Energy crisis to be a big focus of Sona speech

President Cyril Ramaphosa will deliver his seventh state of the nation address on Thursday at a parlous juncture in his tenure.

An energy crisis dating back to 2008 dramatically intensified last year and rolling blackouts have been imposed for 102 consecutive days to prevent the grid from collapsing, hobbling the economy. There’s also widespread public anger over a 33% unemployment rate, surging living costs and the near collapse of government services in many towns.

With next year’s elections gearing up to be the most hotly contested since apartheid ended in 1994, Ramaphosa needs to provide solutions to the country’s myriad problems to bolster his chances of winning another term. He’ll deliver his speech in the Cape Town city hall, because parliament is still being rebuilt after being gutted by a fire.

These are some of the key issues the president is likely to address.

1. Power shortages

Steps to curb the electricity outages and put troubled state power utility Eskom back on a sound financial footing are likely to be front and centre of Ramaphosa’s speech. The government has said it’s considering declaring a state of disaster to tackle the crisis and the president could spell out what that will entail. He’s also likely to touch on a plan announced last year for the government to take over as much as two-thirds of Eskom’s R396-billion of debt, with finance minister Enoch Godongwana set to announce details of the bailout in the 22 February budget. Incentives for households and companies that install their own electricity-generation capacity may also be on the cards.

2. Government reorganisation

The ANC decided at its national conference in January to place several state entities that are currently overseen by the ministry of public enterprises under the control of line ministries, and Ramaphosa could set out what’s envisioned. The options include getting Eskom to answer to the energy ministry and moving state logistics company Transnet and South African Airways to the ministry of transport. The president has also faced calls to split the department of mineral resources & energy in two, and to amalgamate some smaller departments.

3. Wage costs

Civil servants’ salaries have risen by an annual average of two percentage points above inflation for the past decade, and paying them now accounts for almost a third of state expenditure. Even so, unions representing state workers last year demanded raises of as much as 10% to offset the spike in living costs. The government said that was unaffordable and unilaterally implemented a 3% wage hike. The deadlock continues and Ramaphosa could give a steer as to whether the government will continue digging in its heels or is prepared to compromise. Ratings companies have consistently flagged the wage bill as a key fiscal risk.

4. Infrastructure investment

Ramaphosa has consistently flagged increased investment in new rail links, roads and other infrastructure as a way of kick-starting the ailing economy and creating jobs. With a number of state entities and departments repeatedly failing to implement projects and returning the money to national treasury, the president could announce new measures to compel them to spend their budgets. He’s also likely to reiterate calls for private companies to partner with the government on infrastructure projects.

5. Tackling crime

The government has made little progress in tackling rampant crime and the country’s murder rate remains among the highest in the world. No one has been held to account for a series of mass shootings over recent months or for a bout of civil unrest in 2021 that claimed 354 lives. Ramaphosa, who announced the recruitment of thousands of additional police officers last year, is expected to unveil additional measures to ensure law enforcement is beefed up.  — S’thembile Cele, (c) 2023 Bloomberg LP

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