BLSA statement on President Ramaphosa’s SONA address
Date: 8 February 2019 | Author: Business Leadership South Africa | Category: Media Statement
President Ramaphosa’s SONA address suggests that government will not only build on commitments made at the Investment summit last year but also move swiftly to unblock administrative and regulatory bottlenecks to domestic and foreign direct investment. The President’s prioritisation of regulatory issues as the single most important impediment to growth is not only welcome, but is vital if the compact between government, business and labour to create jobs and advance inclusive growth and transformation is to be grounded in tangible results.
We know that addressing the growing regulatory burden, coupled with regulatory uncertainty, can be a major game changer for the economy. In this regard we are particularly pleased that the President highlighted the Public-Private Growth Initiative to mobilise investment in 19 sectors of the economy as a signal achievement in the developing partnership between government and business. In their presentations to government recently, CEOs and Chairpersons from 19 sectors indicated in summary that an increase in sector contributions to GDP of approximately 3-5% is attainable over the next 5 years, subject to prevailing circumstances in specific sectors and the expected multiplier impact on associated businesses.
The aggregated projected investment from a select number of the 19 sectors amounts to more than R500bn over the next 4/5 years if a high-growth path is pursued in our economy.
We have consistently argued that both the removal of inhibitors to growth and fundamental socioeconomic transformation, including an improved education system and the development of a more robust skills base, is integral to accelerating growth in a more inclusive and sustainable way. We therefore welcome the President’s prioritisation of two years of compulsory Early Childhood Development for all children before they enter grade 1 to equip them to succeed in education, in work and in life.
Getting South Africa onto a high-growth trajectory demands that South Africa fundamentally changes its game plan and places small business at the centre stage in the fight against poverty, inequality and unemployment. We therefore take comfort to the President’s commitment to unlock opportunities for new economic entrants by among other interventions creating a more level playing field. Besides the President’s resolve to enact the Competitions Amendment Bill, we believe that the transformation of the structure of the South African economy and the size and configuration of the state is long overdue.
This brings the institutional and governance structure of our state-owned enterprises clearly under the spotlight. The President’s resolve to build a capable, ethical and streamlined state across all spheres of government and the economy will ensure a better, more consolidated and more coordinated effort to support growth in our country. State-owned entities should be the centre of our economic and developmental trajectory.
We wholeheartedly embrace the President’s recognition of the scale of Eskom’ crisis and the commitment to immediately embark on a process of establishing three separate entities – Generation, Transmission and Distribution – under Eskom Holdings. We agree that this will ensure that we isolate cost and give responsibility to each appropriate entity. Eskom is too big to fail; its failure will certainly collapse SA Inc. It is indeed imperative that we undertake these measures without delay to stabilise Eskom’s finances, ensure the security of electricity supply, and establish the basis for long-term sustainability. In responding to this challenge, we stand ready as business to jointly work out the details of a just transition at
Eskom that will address the needs of all those who may be affected.
It is time to give practical effect to our collective vision of accelerated, inclusive and sustainable growth. The President has once again sent a call to government and business to vigorously tackle unnecessary inhibitors to shared prosperity and social solidarity, including the scourge of corruption in the public sector and capture by an elite of vital public institutions. As business, we wish to respond to the President’s call by committing to continue to play our part in building a durable social compact for fundamental social and economic transformation.