The Durban Chamber of Commerce and Industry welcomes the opportunity to comment on His Excellency, Matamela Cyril Ramaphosa, President of the Republic of South Africa’s 2020 State of the Nation Address.
Disruptive start to SONA
South Africa is facing severe socio-economic challenges and constrained growth. Strong and decisive leadership is required to set a tone that will help to reverse this trend. The disruptive start to the State of the Nation, given the context, significance and stature of the address, could negatively impact business and investor confidence and sentiment regarding South Africa and our economy. As organised business, we are appealing to the government and our elected representatives to be mindful of this, as the country needs to bolster business and investor confidence and sentiment.
In his address, President Ramaphosa touched on many promising and inspirational plans and initiatives aimed at addressing many of South Africa’s socio-economic challenges, focusing on youth development and addressing climate change as well as land reform. The Durban Chamber will focus on the main talking points for organised business; namely, state-owned enterprises and corruption.
State-owned enterprises (SOEs) hold a significant position in South Africa’s economy, playing a leading role in several crucial sectors such as utilities (electricity and water), transport (air, rail, freight, and pipelines) and telecommunications However, despite being vital to our national socio-economic agenda, South Africa’s SOEs are in a state of financial and operational collapse, suffering from chronic mismanagement, plagued by on-going corruption and characterised by a complete lack of adherence to effective governance and compliance frameworks. This is severely impacting the country’s economy and investment profile as well as negatively affecting our country’s growth and development prospects. Our failing SOEs are the leading cause of the constrained growth that South Africa has experienced over the past five years. The government needs to end the repeated bailouts of SOEs and government guarantees that are a drain on the economy and society as a whole, with taxpayers (organised business and ordinary citizens) bearing the brunt of the effects.
The Durban Chamber believes there is an urgent need to reform and diversify South Africa’s energy sector. We are pleased by President Ramaphosa’s announcement that government will action crucial legislation that will enable the development of additional grid capacity from renewable energy and that municipalities in good financial standing will be allowed to procure their own power from independent power producers. The Durban Chamber believes that this will provide relief to businesses, especially those that are dependent on energy for their operations. The business community anxiously awaits government’s timeline for the implementation of the promised initiatives and plans, including proposals on how organised business can support the government to action these plans.
South African Airways
The Durban Chamber is deeply concerned about the financial health of SAA, and by the fact that the President did not announce any concrete action plans related to the beleaguered national carrier. The eThekwini and KwaZulu-Natal business community’s primary concern is the recent announcement by SAA that it will be decommissioning all national routes except Johannesburg to Cape Town. The cancellation of domestic flights to Durban will have severe and direct operational impact on businesses across numerous industry sectors. It will also negatively impact the economic growth and development of the province as a whole. KZN has a thriving tourism sector, and this decision will negatively impact our entire tourism value chain leading to loss of revenue and job losses. The Durban Chamber believes that this decision needs to be reviewed as a matter of urgency and that the government needs to communicate a clear plan with timelines about the next steps for SAA. A public-private partnership may be the most viable route to rescuing the ailing airline.
Transnet and the Port of Durban
In 2019, the Durban Chamber had an interactive session with President Cyril Ramaphosa, Minister of Trade and Industry, Ebrahim Patel, and other cabinet ministers, in which organised business expressed their frustration regarding the inefficiencies, ineffectiveness and congestion at Durban’s Port which are costing KwaZulu-Natal billions of rand in revenue. We are pleased that the President has committed to undertake a “fundamental overhaul of the Durban port – the third-largest container terminal in the Southern Hemisphere – to reduce delays and costs”. The Durban Chamber has been having robust engagements with Transnet to find solutions that ensure that we have a fully functional Port of Durban.
However, as representatives of organised business, the Durban Chamber wants to know the actual implementation strategies and timetables for government’s plans and initiatives. In order to create a more stable and conducive environment for inclusive and sustainable economic growth and development, investors, organised business and stakeholders require details and specifics. As the adage goes, the “devil is in the details”, and all stakeholders need to understand their roles as well as the priorities, deadlines and tasks involved. No real information was communicated about recovery plans and actions for other failing SOEs such as Transnet, Passenger Rail Agency of South Africa, South African Broadcasting Corporation, Denel, PetroSA and South African Post Office.
Corruption and Non-Performance
The Durban Chamber acknowledges the President’s efforts to tackle the issue of corruption and for introducing performance management principles, processes and procedures into government. However, what is missing, in the case of corruption and state capture, is clarity on the remedial action and punitive consequences. So far, despite the abundance of evidence, no-one has been charged, tried and compelled to face the consequences of corruption. Corruption and state capture are a serious economic crime in South Africa that significantly exacerbates our socio-economic challenges. Until the criminals involved in state capture and corruption suffer severe consequences for their acts of economic sabotage, then there will be no real change in the status quo.