Reaction to president Cyril Ramaphosa’s State of the Nationa Address (SONA) has been less than enthusiastic.
The president’s speech, heavily delayed due to petty politicking in Parliament, took a hopeful slant on South Africa’s many problems, with Ramaphosa insisting that government has a plan which is already in motion.
Notably, he said that the government cannot do it alone, and called on businesses and all South Africans to join government to work together to turn around the country’s fortunes.
But markets are not looking for inspired platitudes about hope for the future – they have been waiting for actual solutions to problems like high unemployment, low economic growth, failing state companies and policy uncertainty.
On this front, the president appears to have come up short.
Here’s what various sectors said:
Rand reaction – SONA was a non-event
The rand remained flat throughout the SONA, after trading sideways for the most part of Thursday.
According to Bianca Botes, Treasury Partner at Peregrine Treasury Solutions, there was little to energise the markets.
“In currency market terms, SONA has largely been a non-event, with little new coming to the fore in terms of policy and reform plans,” she said.
“We now turn our attention towards the budget later this month, waiting with bated breath for the “How” and “When” from finance minister Tito Mboweni.”
Intellidex – A PR win, but it’s mostly just talk
Intellidex analyst Peter Attard Montalto described Ramaphosa’s speech as a PR win, with okay policy, but little in the way of execution.
“The SONA scores highly for PR/rhetoric (an 8/10), actual policy is ‘ok’ (at a 6.5/10, being generous), but signs of any shifts towards implementation through specificity of timelines or named, delineated responsibility falls flat (2/10 at best),” he said.
“This was therefore a decent speech and a win in those narrow terms and will generate some buzz, yet only action will move business sentiment. ”
The analyst noted that the speech will raise expectations on a variety of policy fronts, which subsequently raises risks both politically and in terms of market disappointment – especially with the budget coming up so soon.
“As we have reinforced so much in the last year – PR and policy can both get ticks, but the proof is in the implementation where capacity is lacking, combined with a lack of urgency across the wider public sector – and the Presidency struggles to push implementation action downwards to where it matters.
“As such we think the positivity around this will eventually fade as delay (at best) sets in. The President will also have set up the perfect reasons for him to be removed if he does not deliver such specificity- in 2022.”
Realtors – We’ve heard this all before
Yael Geffen, chief executive officer of Lew Geffen Sotheby’s International Realty, said Ramaphosa’s opening address to Parliament lacked substance and would do little to boost domestic or international investor confidence.
“The world would be forgiven for thinking they were listening to a rebroadcast of 2019’s speech; we’re in the same place economically and a year down the line the president is talking about the same things,” Geffen said.
“Loadshedding is crippling the economy, corruption continues to plague government, our public service wage bill is bloated in the extreme, crime is rampant, the youth need employment and our economic outlook is dire, to say the least.
“The speech also failed to allay investor concerns about the future of private land ownership, which is going to be felt across the economy.”
Outa – Big plans, but where’s the action?
Civil action group Outa said that it wants to believe Ramphosa’s promises, but needs actual action to be convinced that they’re anything more than empty words.
“We want to believe in the vision and plans promoted during the President’s speech. However, unless the promises made are followed by concrete, faster implementation South Africa will remain in a precarious state. We are running out of time,” it said.
“Recognising that the state of the nation is heading towards a dire situation, the President listed numerous promising initiatives to stimulate the economy. These ranged from the promotion of IPPs, building infrastructure and reducing the barriers to doing business, to addressing corruption and the inefficient use of public funds.
The president’s vision, Outa said, can only become a reality when those in authority lead by example and begin a meaningful cost-cutting journey from the top.
“We still need to see the promised public performance agreements for ministers, along with a real “new culture of transparency and accountability”. While senior leaders implicated in state capture continue to walk free, society will remain rightfully wary in this regard.”
Auctioneers – Government is spinning impossible dreams
Joff van Reenen, director of South Africa’s property auctioneer High Street Auctions, said after the State of the Nation Address it’s clear government is not remotely equipped nor competent to lead the country out of its economic crisis.
“Any turnaround now will come from the private sector and business is going to be working alone to pull this country from what can only be described as ‘disaster’,” he said.
“This private-public partnership Ramaphosa has touted ever since he walked into the Presidency hasn’t materialised so far and will never get off the ground as long as the government’s policies continue to actively deter investment confidence.
“We need entrepreneurship, we need innovation and we need business to believe in the future of the country and step up to the plate. As far as government is concerned, the only thing it needs to get right and quickly is a stable power supply so that business can get on with the business of rescuing South Africa.”
Sage – Ramaphosa delivered a sober SONA
Pieter Bensch, executive VP, Africa & Middle East: Sage, said that the SONA addressed many of the concerns facing South Africa, but now required action.
“President Ramaphosa delivered a sober assessment of the challenges the nation faces along with realistic proposals about how these problems may be addressed,” he said.
“It is especially encouraging to see that the government is taking steps to ease the energy crisis, which has crippled growth and hurt the sustainability of so many businesses big and small.
“The promises to procure emergency energy, to let municipalities procure their own power from independent power producers, and fast-track self-generation licenses for large industrial users must be translated into urgent action.
“As the negative economic data for December 2019 shows, time is running out for our economy. Small businesses can’t afford to lose 20 business hours per week to load shedding.”
Bensch said that the president’s recognition of the crisis of youth unemployment, and of the importance of entrepreneurship in driving job and wealth creation is important.
“However, I am not sure that some of the top-down proposals for growing small businesses will necessarily be effective,” he said.