State of the nation and budget speeches very important in 2025

The upcoming state of the nation and budget speeches will be important to speed up South Africa’s growth initiative after the country entered the new year on a strong footing with the government of national unity (GNU) making good progress on several fronts.

Busisiwe Mavuso, CEO of Business Leadership South Africa, says in her weekly newsletter that despite disputes between members of the GNU, confidence has been growing that parties are fundamentally committed to making it work and to find workable solutions to their differences, putting the country first.

She says the president can use the state of the nation address (Sona) to consolidate this confidence, demonstrating his commitment to work with partners to resolve disagreement and ensure stability.

“This week’s Sona is an opportunity to consolidate the work needed to deliver 3% economic growth by the end of this year. That is the kind of growth that will start making a meaningful impact on unemployment, spur investment and generate the tax revenue required to support government’s social programmes.

“Business and government have formed a productive partnership, in line with our common interest to deliver growth and the Sona speech can reinforce the plans for action to achieve that outcome.”

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Load shedding a sobering reminder

However, Mavuso says, this past weekend was a sobering reminder that we cannot slow down as load shedding returned after 311 days without it. “While we made dramatic progress in improving electricity security, the reform process still has some way to go to ensure that load shedding is well and truly behind us.

“We must continue with Eskom’s unbundling, drive major new grid investment and commission new generation. That is all part of the Energy Action Plan that government and business have been implementing together and the Sona is an opportunity to recommit to driving its completion.”

She points out that some elements are behind target, including new generation and transmission investment, but says we can catch up through government’s partnership if the president recommits to driving the momentum, particularly the reforms needed to get private sector grid investments under way.

Mavuso says apart from ensuring the Energy Action Plan is fully implemented, government and business must swiftly deliver on the freight logistics roadmap too. “Transnet has been making encouraging, although tentative progress towards setting up scope for increased partnerships with the private sector.

“These need to become more ambitious. If we are to unleash the scale of investment needed to upgrade and then efficiently operate our rail and port infrastructure, private investment must be brought in on a much bigger scale through concessions.”

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Sona must also include rail and port performance

She says there has been progress in stabilising port and rail performance, but the taps must now be opened for new investment. “Open access to rail infrastructure must be fast-tracked as part of delivering on the network statement published in December, that could spark R250 billion to R300 billion in investment in the rail network by 2030.”

Mavuso adds that it is also time to follow through on restoring the criminal justice system. “The escape from the Financial Action Task Force (FATF) grey list is possible this year if we can demonstrate that the National Prosecuting Authority can successfully prosecute corruption, money laundering and terrorist financing.

“Of course, an effective criminal justice system has many economic and social benefits and this underpins the rule of law in our country. That is why business is committed to supporting reform through Business Against Crime and initiatives such as BLSA’s memorandum of understanding with the NPA that allows it access to top skills to build its cases.”

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Ramaphosa must talk up institutional renewal

She says President Cyril Ramaphosa can now talk up institutional renewal and how key points across the system, like the Hawks and crime intelligence agencies, can be supported to enable performance improvements.

In addition, Mavuso says the president must also focus on local government service delivery and water infrastructure. “The calamitous financial state of many municipalities is now a serious risk to the economy. Municipalities are unable to manage their liabilities, perhaps most obviously to Eskom but also to many other service providers.

“There is a systemic risk that some large municipalities will simply collapse and fail to provide basic services to their residents and businesses. This is now recognised as a major challenge and business and government are working on interventions and support. The president can emphasise government’s seriousness in tackling the problem.”

Mavuso also points out that momentum is building towards South Africa’s hosting of the G20 and associated business events at the B20, creating an opportunity to demonstrate to the world that South Africa is back in business.

“The president can use the Sona to reinforce government’s commitment to leading the G20 agenda and supporting global policy shifts that enable growth in emerging markets.”

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Still much to be consolidated in state of the nation speech

She says there is plenty that will need to be consolidated into the Sona, including long-promised reforms of the regulations that govern public-private partnerships to streamline them. “National Treasury can make clear progress on this and other regulatory reform to improve the business environment, from exchange control to tax certainty.

“Despite the load shedding bump in the road this weekend, we are set to have the best year in a long while. The Sona and then the budget speech two weeks later is critical to ensuring we follow through to ultimately deliver on our growth ambitions.”