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State of the Nation Address

21 June 2019 Commentary by Johann Els, Chief Economist at Old Mutual Investment Group

The State of the Nation (SONA) address is not usually a forum for detailed policy announcements, despite February’s SONA differing slightly from the norm. It is usually all about policy certainty and building confidence. With this is mind, while the President’s latest State of the Nation Address did not provide much detail, I view it as an overall positive message with full acknowledgement of the problems facing South Africa, as the President delivered on the most pressing issues and focused largely on the economy and lack of growth.

This included the reaffirming of the Reserve Bank’s constitutional mandate as well as further support for Eskom. With regard to Eskom, the R230bn allocated in the budget over the next 10 years will be frontloaded (but no detail around that) and a new CEO and the Chief Restructuring Officer will be appointed soon.

The National Development Plan (NDP) was also mentioned a few times during the speech as the way to get growth going, with one of the key targets being to get growth to exceed population growth. This was a big positive in my view as there is no time to develop new plans. The NDP is a very good plan, but it needs to be implemented as soon as possible.

Other positive factors to note included the continued emphasis on public private partnerships, the telecommunication spectrum licensing process that will be started, reference to the focus on reducing the cost of business and how we need a ‘world-class visa regime’ to boost tourism.

Overall, an encouraging message, but now we need action and implementation as the country cannot afford any further delays.

Quick Polls

QUESTION

South Africa’s economy is facing major policy and market challenges in 2025. As an adviser or broker, what concerns you the most?

ANSWER

Erosion of private property rights
Government interference in free trade
Inflation, administered prices
Weak growth, high debt
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