SONA 2019 REACTION: Fixing Eskom a ‘big ticket item’

Prof. Raymond Parsons

The crucial test of the State of the Nation (SONA) message this evening will be the successful implementation of planned policies and projects.  This is according to NWU Business School Economist Professor Raymond Parsons.

Parsons says that the wide-ranging SONA delivered by President Cyril Ramaphosa recognised the importance of promoting higher and inclusive economic growth, together with structural reforms, if SA is to create a bigger, stronger and better economy.

“The key references in the SONA to making it easier to do business in SA, reducing policy uncertainty and removing constraints on investors are therefore welcome. These are essential requirements if SA is to be a preferred investment destination.”

He adds that the challenge in rebuilding confidence nonetheless remains one of the effective implementation of policies and projects and of creating the necessary state capacity to do so, in collaboration with the private sector where necessary.

“SA will have to dramatically raise its economic game if the growth and employment targets outlined in the SONA are to be achieved and challenges of unemployment, poverty and inequality are to be more adequately addressed. ‘We must get the economy working again’ is just the initial point of departure towards a better economic dispensation.”

Fixing Eskom was understandably a ‘big ticket item’ in the SONA address, “which correctly referred to the Eskom situation as a ‘crisis’ requiring urgent attention to promote investor confidence.”

Parsons states that the intended measures announced in the SONA to refinance and restructure Eskom are steps in the right direction, but further details are needed to see to how successful they will eventually be in stabilising Eskom.

“The latest SONA confirms that SA’s political economy remains complex. Against a backdrop of muted economic growth and the dynamics of the upcoming elections on May 8, there is inevitably still much ‘unfinished business’ on the SA’s national agenda. This ranges from the forthcoming Budget to the outcome of the land reform process, which could be sources of continued policy uncertainty this year.

“It therefore seems likely that the SA economy, although in recovery mode, will remain basically in a ‘holding pattern’ for most of 2019, until certain political and economic issues are resolved or trends become clearer,” Parsons concludes.

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