Ramaphosa's 2020 Sona plans went up in smoke, and he now needs to rebuild

Expert believes that mining energy should be at the centre of President Cyril Ramaphosa's plans for economic recovery in 2021

11 February 2021 - 06:00 By thabo mokone
With the GDP estimated to have shrunk by 7.8% in 2020, some economists were expecting Ramaphosa to use the 2021 Sona to present a new blueprint to pull the country out of the ruins of Covid-19.
With the GDP estimated to have shrunk by 7.8% in 2020, some economists were expecting Ramaphosa to use the 2021 Sona to present a new blueprint to pull the country out of the ruins of Covid-19.
Image: Jairus Mmutle/GCIS

When President Cyril Ramaphosa stood on the podium of the National Assembly to deliver his state of the nation address (Sona) around this time last year, he declared 2020 as the year to “fix the fundamentals”.

“This Sona is, therefore, about inclusive growth. It is about the critical actions we take this year to build a capable state and place our economy on the path to recovery. This year, we fix the fundamentals. We pursue critical areas of growth. And we ensure excellence in planning and execution in government,” the president said.

But hardly a month later, Ramaphosa's lofty plans all but fell part as the deadly Covid-19 pandemic hit in March when the country reported its first case of the disease — forcing a nationwide lockdown of the economy that is still ongoing.

Devastation immediately followed, with more than 2.2 million South Africans losing their jobs in the second quarter of 2020, the height of last year's hard lockdown.

The inclusive growth, improved “planning and execution”, would also quickly evaporate as ANC leaders and other politically connected figures looted billions of public money Ramaphosa and his administration had set aside to curb the spread of Covid-19. They even helped themselves to funds set aside to help those who had been retrenched as result of the economic ramifications of the lockdown.

This all took place while Ramaphosa had committed to tackling corruption and mismanagement in government.

With the GDP estimated to have shrunk by 7.8% in 2020, some economists were expecting Ramaphosa to use the 2021 Sona to present a new blueprint to pull the country out of the ruins of Covid-19.

Ramaphosa was also expected to outline measures to cushion the unemployed from Covid-19, including the mooted extension of the R350 relief grant, which was proposed by the ANC national executive committee last month but has yet to find expression at government level.

For Peter Leon, partner and Africa co-chair at Herbert Smith Freehills, Ramaphosa should prioritise the mining and energy sectors. Leon points out that mining output has remained sluggish despite a commodity price boom, largely due to outdated legislation that hinders investment in the exploration of new mining opportunities.

“To change this trajectory, the government should urgently amend the Mineral and Petroleum Resources Development Act, 2002 to limit administrative discretion, impose strict time periods for making decisions and remove unnecessary obligations which do not benefit the mining sector or mine communities; implement mechanisms that would promote more exploration and greenfield projects,” said Leon.

“HSF and the World Bank recently advised the Kingdom of Saudi Arabia on its new mineral law regime and identified the need for a central online system as one of the key mechanisms for any successful mining jurisdiction.

“The cadastral system should provide a functioning online platform where all licensing applications are submitted (and tracked) and information in respect of SA's mineral deposits and existing licences are easily accessible.

“This will grant prospective investors insight into SA's actual mineral wealth and highlight investment opportunities; and amend Mining Charter III and create a system which empowers workers and communities, and promotes security of tenure in relation to existing rights. The mineral regulatory system should be fair, predictable and stable.”

With load-shedding simply refusing to go away, Leon also advised that Ramaphosa should introduce measures to incentivise the private sector to invest more in the energy sector  and clean energy generation.

“The pressure on SA's energy bill as well as its clean energy undertakings under the Paris Agreement could significantly be reduced if the government increased the licensing exemption threshold from 1MW to 50MW. 

“This would facilitate electricity generation investment by large electricity consumers. This would be of benefit both to SA’s measures to limit climate change and support energy security which is a necessary precursor to economic growth and investment,” he said.

The issue of allowing municipalities to generate their own power or procure from independent energy generators also featured sharply in last year's Sona.

To his credit, Ramaphosa' administration has delivered on this score, but with load-shedding remaining a reality for the foreseeable future it's easy for this to go unnoticed.

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