Last wishes for Sona tonight: less corruption, more power

If president Cyril Ramaphosa still needs any tips for his State of the Nation Address (Sona) speech tonight, he would do well to look at these last wishes: less corruption and more power, jobs and economic growth.

He would also do well to remember the promises he made in his speech last year to address the country’s challenges.

Neil Roets, CEO of Debt Rescue, says in an open letter to the president that when he delivers the Sona, 61 million South Africans will be listening with the hope that he heard their voices and will act in their best interest regarding the financial difficulties they face.

Despite his 2023 Sona promises, the country still faces many difficulties, he says.

“There has been some progress, but South Africans overwhelmingly feel there is a need to act with real urgency in the face of a cost-of-living crisis the likes of which we have never seen before.”

“South Africans are in trouble. Deep trouble. What we need is a plan to dig us out as 8.2 million people currently live below the breadline.”

Key priorities at Sona 2023 were that these issues would be addressed with urgency, Roets says.

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Restoring energy security

The energy crisis is by far the most urgent, he says.

“South Africa endured its worst year of load shedding in 2023, along with soaring prices that placed a heavy financial burden on people. In real terms, this meant that the average household now has to allocate a much larger proportion of their income to cover basic utilities, leaving less money for essentials like food, transport, education and healthcare.”

This hits low-income families hardest, as they struggle to meet the costs of even the basic necessities. Furthermore, he says, industries reliant on a stable power supply, such as manufacturing and mining, have been particularly hard hit, leading to job losses and stunted growth.

“The repercussions of the rolling blackouts are dire. It causes spoiled food, refrigerators dying due to power surges, businesses forced to close down, not to mention the ripple effect on the economy in reduced investor confidence that costs the economy millions per day.”

In fact, the South African Reserve Bank estimates the cost to the economy due to load shedding at R899 million a day at stage 6 and we have seen what this looks like. The underlying issues plaguing the country’s energy sector must be addressed to alleviate the burden on its citizens.

ALSO READ: Load shedding: How much progress since Ramaphosa’s last Sona?

Creating jobs and growing the economy

South Africa still has the highest unemployment rate in Africa, with official figures currently at 31.9% and with 47%, almost half the nation, reliant on a social grants. Trading Economics SA’s latest figures show youth unemployment at a frightening 58%, Roets says. 

“Leading economists have warned that the Basic Income Grant, which will alleviate a bit of the burden for some, will create an unsustainable economic scenario. With only 7.1 million taxpayers contributing to government and 28 million South Africans currently receiving grants, there are clearly not enough taxpayers to generate enough funds for this. We need to focus on growing the taxpayer base by stimulating economic growth.”

Roets says the country needs sustained job-rich growth and only rising total fixed investment will drive this, especially private fixed capital formation. Although there is welcome evidence of increased private investment in alternative sources of energy, total fixed investment remains at only about 15% of GDP, instead of closer to the 30% of GDP target by 2030 set by the National Development Plan (NDP).

“The SME sector is a primary job creator and a major economic driver and the NDP has an admirable vision for them but is unfortunately missing these targets. Growth was under 4% in 2023, while unemployment, supposed to drop to 6% by 2030, has instead shot up to 31.9% officially in 2023. SMEs are fighting to keep their heads above water, mostly due to high interest rates and supply chain issues.”

He points out that the axis around which all other growth and prosperity spins is crucial − the economic growth of the country.

“The International Monetary Fund has just downgraded its economic growth forecasts for South Africa, warning that logistical challenges are constraining activity and acting as a drag on the entire region, exacerbated by geopolitical tensions.”

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Sona 2023: Fighting corruption

Strengthening the SAPS to prevent crime and increased capacity at the National Prosecuting Authority was pinpointed as a top priority in 2023. Unfortunately, Roets says, in February 2023 the scourge of corruption tarnished the country’s reputation so badly that it was grey listed by international financial crime watchdog the Financial Action Task Force, prompting investors to pull out of the country.

“Sadly, a year later South Africa scored 41 – the lowest score the country has ever received – on the annual Corruption Perceptions Index – that ranks the countries and territories around the world by their perceived levels of public sector corruption. South Africa now unfortunately officially falls into the category of “flawed democracies’.” 

Corruption has the potential to thwart all efforts to build a strong economy, he warns.

“We need you to keep that hope alive. We desperately need constructive plans that you will irrevocably fulfil on.  Please hear the pleas of ordinary South Africans.”