What SONA didn’t say

Last night’s SONA address from the President didn’t deliver for many people, not least business leaders who had hoped he’d touch on ways the private sector could become involved with government initiatives that have failed. Alas, this was not to be, and hackles would have been raised further with mention of the contentious NHI bill. It was definitely more that was left unsaid than what was said that has concerned industry professionals.

Here, two category experts from Momentum, Nkosinathi Mahlangu, Youth Employment Portfolio Head at Momentum Metropolitan and Jurgen Eckmann, Franchise Principal and Financial Adviser at Consult by Momentum weigh in on how the President’s speech was not quite what the nation needs.

Nkosinathi Mahlangu, Youth Employment Portfolio Head at Momentum Metropolitan

In terms of youth employment initiatives and progress, SONA 2024  fell short. The president looked deeply at the rear view mirror by reflecting on the last 30 years, and while he acknowledged a few gaps (such as the fact that our youth unemployment remains the highest it’s ever been), there was little emphasis on how to overcome these gaps. 

There were not many tangibles – vague references to employment opportunities, but there is a big difference between job opportunities and actual jobs. I would have liked him to give indication of whether these job opps equated to permanent jobs, in which sectors, provinces and even gender split (knowing that women are historically more disadvantaged than men). He also did not clarify on what role the private sector could play and what role the government could play going forward. 

He also mentioned an end to loadshedding was in sight, but again, little acknowledgement on the effect that loadshedding has on SMEs and youth owned businesses. An initiative to address this would have been very welcomed, as would have a mini report card that juxtaposed the state of loadshedding now with the state over a year ago, when he made his promises to end loadshedding.

Lots of infrastructure opps mentioned but again, my question is, will youth be actively brought in? They should. 

The president also mentioned an extension and “improvement” of the SRD grant, which sounds like an increase is on the cards. There are concerns over how sustainable this is, with such a small base of taxpayers already supporting such a large population. While he is adamant this will not create a grant-dependent society, we may very well be doing this, if we are not making severe strides in getting our youth employed and part of the taxpaying population.

It’s important to be optimistic, but we also need to be realistic. Youth unemployment remains a massive challenge. The president says the youth inspire our country – but the question is, does our country inspire the youth?

Jurgen Eckmann, Franchise Principal and Financial Adviser at Consult by Momentum. 

As a financial adviser, my job is to translate for my clients how SONA affects them and their investments. Economic growth is thus an area that always stands out to me. I need to understand what will lead to more investment in the country and better market performance. Our clients ask us where they should be investing; where they can expect to see sustained growth.

Unfortunately corruption, high unemployment, poor service delivery, high crime rates – these are all correlated and affect our economic growth. These were areas I wanted clarity on, but unfortunately, the address was a bit vague on details.

The president touched on involving the private sector in growth initiatives, which will lead to expansionary fiscal policy – but we needed more clarity. We’ve been stuck in a sluggish growth environment of 1-2% for some time now and the economy needs to grow more so that we can pull in foreign direct investment. Hopefully, BRICS will help from a trading perspective. However, severe logistical and infrastructural problems (Transnet) continue to derail us, and again, the address was thin on details here. The much-anticipated announcement of a new Transnet CEO also did not materialise, which was also disappointing.

I was also hoping for more detail on how NHI might be funded – can we expect an increase in VAT, personal income tax rates? This was skimmed over, with the president coyly mentioning that the bill was on his desk for signature, while he was ‘looking for a pen’. 

However, I am hopeful that the promised ‘energy revolution’ will create lots of jobs and it’s encouraging to hear about a Climate Change Response Fund. There was also talk about various initiatives and innovative funding mechanisms to improve our infrastructure challenges, and I am hopeful that this will help to grow our economy. But we will need action – not just talk of plans.