President Ramaphosa raffled on about various topics and did not address certain pertinent issues that was centre stage in the diplomatic storm and ensuing tension between Pretoria and Washington. The president mentioned the peace keeping force and fallen South African soldiers in the DRC and reiterated that South Africa was on a “peace keeping” mission to stabilise the region and see to end the conflict within the area. His address sounded much like a repeat of the address given in 2023 and 2024 with political parties mostly left unsatisfied with the address. Some parties mentioned that these SONA promises had already been made in previous addresses and that progress rather than rehashing of promises should have been done in the 2025 SONA.
In relation to diplomatic storm Ramaphosa mentioned briefly that the world is living in a multipolar world with a rise in nationalism where fundamental political changes are occurring. He further stated that South Africa remains constitutional democracy with laws imbedded in our South African constitution and that South Africa as a nation will not be bullied. This statement was in direct response to the US’s reaction on their suspension of USAID to South Africa as it relates to Ramaphosa’s signing of the Expropriation Without Compensation act (EWC) to the ire of the new US administration.
President Ramaphosa stated that South Africa must have a government with durable institutions with a growth framework with a medium to longer-term horizon. He announced that government adopted the Medium-Term Development plan with the aim to:
- Drive inclusive growth
- Reduce poverty and to
- Build an ethical capable state.
In the SONA the president further acknowledged service delivery failures and made a renewed commitment to enhance service delivery across many spheres in South Africa. In relation to service delivery failures Ramaphosa stated that R940bn us earmarked for infrastructure related investment in the next three years specifically related to water infrastructure (R33bn), rail and port maintenance and expansion, housing and ending electricity supply constraints with the Energy Action Plan.
The tourism sector was also mentioned as a key sector for attracting people to South Africa and creating employment opportunities within this sector as more people visit South Africa on an annual basis. In relation to the tourism sector, Home Affairs has cleared nearly 90% of backlogs in visa applications to facilitate increased ease with which South Africa can attract top talent from elsewhere and made it easier for tourist to visit our shores.
The energy and agricultural sectors were also mentioned a sectors with significant growth opportunities and South Africa can unlock the abundance of green energy South Africa has, especially as it relates to solar energy. In the agricultural sector, the president made mention of the possibilities of hemp/daga farming and the possibilities stored up within the commercial farming of this product.
As South Africans watched the SONA, some important points, laws and views has been expressed by the government. Some of these points included the:
- Bella act that will be pushed forward,
- the much-dreaded EWC agenda and the consequences it can have on the South African economy internationally (Agoa),
- BEE transformation fund of R20bn over the next five years,
- National Health Insurance (NHI) that will be implemented and pushed through and lastly
- South Africa’s stance in relation to Palestine.
According to president Ramaphosa the Bella act will see to advance education in mother tongue languages going forward. The president also stated that a BEE Transformation fund of R20bn will be established to help black SMME’s with financing for startups in the next five years. This R20bn however remains a concern as R8bn have been withdrawn by USAID in relation to South Africa’s aids and tuberculosis program and will have to be filled from the South African fiscus, not to mention the R20bn needed to create this new transformation fund and funding of the NHI later this year.
He further mentioned that the South Africa’s land belongs to all who work it and that EWC is an act that will allow people to get access to land which will restore their dignity while providing an opportunity. This act (EWC) however caused quite a bit of backlash, especially from the US that sees property rights- and protection as a cornerstone of the Agoa agreement and any possible violation of property rights in any form or shape put the trade agreement in jeopardy. It is not only the Agoa agreement but also the possibility of a trade war with the US and ultimately access to the US market that can be affected if the situation between Pretoria and Washington can’t be ironed out in a satisfactory manner.
National Health Insurance (NHI) remains a very contentious issue among the GNU partners and the possibility the death of private medical aid schemes in South Africa and subsequent “brain drain” that might happen if the act is signed into law in its current form. The president stated that NHI will be implemented as everyone in South Africa has the right to healthcare and that it should not only be accessible to a minority of the population but be equally accessible to all South Africans. Hopefully, GNU partners can find a workable solution around their difference related to this bill as it can have serious ramifications for both the economy and healthcare sector at large.
The presidency furthermore reaffirmed their stance of solidarity with the Palestine people and approach of the International Court of Justice against Israel in this regard. This action coupled with EWC and the US view on minority rights and human right violations and movement of the Taiwanese embassy from Pretoria may ultimately affect the South African economy adversely in the medium-term at least. The tension between South Africa and the US reached new hights as the US Secretary of State, Senator Marco Rubio, declined the invite to attend the G20 in South Africa later this year.
The hardline approach the US has taken in dealing with other nations tells us that the US are unwilling to compromise on their views and political agenda for at least the short-term, not boding well for South Africa with the idea that “South Africa will not be bullied”. Amidst these challenges, hope remains as the economy is expected to expand by 1.5% for 2025 with moderate to low inflation and some return of consumer demand to the market. The lower interest rate coupled with an increase in confidence in the economy as both the Consumer- and Business confidence increased in the latter stages of 2024 bode well for the South African economy.
The increase in consumer spending, exceeding expectations for November 2024 data, and a forecasted 15% increase in the JSE ALSI for 2025 only reaffirms the positive market sentiment the South African economy is still experiencing after the formation of the GNU. This only further highlights the opportunities awaiting to be unleashed within the domestic market for investors and businesses with a keen eye for an opportunity.
