President Cyril Ramaphosa must be brave enough to give a real diagnosis of South Africa when he delivers his State of the Nation Address on Thursday evening, several economists agreed.
Ramphosa’s fourth address – since taking over the presidency in February 2018 – comes as the economy continues to limp along gingerly, crippled by rolling blackouts, growing unemployment and inequality.
The ANC president is leading an impatient nation which is calling for more action against corrupt officials.
Ramaphosa has often spoken to all those issues, been on investment drives, and promised to clamp down on corruption, but it seems this has not been enough.
News24 spoke to several economists, who set out some of the key issues Ramaphosa needs to address urgently. They warned of the threat to his reputation and that of the government and the ANC if the head of state delivers yet another SONA speech full of anecdotes.
SOEs urgent attention
Hugo Pienaar, chief economist at the Bureau of Economic Research, suggests Ramaphosa should have a shortlist of priorities.
“If you look at countries that have gone through difficulties in the past, those who were successful in getting out of the hole only focused on a few key things, instead of 20 things,” Pienaar said.
He says one of the key areas the president needs to focus his energy on are state-owned enterprises, including Eskom and SAA.
On Eskom, Pienaar says it would be helpful if the president stood up and gave his full support to the team being led by André de Ruyter.
The new CEO of the embattled parastatal officially started the job in January.
Pienaar says Ramaphosa and his government need to make it clear they fully support the new CEO and the strategy he is developing to resolve the country’s energy crisis.
“In the past, they have said ‘keep the lights on at all cost’ and the severe consequences of that we have seen,” he said.
Government, including Ramaphosa’s administration, has in the past been criticised for interfering in the operational management of parastatals, frustrating the executive teams tasked with improving their performance.
Turning his focus to SAA, Pienaar says the business rescue practitioners (BRPs) currently in control of the airline have to be given space to do their job.
“[There is no] full evidence, but we are already seeing indications of that. Think about the sudden loan from the Development Bank of Southern Africa.”
Just last week, Ramaphosa said he disagreed with the business rescue team’s decision to cut several international routes and all domestic routes, except flights between Johannesburg and Cape Town.
Pienaar says the president must target the public wage bill to rein in government’s exorbitant expenditure.
“What you also want is for him to stand up next and say, ‘Look we are sorry, we have run out of options, we need to cut back on the wage bill, Cabinet has agreed and this is what we are going to,’.
Can Ramaphosa give SA a proper diagnosis?
While economist, researcher and strategy consultant Xhanti Payi recognises that Ramaphosa needs to address a wide range of issues, he’s concerned the president isn’t be able to give a proper State of the Nation Address, as he doesn’t know what the state of the nation is.
“I think our president refuses to go there, to give a proper diagnosis of the state of the nation,” says Payi.
He says, while Ramaphosa is expected to highlight some of his administration’s achievements over the past year, he needs to be frank when discussing challenges, along with their root causes.
Highlighting the government’s approaches to inclusive growth, youth unemployment and land redistribution as being problematic, Payi complained of outdated economic models, and a leader out of touch with the true nature of these challenges.
“We do need to go back to the basics, to be told what problems we face. We don’t want to hear this nonsense based on rumours of what is happening. What is the actual scientific diagnosis of what we are facing.”
“We can’t go on about anecdotes and rumours,” he adds.
Payi says the overarching issue lies with lack of research, saying Statistics South Africa has not been able to conduct key studies that will allow for a proper understanding of the country’s challenges.
Instead of Ramaphosa pouring money into commissions, a fraction of those financial resources could have been directed towards research to allow for the development of fresh research to help government develop better plans, Payi reasoned.
Ramaphosa must wake up
While Ramaphosa is hard pressed to deal with urgent problems, he will also be mindful of how he is shaping his own legacy.
Chief executive of Pan-African Investment and Research Services, Dr Iraj Abedian, says Ramaphosa has wasted too much time talking.
“Not only has the South African economy suffered from too much talk and no action, he himself is on the verge of losing credibility,” noted Abedian.
He, like the other economists News24 spoke to, believes Ramaphosa already knows the problems facing the country, but is still dragging his feet and fast running out of time.
Abedian says Ramaphosa has to show himself to be “alert” to the reality on the ground, as well as the impact of a contracting economy on the broader society, especially on the poor and unemployed.
He says, based on the first part of Ramaphosa’s presidency, it’s becoming hard to believe he will deal with deep problems, such as the state of South Africa’s broken SOEs. He questions how the president, who has been in government since 2014, seems to be clueless about how deep some of the country’s problems run.
“The nation is impatient, and the market is on the verge of regarding his speeches and talks as hollow and empty promises.”