Sona 2020: Promises made and somewhat kept
Just less than a year ago President Cyril Ramaphosa’s plans were upended by the Covid-19 pandemic. The arrival of the deadly virus could not have come at a worst time. The country’s economy was already stalling and the government’s fiscal position was becoming precarious.
But even with Covid-19 forcing a change in priorities, the state, judging by the goals set out in the President’s 2020 State of the Nation Address still managed to achieve some of its most notable goals like the opening-up of the electricity market.
Eskom is on its way to being split up, municipalities can source their own electricity and the network is now open to independent power producers.
When it comes to bringing the corrupt to order, the creation of a “fusion centre”, which is an amalgamation of investigative and prosecuting authorities, has already resulted in several cases being brought to trial.
The industry “master plans” have also paid off. There is now expanded capacity in the poultry sector, carmakers have invested billions of rands, and the clothing industry has invested more than half a billion rand to expand local manufacturing facilities.
When it comes to rural development, the government has redistributed over 5 million hectares of land, totalling around 5 500 farms, to more than 300 000 beneficiaries.
Despite these successes, there are several disappointments. The state-owned enterprises (SOEs) are generally still a mess, the Climate Bill still has to be made law, and the mooted establishment of a Crime Detection University has been tired up in red tape.
The Covid-19 crisis also seemingly postponed some of the government’s most ambitious projects. There was no mention of a state bank and a sovereign wealth fund in the Medium-Term Budget Statement (MTBS). There was mention of National Health Insurance in the MTBS but it was noted that “capacity building” within the national Department of Health had been delayed.
There was also somewhat of an oddity in last year’s and this year’s address. For two years in a row, Ramaphosa said the waiting period getting a water usage licence was reduced to 90 days. Maybe he should speak to his officials because in November 2019, the Department of Human Settlements, Water and Sanitation already announced that it had cut down the time spent on processing Water Use License applications to 49 days.
For more on what was promised versus what was delivered look below:
Eskom
| What was promised | What happened |
| A Section 34 Ministerial Determination will be issued shortly, by the Minister of Mineral Resources and Energy, to give effect to the Integrated Resource Plan 2019, enabling the development of additional grid capacity from renewable energy, natural gas, hydro power, battery storage and coal. | In September, Nersa concurred with the Section 34 Ministerial Determination opening the way for the procurement of about 11 800MW of new production capacity. |
| We will initiate the procurement of emergency power from projects that can deliver electricity into the grid within three to 12 months from approval. | Also in September, Eskom said it had made progress in the procurement of 2 000MW of emergency power, which it hoped would be connected to the grid by December 2020. |
| Nersa will continue to register small scale distributed generation for own use of under 1MW, for which no licence is required. Nersa will ensure that all applications by commercial and industrial users to produce electricity for own use above 1MW are processed within the prescribed 120 days. It should be noted that there is now no limit to installed capacity above 1MW. | In October, Nersa confirms that the Minister of Mineral Resources and Energy has approved that it may process licence applications for self-generation facilities of above 1MW, even if they are not in compliance with the Integrated Resource Plan. |
| We will open bid window 5 of the renewable energy Independent Power Producers (IPPs) and work with producers to accelerate the completion of Window 4 projects. | Bid Window 4 wind farms are already connected to the grid, with a total of 1.3GW of new wind power capacity says the South African Wind Energy Association. Bid Window 5 auction has been delayed until the first quarter of 2021. |
| We will also put in place measures to enable municipalities in good financial standing to procure their own power from IPPs. | In October, the government allowed municipalities to procure power from IPPs. |
| The social partners – trade unions, business, community-based organisations and government – are committed to mobilising funding to address Eskom’s financial crisis in a financially sustainable manner. | In December 2020, government and its social partners signed the historic Eskom Social Compact, which outlines the necessary actions we must take, collectively and as individual constituencies, to meet the country’s energy needs now and into the future. |
Climate change
| What was promised | What happened |
| We will finalise the Climate Change Bill, which provides a regulatory framework for the effective management of inevitable climate change impacts by enhancing adaptive capacity, strengthening resilience and reducing vulnerability to climate change – and identifying new industrial opportunities in the green economy. | Bill has not been passed but is in the process of being finalised. |
