‘Bland’ SONA sets low expectations for the 2024 Budget

 ·9 Feb 2024

President Cyril Ramaphosa’s “bland” State of the Nation Address (SONA) delivered on Thursday evening points to no big shocks or significant shifts in policy heading into the 2024 Budget.

According to Investec analyst Annabel Bishop, the SONA covered many topics and noted recent and past progress – but ultimately the speech “failed to show urgent measures to reduce severe growth impediments” for the country, she said.

This means that the 21 February budget is also unlikely to shift the dial on South Africa’s big problems, the biggest being that the government is overspending and under-collecting (revenues) and turning to debt to pay its way forward.

Commenting on the SONA overall, Bishop noted that the president merely touched on the same themes he has been running through each year, showing limited progress in eradicating the various crises gripping the country.

“The extreme electricity and freight crises are severe impediments to growth, and the SONA failed to fully open up these sectors to the private sector, dulling business sentiment towards the address. Little to spur faster growth was announced,” she said.

Ramaphosa did try to spin some of South Africa’s challenges in a positive way – but facts on the ground easily countered these.

For example, the president stated with confidence “that the worst is behind us and the end of load shedding is finally within reach”. However, Bishop noted that 2024, to date, is already seeing a worse average performance in energy availability – even compared to 2023, which was the worst year on record for load shedding.

“The electricity availability factor (EAF) for 2024 is 51.6% to date, versus 54.7% for the full year of 2023 – with the EAF the ratio of the available electricity versus the installed capacity (or maximum amount that can be produced),” she said, adding that the country’s own draft IRP does not see load shedding ending before 2028.

Other big themes faced similar contradictions – such as the president talking up taking action on corruption while the recommendations of the Zondo commission of inquiry into state capture have still not been implemented and implicated persons still sit in his cabinet.

The president also talked big on the partnership between the public and private sectors – while also taking time to joke about signing the National Health Insurance Bill into law, which threatens private healthcare and will ultimately see entire businesses shut down.

This puts South Africa’s various crises into sharp focus, with the SONA delivered by Ramaphosa doing nothing to signify change.

To the budget

Looking ahead to the 2024 budget, Bishop said that finance minister Enoch Godongwana is also unlikely to present a vastly different picture than what was delivered in the medium-term budget in November 2023.

She told the No Ordinary Wednesday podcast this week that South Africa’s problems in rail, freight, the ports, load shedding, crime and corruption still persist – and economically, things in the country haven’t really changed much since November either.

“We continue to overspend and under-collect (thanks to the weak economy). We’ve increased borrowings and projected borrowings. Usually, we see quite big revisions (by the time of the February Budget) – this time around, it’s highly unlikely,” she said.

Read: SONA 2024 reactions: Ramaphosa pats himself on the back while South Africa sits in crisis

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