, for the country in respect of undertaking the necessary reforms to “get our economy right” and to accelerate the economic participation of all South Africans.

However, Cawe said that while an urgency remained, when looking for details and implementation measures, "some of it was there in patches, but I think there are certain areas where that is missing, one of which is around local government”, elaborating that action and implementation needed to take place “where the rubber meets the road”.

Theron further referred to spectrum as another area of concern for South Africa, which could increase economic growth by about 1%, according to the World Bank. Theron lamented the about ten-year delay in implementation, exacerbated by current litigation, and which affects the cost to communicate.

Similarly, the National Health Incentive and independent power producer (IPP) programmes face similar challenges.

Referring to the IPPs specifically, Theron noted that “it is encouraging that municipalities can start buying from IPPs”, though she lamented the delays that were still being experienced.

The SoNA, according to Theron, made “the right sounds” but she remained concerned about the pace and scale of implementation.

These concerns were echoed by Investec chief economist Annabel Bishop, who provided more insight into the financial markets aspect, noting that the SoNA, despite “little to no reaction”, provided a sense of optimism in the financial markets.

This is also owing to South Africa’s Covid-19 vaccination drive, which is expected to bring about the “return to normal”. As a consequence of this, Bishop noted that the financial markets had “heavily invested” into emerging markets and their financial assets, whether they be bonds or equities.

While South Africa did benefit (though not as much as other emerging markets), she noted that this increased investment and investor optimism had seen the rand improve to about R14.50 to the dollar on February 16.

However, Bishop lamented the lack of clarity surrounding the dire state of South Africa’s government finances, which “is quite key” for financial markets, especially considering the massive government expenditure bill.

“The SoNA was certainly light on a few details, [which resulted] in some of the lack of reaction. While all [of the same themes in the SoNA] were very key, we are just not getting there very quickly,” she said.