Treasury
| What was promised | What happened |
| Minister of Finance will outline a series of measures to reduce spending and improve its composition. | The 2020/21 budget had to be revised to facilitate spending on the Covid-19 crisis. |
| We are engaged with labour and other stakeholders on measures to contain the public wage bill and reduce wastage. | Negotiations are still on-going and agreement has been reached. |
| Efforts to reduce government spending, prioritise resources more effectively, and improve the efficiency of our tax system are important – but insufficient – contributions towards stabilising our public finances. | The South African Revenue Service (Sars) is rebuilding its capacity. According to the MTBS, there are also plans to improve fiscal stability, which will see government develop a “comprehensive public-sector remuneration strategy for the medium to long term”, which will “include public office bearers, state-owned companies, public entities and local government.” |
| By working with the Auditor-General to reduce irregular expenditure, by shifting government spending from consumption expenditure to investment in infrastructure, we aim to improve the state of public finances. | To improve infrastructure planning and fast-track a project pipeline, an Investment and Infrastructure Office has been created in the Presidency. |
| Dealing with the slow pace of economic reform. | Government has implemented Operation Vulindlela, a joint initiative of the Presidency and the National Treasury that will implement structural reforms. Its goal is to speed up implementation of priority reforms determined by the President. |
| We have decided to establish a sovereign wealth fund as a means to preserve and grow the national endowment of our nation, giving practical meaning to the injunction that the people shall share in the country’s wealth. | In the MTBS, there was no mention of the sovereign wealth fund. |
| We are also proceeding with the establishment of a state bank as part of our effort to extend access to financial services to all South Africans. | There was no mention of the creation of a state bank in the MTBS. |
| We will be undertaking far-reaching economic reform measures that we will include those contained in the paper produced by The National Treasury, entitled Economic Transformation, Inclusive Growth and Competitiveness. | In October, government gave a breakdown of its Economic Reconstruction and Recovery Plan, which outlined the economic reforms it wanted to implement. Organised business has since called on timeframes to be given to these reforms. |
SOEs
| What was promised | What happened |
| This year, we are moving from the stabilisation of SOEs to repurposing these strategic companies to support growth and development. | In its annual report, the Department of Public Enterprises accepts that stability has not been attainted, despite “introducing new boards and management with the necessary experience and knowledge.This remains inadequate in resetting the SOCs [State Owned Companies] towards financial sustainability,” said Minister Pravin Gordhan. |
| In consultation with the Presidential SOE Council, we will undertake a process of rationalisation of our SOEs and ensure that they serve strategic economic or developmental purposes. | The SOE Council was formed in June, 2020 but its virtual inaugural meeting was only held in November. “The council will review business models, capital structure and sources of financing for SOEs and monitor and mitigate risks,” said acting spokesperson Tyrone Seale. |
Railways
| What was promised | What happened |
| We are modernising the Passenger Rail Agency of South Africa’s rail network. The Central Line in the Western Cape and the Mabopane Line in Pretoria have been closed for essential refurbishment and upgrades. We are investing R1.4 billion in each of these lines to provide a safe, reliable and affordable service. | The Department of Transport increased the amount budgeted for capital spend on railways from R91.9 million in 2018/19 to R600 million in 2019/20. The Rolling Stock Fleet Renewal budget went from R4.7 billion in 2018/19 to R5.8 billion in 2019/20. |
South African Airways (SAA)
| What was promised | What happened |
| The extent of the state capture, corruption and mismanagement in SOEs is best demonstrated at South Africans Airways [SAA], which was placed in business rescue late last year. The business rescue practitioners are expected to unveil their plans for restructuring the airline in the next few weeks. In the interests of South Africa’s aviation industry and our economy, it is essential that a future restructured airline is commercially and operationally sustainable and is not dependent on further government funding. | The issues around SAA have still to be resolved. Government has said it was close to finding a new equity partner for the airline. |
Water
| What was promised | What happened |
