Sona: Five key things to watch for

South African President Cyril Ramaphosa will deliver his last state-of-the-nation address before the country holds national elections that are gearing up to be the most hotly contested since apartheid ended three decades ago.

Read/ listen: Sona 2024: What we actually need to hear

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The president will likely take stock of the work his administration has done, leaving the announcement of new initiatives to another keynote speech that will be delivered after the vote. The address to lawmakers on Thursday evening in Cape Town comes two weeks before his party presents its manifesto to voters.

Watch the livestream of the Sona on Moneyweb at 7pm on Thursday. 

Here are the key things to watch out for:

1. The election date

Ramaphosa proclaimed the date for the 2019 elections in a state-of-the-nation address and may do likewise this week — on Wednesday his spokesman said an announcement will be made within 15 days. Once that happens, the date will be published in the Government Gazette and the voters’ roll will close. The vote must take place by August and several opinion polls show the ruling African National Congress risks losing its national majority for the first time since it took power under Nelson Mandela in 1994.

Read: Ramaphosa to announce election date by 23 February

2. Income grants

There’s been a tug-of-war within the government over whether a temporary R350 monthly stipend that was introduced to cushion the unemployed against the fallout from the coronavirus should be made permanent. The National Treasury has called for a comprehensive review of the entire welfare system and warned that the income grants are unsustainable unless new sources of revenue are found. But the ANC insists that an extension to the stipends is non-negotiable and Ramaphosa told a party meeting last month that there is “a strong case for a permanent form of a targeted income-support grant for the unemployed within our fiscal constraints.” If he does pronounce on the matter, it will likely fall to Finance Minister Enoch Godongwana to spell out where the money will come from when he delivers his annual budget on 21 February.

Read: Ramaphosa hints at income grant as election nears

3. Energy and rail crises

Ramaphosa is likely to elaborate on what is being done to tackle power shortages and logistical snarl-ups that have hamstrung the economy, but isn’t expected to unveil new overarching plans. The country endured record blackouts last year, some lasting as long as 12 hours a day, because state utility Eskom Holdings couldn’t keep pace with demand for electricity from its old and poorly maintained plants. While private investors have been enlisted to bring new capacity online, the process has been a bumpy one. Transnet, the struggling state-owned company that runs the freight rail network and all the main ports, has committed to implementing a turnaround plan to address complaints from mining companies and farmers that they can’t get sufficient volumes of their goods to market. In December, the government agreed to provide the company with R47 billion in debt guarantees and Ramaphosa may signal whether more support will be forthcoming.

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Read all our Eskom and Transnet coverage.

4. Healthcare reform

Late last year, lawmakers signed off on the contentious National Health Insurance Bill, which seeks to facilitate the provision of universal access to health care through a centrally managed government fund that buys services and medicines from public and private providers. The legislation has been referred to the president, who can either assent to it, or ask the legislature to amend it if he deems it to be legally or technically flawed. While Ramaphosa is unlikely to announce that he has signed off, he may signal how close he is to a decision. Business groups and opposition parties say the law erodes the constitutional rights of both patients and healthcare professionals and they intend challenging it in court if it is adopted in its current form.

Read: NHI means 31% more tax and 69% less benefits for medical scheme members

5. Government overhaul

The Treasury has been working with the presidency on a plan to restructure the cabinet, which has expanded since Ramaphosa took office in 2018 despite his repeated commitments to slim it down. The president may spell out what concrete action will be taken to reduce the number of ministers and deputies, and merge departments with similar mandates, should he win another term. Rationalisation will go some way toward helping the Treasury contain a runaway public-sector wage bill that is destabilising public finances.

© 2024 Bloomberg

William Murphy

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