President Cyril Ramaphosa did very little to dispel the existing South African mood of despondency when he delivered his much-anticipated State of the Nation address on Thursday night.
This is according to two political analysts who say that although Ramaphosa did much to try to allay fears about the government’s plan to boost South Africa’s ailing economy, his speech was more about “what is to happen — not what is happening”.
Ramaphosa’s speech focused on four key priorities for 2021, namely: infrastructure, local production, job creation and the rapid expansion of energy-generation capacity.
He said the government had developed an infrastructure investment project pipeline worth R340-billion in sectors including energy, water, transport and telecommunications.
Ramaphosa added that resources have been committed from the fiscus to support the construction and rehabilitation of the major N1, N2, and N3 highways.
“These infrastructure projects will lead to the revival of the construction industry and the creation of much-needed jobs,” the president added.
To improve South Africa’s rail efficiency to compete with global markets, Ramaphosa said the government was repositioning Durban as a hub port for the southern hemisphere and developing Ngqura in Port Elizabeth as the container terminal of choice. The rail corridor from Gauteng is being extended to enable the export of vehicles through Port Elizabeth, he added.
Infrastructure spend
Political analyst Ongama Mtimka said that although he was excited about the rail project, which would generate a much-needed boost to the rural economy of the Eastern Cape, he was concerned about the delays in megaprojects, which, in turn, would delay economic growth.
“As far as infrastructure expenditure is concerned, it was the right message, given the fact that capital expenditure had been declining since 2018, according to the report from Statistics South Africa. We did need to see a growth of infrastructure spend, [which] is going to go a long way to revitalise the struggling construction sector,” Mtimka said.
“Ominously for [these projects], [their implementation] will depend a lot on Covid-19 restrictions: what the president had said last year — that 2020 would be the year that South Africa turned into a construction site — didn’t happen.
“With megaprojects, corruption tends to be a dampener of impact, as rent extraction is the opportunity cost for greater investment in socioeconomic infrastructure. You find that these projects tend to be delayed — and their impact on the economy tends to be delayed,” Mtimka noted.
The state of Eskom
Mtimka added that he was “extremely disappointed” with Ramaphosa’s lack of detail about how to fix Eskom, adding that more detail would have helped to convey a sense of whether the power utility’s turnaround strategy was gaining momentum.
Ramaphosa assured the nation that Eskom is making substantial progress with its intensive maintenance and operational excellence programmes to improve the reliability of its coal fleet.
He said the government was working closely with Eskom on proposals to improve its financial position, manage its debt and reduce its dependence on the fiscus. “This requires a review of the tariff path to ensure that it reflects all reasonable costs and measures to resolve the problem of municipal debt,” the president said.
Associate professor of the department of politics and international relations at the University of Johannesburg, Mcebisi Ndletyana, said that Ramaphosa had failed to emphasise a sense of urgency in fixing the power utility, adding that government had developed pathology of sorts, which seems to suggest that the “mere fact of talking is in itself celebrated as progress of achievement”.
“Things that should be happening are not happening. You then come to energy: Eskom is not doing well — we have always known that and we have been talking about reforming Eskom. Though most discussions have been going on for a while, one is not getting a sense that they are being concluded. The implementation is always deferred at a later date,” Ndletyana said.
“Eskom is the key to our economic revival, however, fortunately we have an abundance of resources elsewhere. One would have thought, given the shambles at Eskom, by now we would have fast-tracked licensing of independent power producers (IPPs).”
The DA’s response
Reacting to the speech, Democratic Alliance (DA) leader John Steenhuisen said Ramaphosa has failed dismally to ensure an affordable, reliable energy supply, adding that the country could expect stage six and perhaps even stage eight load-shedding, despite Ramaphosa’s 2015 promise it would take 18 months for the power utility to recover.
“Municipalities and large firms are still not allowed to purchase power directly from independent power producers, despite a commitment in last year’s Sona. Households and businesses are still not free to produce as much power as they like and feed excess power into the grid. The ANC government is literally a deadweight, pulling businesses and households down as they try to move up,” Steenshuisen said.