| Water use licences, which are essential to operations on farms, factories and mines, have previously taken an inordinately long time to process, sometimes up to five years. We are able to announce that water use licences will now be issued within 90 days. | The Department of Human Settlements, Water and Sanitation had already announced in November 2019 that it had cut down the time spent on processing Water Use License Applications to 49 days. |
Ports
| What was promised | What happened |
| During the course of this year, we will undertake a fundamental overhaul of the Durban Port – the third largest container terminal in the Southern Hemisphere – to reduce delays and costs. | Programmes have commenced to refurbish the mobile harbour cranes in Durban’s Multi-Purpose Terminal, the ship loader at its Maydon Wharf Bulk Terminal, and the ship-to-shore cranes at the container terminal. |
New university
| What was promised | What happened |
| We have decided to establish a new University of Science and Innovation in Ekurhuleni. Ekurhuleni is the only metro in our country that does not have a university. | A feasibility study had to be done to establish the nature and scope, as well as location of the new institution and [will] then [be] submitted to the minister for approval by September 30, 2021. |
Police and National Prosecuting Authority (NPA)
| What was promised | What happened |
| Specialised units – bringing together the South African Police Service (SAPS) and the National Prosecuting Authority – are mandated to combat these crimes of economic disruption. | A fusion centre, which brings together key law enforcement agencies to share information and resources has been established. The centre has brought many cases to trial and preserved or recovered millions of rands in public funds. |
| Anti-gang units will be further strengthened, with priority given to the Western Cape, Eastern Cape, Gauteng and the Free State. | The anti-gang unit in the Western Cape suffered a serious set back with the assassination of Lt-Col Charl Kinnear. His murderer has not been identified and his death has brought to light sharp divisions in the police. |
| To improve the quality of general and specialised SAPS investigations, we are establishing a Crime Detection University in Hammanskraal. | In response to a parliamentary question on the matter in June, the Minister of Higher Education, Science and Technology said in terms of the Higher Education Act the proposed institution for crime detection in Hammanskraal could not be established immediately as a university. The Act allowed for new institutions to be established as either Higher Education Colleges or University Colleges. The decision on whether this institution would be established as a university college or a higher education college would be dependent on the outcome of a feasibility study that should first be undertaken. |
| We will amend the Domestic Violence Act to better protect victims in violent domestic relationships and the Sexual Offences Act to broaden the categories of sex offenders whose names must be included in the National Register for Sex Offenders, and we will pass a law to tighten bail and sentencing condition in cases that involve gender-based violence (GBV). | The National Strategic Plan on Gender-Based Violence was established in April 2020. To give effect to this, three key pieces of legislation were introduced in Parliament last year to make the criminal justice system more effective in combatting gender-based violence. In 2019/2020, a total number of 1 153 from a total of 1 154 police stations rendered a victim-friendly service to victims of rape, sexual offences, domestic violence and abuse. There are 1 090 victim-friendly rooms, including 1 001 at police stations, 38 at satellite police stations, one at a contact point, two at international airports and 48 at family violence, child protection and sexual offences units. |
Youth development
| What was promised | What happened |
| On youth employment, as from today, we begin the implementation of the Presidential Youth Employment Intervention – six priority actions over the next five years to reduce youth unemployment. | Last year, the national Pathway Management Network – which now has 1.2 million members – was set up to provide support and opportunities to young people across the country. |
| As part of this intervention, the National Youth Development Agency and the Department of Small Business Development will provide grant funding and business support to 1 000 young entrepreneurs in the next 100 days – starting tomorrow. | The National Youth Development Agency and the Department of Small Business Development would provide grant funding and business support to 1 000 young entrepreneurs within 100 days. It reached this target by International Youth Day August 12, 2020. |
SMMEs
| What was promised | What happened |
| To create a larger market for small businesses, we plan to designate 1 000 locally-produced products that must be procured from small, medium and micro Enterprises. | Cabinet approved the SMME-focused localisation policy famework which identified the 1 000 products. |
Master plans
| What was promised | What happened |
