By Prof. Busisiwe Mavuso
· The SONA was detailed and about real delivery, rather than promises. It rightly highlighted the progress we’ve made in electricity reform, and evolving change in logistics and criminal justice.
· The SONA was a display of unity by the government of national unity, which supports confidence in the sustainability of the GNU.
· Perhaps the most prominent new focus for government is on under-performing municipalities, with promises to establish professionally managed utilities for water and electricity provision.
· There were several pledges from the president that will need to be delivered through the budget which must also contend with the unexpected shock withdrawal of foreign assistance from the US government.
The State of the Nation Address last week did what it needed to do – focused us all on delivering the reforms needed to achieve 3% GDP growth by the end of this year. It was detailed and about real delivery, rather than promises. It rightly highlighted the progress we’ve made in electricity reform, logistics and criminal justice, among much else, while also highlighting the importance of pushing those reforms.
The speech was a display of unity by the government of national unity. Continuing the theme I had seen the week before in Davos of a united “Team SA”, the GNU parliamentarians were united in their reception of the speech. The reforms highlighted by the president need everyone to back them and strive toward implementation. I find it encouraging that parliamentarians from all GNU parties clearly signalled their support for the president’s words.
There were many positives we can take from the speech. Perhaps the most prominent new focus for government is on under-performing municipalities, with promises to establish professionally managed utilities for water and electricity provision which can ringfence revenue to ensure appropriate infrastructure investment. A broader process to redesign the local government system is also welcome to address what has become the weakest link in government service delivery, and a growing risk to other public sector institutions like Eskom which are owed billions in debt. The proposed consultation process leading to a white paper will be an important opportunity to develop new thinking that can enable local governance that is sustainable and of better quality. Business has a clear interest in supporting local government, and BLSA has done so by funding mentorship programmes for municipal engineers and the repair of waterworks, for example, enabling schools to access running water and toilets. Efficient local services are essential for our communities as well as the businesses that operate within them. We look forward to engaging with the process to think through how we can improve the performance of local government.
Eyes will now turn towards the budget due next week. There were several pledges from the president that will need to be delivered through the budget. Among them are promised reforms to the regulations governing public-private partnerships, an arrangement that allows public and private sectors to partner to invest in and deliver large infrastructure projects. These reforms have been in the making for several years and it is high time they were finalised so we can get on with the job of turning South Africa into a construction site. Along with those, the President also noted the ambition for innovative ways to get private investment into logistics and electricity. This requires government to accelerate reforms, particularly in logistics, to enable swifter collaboration and transactions between the state-owned enterprises and private operators, through concessions and other mechanisms. The economy would benefit greatly, for example, from competition between ports and rail routes, which could be created by concessioning use to different private operators.
The budget must also contend with an unexpected withdrawal of foreign assistance from the US government, which is deeply unfortunate. It appears that a combination of efforts to cut back foreign development spending by the new US government, and a mistaken view that the Expropriation Act amounts to a land grab, led the White House to order the halting of all aid and assistance to South Africa over the weekend. While the Expropriation Act is not perfect, it does not remove constitutional rights to property and due process in any expropriation.
The loss of US funding is material, particularly for the Pepfar programme that is integral to our management of the HIV/Aids pandemic. Pepfar last year contributed $453m (R8.5bn) in direct funding to South Africa, a substantial portion of the R30bn spent on the fight against HIV. Pepfar has been critical to the development of South Africa’s HIV response, not just in funding, but also in know-how and scientific research and was until now a proud example of America’s support for development and improved health elsewhere in the world.
Of course, the US remains an important trading partner to South Africa and our respective private sectors have extensive relationships that will remain strong.
February is always a critical month in setting the tone and agenda for government, between the SONA and the budget. With one of the set piece speeches now done, I’m encouraged by the direction government is going and the opportunity to work with it to ensure we achieve our mutual aims of driving growth. Next week we will see the next important push from the Minister of Finance and I hope it will provide further impetus to our joint efforts.
