BLSA CEO’s letter 08 February
POSTED ON: February 8, 2021 IN BLSA CEO's Weekly, Covid-19, Economic policy, SOEs by BLSA
By Busi Mavuso
The state of the nation address is an opportunity for President Cyril Ramaphosa to set policy objectives and provide clarity on what the rest of the year is going to consist of.
This week we will hear the President’s state of the nation speech. It is an opportunity to set down policy objectives and provide clarity on what the rest of the year is going to consist of.
First, we need precise guidance on the vaccine strategy. We want a clear rollout plan that details when vulnerable groups will receive vaccinations. That will in turn make it clear when stress on hospitals will reduce and when the need for lockdown measures will dissipate. Business now needs that clarity in order to plan around the risks of a third wave which may reach us before critical mass of vaccinations has been achieved.
That is probably the easy part, though. The President also needs to detail how we as a country can lift our heads and look forward to the future, post the pandemic. The foundations need to be set now. Business worked alongside other social partners and government to develop the economic recovery plan that has been backed by cabinet.
We need now to move beyond planning to action. Everyone is aligned.
In last year’s Sona, the President promised that spectrum auctions and a fifth round of the renewable energy programme would happen in 2020. These still haven’t.
Of course, the pandemic interrupted many plans but it is now crucial that the President provides evidence that these will happen in short order. Along with these we urgently need wider reforms to energy policy, finalising long-promised reforms to visa policies for scarce skills, solidifying the infrastructure strategy to actually reach construction stage, and finalising mining sector reforms.
Last week, Eskom CEO Andre de Ruyter backed reforms to allow anyone to build their own generation facilities of up to 50MW without needing a licence, a move that would rapidly lead to large investments by companies in their own energy infrastructure. That, along with clarity on renewable energy timetables, could spur a green economy industrialisation wave to position South Africa as global leader in green tech. It would create many jobs and spur small business. But for that to happen we need clear timetables, clear policies and accountability for delivering on them.
Clarity on the renewable energy programme means backing the successful formula that has delivered four rounds so far, one that everyone from banks to construction firms understand well. Introducing uncertainty, particularly around the extent of local input required, would delay energy security, increase costs of bids and ultimately slow down the economic recovery and green industrialisation process.
Infrastructure has been central to the President’s economic strategy since he took office, calling for private investment to spur development. Yet there have been no new public-private partnerships registered since and therefore no opportunity to invest. In the economic recovery plan there is clear agreement that the Public Finance Management Act, Municipal Finance Management Act and their respective regulations need to be amended to make both PPPs and on-budget infrastructure delivery more straightforward.
The public sector has suffered a skills exodus and the cumbersome procurement process frustrates those left from quickly delivering infrastructure at all levels of government. A waste-water treatment plant in a small town has to follow the same process as a mega project like the Gautrain in order to be delivered through a PPP.
This is poor use of scarce resources. Yet we have heard nothing from National Treasury which oversees the legislation of plans to undertake amendments.
Business is ready pick up the infrastructure baton and run with it. Regulatory clarity would trigger major investment from communications infrastructure to mining exploration, without costing the state a cent. Similarly, an appropriate PPP framework would open many opportunities for the private sector to invest in, construct and operate public infrastructure.
We are ready to support the effort. This week the President can earn our trust and confidence to work with government on delivering. The future we see ahead would be far brighter for all South Africans.
The successful rollout of vaccines to health workers will provide the country with an opportunity to redirect its efforts to put the economy back on a recovery trajectory, I wrote in my Business Report column. It’s also critical that in meeting the goal of reaching about 40-million people, the state must work in partnership with business and labour. Over the short to medium term, our biggest growth risk is a slow and haphazard rollout of the vaccination programme.
To undertake a vaccination programme that will ultimately have to reach 67% of the population, or about 40-million people, is a daunting enough task for any country, let alone South Africa. I wrote in Business Day that we understand the magnitude of this test – it’s the first time the government has had to undertake such a challenge. Business is assisting the government in numerous areas to support a successful vaccine rollout.
This is a weekly newsletter from BLSA CEO Busi Mavuso.
BLSA is a business organisation that believes in South Africa’s future and shares the values set out in the Constitution. In 2017, BLSA signed a contract with South Africa, committing business to playing its part in creating a South Africa of increasing prosperity for all by harnessing the resources and capabilities of business in partnership with government and civil society to deliver economic growth, transformation and inclusion.
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