Sona: Corruption is not a problem of the past, says BLSA boss

In his Sona president Cyril Ramaphosa did not dwell on the core challenges facing the country that are critical to turning around a dire economic performance he rightly blamed for high unemployment and many other ills we face as a country.

However, Busi Mavuso, CEO of Business Leadership SA, says it was appropriate for him to celebrate progress made in electricity reforms and to point to the importance of the logistics roadmap that is key to dealing with the country’s logistics crisis.

“But on both the energy and transport fronts, much more could have been done. As he knows well, resistance from some in his own government currently frustrates progress. Business wanted clear indications of how blockages will be overcome to improve confidence that reform momentum will be maintained.”

Mavuso says she is pleased that the president emphasised the importance of economic growth but reforms such as the concessioning of ports and rail infrastructure have not worked smoothly. “We needed to hear how things will change to overcome these blockages.”

Ramaphosa acknowledged the role of business in supporting the National Electricity Crisis Committee and Logistics Crisis Committees, but Mavuso says this received just passing attention, while the joint work that business and government did through these structures is critical to building investor confidence that we are making progress.

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Corruption is not a problem of the past

She also points out that corruption is not a problem of the past. “It is a clear and present danger to the economy,. Investment cannot happen without confidence in the criminal justice system, which is why business is eager to continue helping to build capacity in the system.”

Infrastructure has long been a big theme in the Sona and this year was no exception, Mavuso says.

“The president’s emphasis on new financing mechanisms is important and these must be followed through in the budget speech in two weeks with long-promised reforms of regulations regarding public/private partnerships.”

These can unleash significant investment if an enabling environment is created.

“The reality for many years is that government spending on infrastructure has been shrinking. Reforms, particularly in electricity, have enabled the private sector to invest and much more will come with further reforms.”

That includes the 14 000 km of new transmission lines to accommodate renewable energy that will be built “over the coming years”. The president promised to fast track that process and “enable private investment in transmission infrastructure through a variety of innovative investment models”.

Mavuso says this is a clear and welcome indication that electricity reforms will enable grid investment by the private sector. She also welcomed the new emphasis on the potential of the green economy and a commitment to stimulate mining exploration with the creation of a new fund.

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Tackling policy uncertainty in mining

“I was pleased to hear that the president is clearly concerned about the lack of mining exploration that is happening now. A fund is welcome, but we really have to deal with the policy uncertainty that has hung over the industry for well over a decade. That would do much more to promote investment and new exploration.”

The president highlighted the gazetting this week of the amended visa regulations and promised further momentum on visa reform to ease the ability of business to hire skilled foreigners to fill the huge skills shortage domestically, but Mavuso says this needs to happen faster as the trusted employer scheme, for example, is running behind schedule.

“What the President did not say was also important. There were no populist promises on the social relief distress grant that would come at the cost of government’s fiscal discipline. There is obvious political pressure to make unsustainable commitments to spending, but he stopped short of major new promises. That is an implicit endorsement of National Treasury’s fiscal discipline, which is key to business confidence.”

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National Health Insurance a clear negative

However, Mavuso says, the clear exception to fiscal constraint is the National Health Insurance Bill which the president recommitted to signing.

“This is completely unimplementable as it stands with no feasible funding plan. Business has made some focused suggestions on how it could be turned around into something that really makes a positive difference for all South Africans, but these seem to fall on deaf ears.”

She also noted that Ramaphosa regularly placed the blame for the dire economic performance on State Capture, yet there are still too many people in his current administration who were responsible for state capture and therefore it is not just a previous administration issue.

“Certainly, five years into this administration, more could have been done to hold those responsible to account.” 

The state of the nation speech is always an opportunity to recognise progress and determine our current priorities.

“I think the President got these right – we need to drive investment and deal with the constraints on the economy. Business will continue to work with government to overcome these challenges.”