Governance

How the 2022 SONA affects 2030 business

Gareth Bird – the Operations Director at the Skills Development Corporation

For years, a disconnect between the private sector and the South African government has existed. During his State of the Nation Address (SONA) in February, President Cyril Ramaphosa made it clear that he has every intention to bridge this gap. 

This provides a glimmer of hope for many South African business owners. 

The almost two-hour-long speech was perfectly summed up by Finance Minister Enoch Godongwana: “Basic economics suggests that the bulk of productive activity in the economy is [private business] and therefore, you have to create a conducive environment for that. The structural reforms that the president announced are intended to give substance to that message.”

What actions will materialise from the speech is hard to predict, though Gareth Bird – the Operations Director at the Skills Development Corporation – has provided his predictions for how the 2022 SONA will affect 2030 business. 

An economy in the green, thanks to green energy

Every business owner has felt the impact of frequent load-shedding and persistent unplanned electricity outages. Intervention from the private sector to stabilise the grid, and ensure a solid base for investment into South Africa by companies is vital. 

The Renewable Independent Power Producer Programme plans to produce R150 billion and 250,000 jobs by 2047. This doesn’t include potential rebates and concessions granted on a global stage for our use of responsible energy production methods,” says Bird. He continues, “This is the only sustainable way forward, both environmentally and financially.” 

Further to this, the Hydrogen SA strategy, according to the official website, aims at “developing South African intellectual property, knowledge, human resources, products, components, and processes to support the South African participation in the nascent, but rapidly developing international platforms in Hydrogen and Fuel Cell Technologies.”

This presents South Africa with the prospect of being a global leader in this space. “If we continue to see the private sector taking strides in electricity production and research, and, if the government continues to concede to the private sector in this regard, this will be a booming South African industry by 2030 – if it isn’t, it will be well on its way there,” says Bird. 

A better-skilled, educated workforce 

A fundamental component of a successful business is a skilled workforce – supported by education. 

It stands to reason then, that a government hoping to promote the prosperity of its country’s private sector should create a solid education framework.

That seems to be what Ramaphosa is working towards, having made promises regarding three critical areas: improved service delivery in public education, improved maintenance and provision of infrastructure (particularly in low-income/ rural areas), and revitalisation of the government’s National Youth Service. 

These three areas of focus may take time to yield the desired results, which is why Ramaphosa has suggested a fourth and final instrument to connect businesses with better-educated workers – he’s importing them. 

Less stringent immigration laws and a newly reworked Critical Skills List (the first CSL updated since 2014) will aid skilled workers from the rest of Africa and abroad in finding their dream job in sunny Mzansi. 

“It’s something that we discuss at length at The Skills Development Corporation (SDC) – education is critical if you want your business to have any kind of competitive edge. Ignoring the socioeconomic benefits of a better-educated society, there’s the commercial benefit to consider. That’s often why our corporate clients seek out our services; because they know that their business benefits when they invest in the education of their employees. The government is echoing this sentiment and doing what they can to provide the private sector with a work-ready workforce within the next decade.” says Bird. 

Connecting people and businesses

“One area that we lag in [as a country] is our connection to the internet – at least in terms of affordability and coverage. The fact that the president is going to spearhead an initiative to deliver affordable broadband to the entire country is incredible. It means that more entrepreneurial spirits will have access to a major business component, future workers will have an easier time receiving an education, and future advances in technology won’t suffer the latent adoption we experience today.” comments Bird. 

An Afrocentric approach to commerce 

Ramaphosa isn’t just looking to remove the red tape preventing South African Small, Medium and Micro Enterprises (SMMEs) from operating fluidly. The AfCTA (African Continental Free Trade Area agreement) will also play its part in removing much of the red tape surrounding trade on the African continent. 

“An Africa-first approach to trade and commerce is a no-brainer. Wherever possible, we should be promoting the growth of not only our economy but the economy of our fellow African states (and vice versa). Young South Africans should do their research in this area and find where they can leverage trade between African nations – no doubt this will be a sizeable part of the economy by 2030.” says Bird. 

Barrier-free business, without hefty government involvement  

Perhaps the most exciting announcement made during the SONA was the fact that the government is introducing a “retain, consolidate, or dispose of” policy for State-Owned Enterprises (SOEs). 

This will have some impact, the most significant being that this should remove many of the barriers to entry to markets that were previously monopolised by the government.

“It’s huge. Broadcast was state-run for decades. So were our phone lines and electricity and water. If you wanted to start a business in any of these industries, it was the government that stonewalled (however passively) you from doing so. Where the private sector has succeeded in entering these markets, we’ve noted significant financial benefits as a nation. We should expect to see more of the same, except in larger quantities, as the government begins to remedy the inefficiency of its SOEs.” comments Bird. 

Once again, it is almost impossible to say whether any of what Ramaphosa has promised will manifest, though this year’s SONA was filled with promises that – if carried out effectively – could change the course of the South African economy and position South Africa as a globally competitive powerhouse. It will be exciting to see what will come to fruition, not only from Gareth Bird’s predictions but also from what the president has said. 







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