Sona ticked many of the right boxes but is short on specifics
The overarching focus of President Cyril Ramaphosa's 32-page speech was inclusive growth. Issues covered included the energy crisis, public finances, SOEs, job creation, education and training, safety and security, corruption and state capture, and infrastructure among others.
Sona 2020 ticked many of the right boxes, indicating that Ramaphosa has recognised the key areas of intervention necessary to address the country's problems.
But it was very long on commitments, short on specifics regarding implementation modalities, timelines and budgetary implications of chosen proposals. We will need to wait for finance minister Tito Mboweni's budget to get a clearer indication.
We have an elephant to swallow, and we definitely cannot do that in one bite.
The policy agenda needs to be more focused, targeting a handful of areas for immediate intervention. Nevertheless, Ramaphosa's speech addressed some key areas.
Youth unemployment is the biggest crisis we face at present. Ramaphosa proposes to address this crisis by expanding employment opportunities for young people and supporting youth entrepreneurship.
The Presidential Youth Employment Intervention contains six priority actions to be implemented over the next five years:
Creating pathways for young people into the economy by providing support, information and training where they are;
Changing the way young people are prepared for the world of work through shorter more flexible courses in skills that employers in fast-growing sectors need;
Supporting youth entrepreneurship in innovative ways;
Scaling up the Youth Employment Service and exposing youth to workplace training;
Establishing the Presidential Youth Service programme; and
Setting aside 1% of the budget to fund a youth employment initiative.
This intervention, if implemented effectively, should remove structural barriers preventing young people from accessing employment and entrepreneurial opportunities. However, the government should introduce youth development strategies that factor in class, race and gender differences. State departments and agencies responsible for youth development must be capacitated to implement Sona proposals.
Restructuring the energy system
Energy is a major requirement for economic recovery and structural reforms. Ramaphosa cleared the air about load-shedding, announcing it will be an ongoing reality for the foreseeable future as Eskom seeks to stabilize its generation capacity.
In the meantime, the energy system will see some restructuring, with the state making provision for small-scale distributed generation under 1MW, for commercial and industrial users to produce electricity for own use over 1MW and for municipalities in good standing to buy their own power from independent power producers (IPPs).
There will be a bigger role for renewable energy. More projects from IPPs will be brought online and government will negotiate supplementary agreements to source additional capacity from existing wind and solar plants.
These proposed interventions should be supplemented by social partner collaboration. Government, business and labour must work together to produce positive socio-economic outcomes in this energy transition.
This requires a framework agreement, which covers important development aspects such as employment creation, reskilling, local content designations and support for displaced workers.
Efforts to restructure the economy must address apartheid spatial development, encourage (re)industrialisation, promote labour-intensive sectors and address market concentration through competition policy.
Implementation of infrastructure projects identified under the Infrastructure Fund, if done right, will have a positive effect on rebuilding the construction sector. Infrastructure has the potential to create employment and produce other multiplier effects in the economy.
The plans for key sectors such as automotive, clothing and textile, poultry and sugar are important as these sectors have the potential to absorb low skilled and semi-skilled labour. More attention needs to be placed broadly on expanding the manufacturing and agricultural sector's contribution to employment.
Fixing local government
Executing the government's plans hinges on strong state capacity, particularly at local government level. Expansion of the district development model, which focuses state efforts at the locus of development by providing support for local government, is welcomed.
But this needs to be accompanied by implementing the auditor-general's recommendations on strengthening public finance management by municipalities and accountability, as well as implementing consequence management for maladministration, wastage and corruption.