As President Cyril Ramaphosa today delivers his State of the Nation Address (Sona), he will have to deliver the best speech of his career: a well thought out, strategic vision to enable South Africa to economically grow.
South Africa, with a flat-lining economy, faces the triple challenge of poverty, inequality and unemployment.
And as Ramaphosa steps up to the podium, the family approach will not win him any favours, nor will empty promises made to South African citizens, who are tired of the lack of service delivery, escalating crime and bad policy decisions, among other woes.
Spinning out the old rhetoric of how far South Africa has come since apartheid just won’t cut it, nor distract from the real issues at hand, amid a cost of living crisis that has made the poor, poorer; left the middle class decimated; and the wealthy looking offshore.
This as Shoprite’s Food Index report last year found that nearly half of South Africa ’s population will be food insecure by 2025.
But this is not Ramaphosa’s first rodeo in facing a difficult Sona.
Back in 2018 a much more shiny Ramaphosa came to lead the country, at a time it was facing a recession. He had the bad luck to be in office amid Covid-19 and then the cost of living crisis, amid a global wave of high inflation.
However, today a dented Ramaphosa will deliver his Sona 2024.
And as we watch Ramaphosa deliver his speech, South Africans cannot help but reminisce on the high hopes we held for him back in 2018, following then president Jacob Zuma's resignation and the lost state capture years.
Ramaphoria was the New Dawn for the country with investors and markets welcoming a safe pair of hands.
However, that honeymoon is well and truly over and after the Phala Phala farm scandal, the President’s reputation is left tarnished.
While the President told eNCA, that his “conscience is clear on Phala Phala”, the fact of the matter is that the scandal nearly sunk him.
It has left his political stature weakened amid the gruelling politics of an election year.
Those supposed “safe” hands don’t feel that way.
Under Ramaphosa’s tenure, the economy has got itself into chronic debt, with little growth expected ahead.
In its World Economic Outlook last week, the International Monetary fund slashed South Africa’s gross domestic product forecast to 1% in 2024, significantly down from 1.8% previously forecast in October 2023.
Ramaphosa in office as President is responsible for government policy and an enabling business environment.
South Africa faces several crises, ranging from logistics (transportation, freight and ports); water infrastructure; energy and crime/corruption, among others. This is the President’s terrain.
The business sector has also taken to telling all and sundry it is the only thing preventing South Africa from becoming a failed state. And in many ways it is not wrong.
And while this sounds admirable, it is not. The government needs to govern, not hand out the state silver to privatisation.
Business wants to make money and profit, that is what it does. But it has a dark side. One only has to look at Steinhoff to know that.
Yes, competition is very healthy and business can enable that, but only with careful regulation, otherwise, business will do what it does best, try to make a quick buck.
So Ramaphosa needs to tread very carefully on the way forward.
For example, Business Report recently ran an opinion, “Unbundling -- are the Oligarchs coming for Eskom?”, in which energy analyst Hügo Krüger noted that South Africa’s biggest investor in the energy market is Patrice Motsepe, the President’s brother-in-law.
After State Capture, vested interests are still very much front of mind leaving a massive trust deficit.
This trust deficit is very much felt by all South Africans, only mitigated by the fact that global leaders in general have a trust deficit.
WEF and global trust deficit
A fact that the World Economic Forum took so seriously that the theme of their summit, held earlier this month was “Rebuilding Trust”.
Ramaphosa clearly did not read the trust memo. He failed to tell South Africa why he could not attend WEF this year -- a lack of transparency that other global leaders would not be let off the hook for.
Business Report interrogated this, Ramaphosa has “nothing to say” at WEF – analyst, but the Presidency chose to not comment, which is astonishing.
Efficient Group chief economist Dawie Roodt said at the time that Ramaphosa had nothing constructive to offer at the WEF discussions this year because the president needed to secure his political future first.
“The simple reason Ramaphosa did not go to WEF is that he’s got nothing to say. He told (investors) in 2018 that it was a New Dawn, but five years later nothing has happened. In fact, it’s another five wasted years,” Roodt said.
SA trust deficit
But closer to home South Africans, including myself, suffer from a trust deficit and are in a state of post-traumatic stress caused by apartheid, state capture, Covid-19, cost of living, crime, the list goes on.
The big elephant in the room is corruption -- a disease that sickens everything it touches and doesn’t allow for healthy growth.
Indeed, with scant legal convictions in South Africa of people having to pay the piper, that elephant is having a field day, munching away all the green.
But it is an elephant that Ramaphosa needs to address today in his Sona or face a complete leadership deficit.
Under his leadership as President South Africa’s spot on the 2023 Corruption Perceptions Index (CPI) took a hit.
Last month anti-corruption movement Transparency International released the 2023 CPI, which painted a bleak picture of South Africa’s progress.
Dropping below the global average, the country has lost a further two points since last year on the leading global index measuring perceptions of public sector corruption around the world.
“Since Corruption Watch (CW), Transparency International’s local chapter, started tracking its progress on the index 12 years ago, South Africa has never scored as low as 41 – until now.
“This score is a decline from the previous low of 42 in 2013, and two points below its maiden score of 43 in 2012.
South Africa is one of 23 countries that reached their lowest-ever scores this year, stumbling into the category of flawed democracies,” the report noted.
Financial integrity
To make matters worse, South Africa’s financial integrity is under the spotlight and not looking great.
Last year South Africa was greylisted by global financial crime watchdog the Financial Action Task Force (FATF) for not fully complying with international standards around the prevention of money laundering, terrorist financing and proliferation financing.
Greylisting makes it more costly to borrow money on international markets because you are seen as more of a risk.
And it was with dismay, that I read “Business Day’s” page 1 lead yesterday, “Foreign investors pull out R1 trillion from SA markets over economic jitters”.
A situation, it reported, that asset management firm Stanlib said was triggered by successive credit downgrades, the sharp deterioration in the country’s fiscal position, rampant corruption and the sustained decline of state-owned entities.
In January 2025, FATF, will review its decision to greylist South Africa and interrogate the public and private sector measures to address its concerns.
Ramaphosa’s Sona will probably not delve into this and leave it up to Finance Minister Enoch Godongwana to address in the Budget on February 21.
However, how can Ramaphosa not address this?
This, as Ramaphosa has taken a hands-off approach on banks’ price fixing allegations, which is damaging to South African financial markets.
BusinessTech reports “Ramaphosa leaves South Africa’s big banks high and dry: report”.
The Competition Commission has approached the Constitutional Court in a bid to appeal against the Competition Appeal Court judgment in which it upheld the appeal by the majority of the banks accused of price-fixing and division of markets.
Global banks have been implicated, but South African banks are getting off the hook?
So today as we watch Ramaphosa’s Sona, it better be delivered from the heart, be authentic and resonate as the socio-economic circumstances we encounter today call for nothing less. To not do so would add to the trust deficit.
Mr President, over to you.
Philippa Larkin is the Acting Editor of Business Report.
BUSINESS REPORT