| A new special economic zone auto hub in Tshwane, as part of the Auto Master Plan, is expected to expand production and local manufacture of components. | The Ford Motor Company announced a R16 billion investment to expand their manufacturing facility in Tshwane for the next generation Ford Ranger bakkie. This investment will support the growth of around 12 small and medium enterprises in automotive component manufacturing. Nearly half of the procurement spend on construction of the bulk earthworks and top structure at the Tshwane Special Economic Zone during this phase is expected to be allocated for SMMEs, an amount equal to R1.7 billion in procurement opportunities. Toyota has invested in their KwaZulu-Natal facility to start production of the first generation of hybrid electric vehicles to come off a South African assembly line. This follows investment announcements by Nissan, Mercedes Benz and Isuzu in expanded production facilities, all of which cement South Africa’s position as a global player in auto manufacturing. |
| The Clothing and Textiles Master Plan, which was signed last year, aims to create 121 000 new jobs in the retail-clothing textile and footwear sector over the decade. | So far 85 million units of additional clothing and footwear [have been committed] from local manufacturing. Since the signing of the clothing, textile, footwear and leather masterplan in November 2019, the industry has invested more than half a billion rand to expand local manufacturing facilities, including SMMEs. |
| The Poultry Master Plan to support chicken farmers and processors and save 54 000 jobs while also creating new jobs. | Through the implementation of the Poultry Master Plan, the industry has invested R800 million to upgrade production. SA now produces an additional one million chickens every week. |
| We have developed a plan with farmers and industrial users to save jobs in the sugar industry and will finalise a Sugar Master Plan within the next six weeks. | The sugar master plan was signed during the lockdown, with a commitment from large users of sugar to procure at least 80% of their sugar needs from local growers. Through the implementation of the plan, last year saw a rise in local production and a decline in imported sugar, creating stability for an industry which employs some 85 000 workers. Support for small-scale black farmers is being stepped up, with a large beverage producer committing to expand their procurement sharply. |
Land and Agriculture
| What was promised | What happened |
| Government stands ready – following the completion of the Parliamentary process to amend section 25 of the Constitution – to table an Expropriation Bill that outlines the circumstances under which expropriation of land without compensation would be permissible. | The Government published a draft Expropriation Bill in its Gazette on October 9, 2020 and this is on track to be finalised by the end of March. |
| To date, we have released 44 000 hectares of state land for the settlement of land restitution claims, and will this year release round 700 000 hectares of state land for agricultural production. | This provides an opportunity for further public-private partnership in agriculture to promote transformation and ensure sustainable growth. It is an opportunity to accelerate land redistribution through a variety of instruments such as land restitution, expropriation of land in order to boost agricultural output. To date, government has redistributed over 5 million hectares of land, totalling around 5 500 farms, to more than 300 000 beneficiaries. This is in addition to the land restitution process, which has benefited over two million land claimants and resulted in the transfer of around 2.7 million hectares. We are also pursuing programmes to assist smallholder and emerging farmers with market access, to develop skills across the entire agricultural value chain and increase the number of commercial black farmers. |
| This year we will open up and regulate the commercial use of hemp products, providing opportunities for small-scale farmers; and formulate policy on the use of cannabis products for medicinal purposes, to build this industry in line with global trends. The regulatory steps will soon be announced by the relevant ministers | The Government planned to finalise the Cannabis Master Plan and was hoping to implement it in the current financial year. In July the Department of Agriculture, Land Reform and Rural Developments said for the plan to take effect, it and other departments were still figuring out how to deal with the court judgment on growing marijuana for personal use, and also drafting licences which regulates the use of cannabis. |
Health
| What was promised | What happened |
| We have noted the enthusiastic support from South Africans during public hearings on the National Health Insurance (NHI), and are putting in place mechanisms for its implementation following conclusion of the Parliamentary process. | “National health insurance could improve healthcare services from both public and private providers. However, progress has been slow. The National Health Insurance Bill is being processed by Parliament and capacity building within the national Department of Health has been delayed. Nonetheless, there are useful lessons from public- and private sector collaboration during the Covid-19 pandemic,” the MTBS noted. |
Source: moneyweb.co.za
