The State of the Nation Address, including retorts from prominent opposition parties to President Jacob Zuma’s address, has been the subject of much debate over the last week. But what are the key outtakes from the address, and what does this mean for South Africans?

We take a look at the most important points from SONA 2016.

SONA 2016 in a nutshell

Local Government Elections 2016

Government has urged the youth to register and vote and foresee an improved election process through visits to municipalities, spot checks of supply chain processes, implementation of recommendations from forensic reports and improved interventions for struggling municipalities.

State-owned pharmaceutical company

President Zuma announced the establishment of a state-owned pharmaceutical which will, among other things supply the Department of Health with antiretrovirals in the 2016/17 financial year. A major HIV/AIDS prevention campaign targeting youth is also on the cards.

Land claims and ownership

Approximately 120 000 land claims have been received since the reopened process for those who missed the 1998 deadline. A draft bill proposing the capping of land ownership at 12 000 hectares and prohibiting foreign land ownership will be presented later in 2016.

Governmental cost-cutting

Zuma has proposed cutbacks on governmental spending, in particular with regards to perks, event and travel spending. Some believe the proposed cost-cutting to be driven by Minister of Finance, Pravin Gordhan, as he’d proposed the like in his previous term.

The South African capital

Zuma has proposed a single capital for South Africa – Pretoria – which will do away with the legislative capital, Cape Town. This has been an ongoing debate over the years, however, with parliament making little headway in reaching a conclusion.

9-point growth plan

Zuma once more touched on his 9-point growth plan mentioned in SONA 2015, which is aimed at overhauling state-owned enterprises (SOEs) in order to improve their governance. Deputy President Cyril Ramaphosa will oversee the inter-ministerial committee responsible for implementation of these recommendations. Some experts have been cynical of the plan due to slow progress since its first release in 2013.

Police self-defence

Addressing the killing of 57 police officers since the start of the 2015/2016 financial year, Zuma has urged officers to defend themselves within the confines of the law. He also stated that they are taking measures for addressing under-performing police stations.

Drought

President Zuma thanked society initiatives such as Operation Hydrate for their aid to drought-stricken areas of South Africa, and stated that the government is providing relief to affected areas.

The economy

Zuma has blamed slumping emerging market economies worldwide for South Africa’s current economic under-performance.

Nuclear energy

Tying into the economic issues – Zuma has stated that South Africa would only implement nuclear energy projects and measures at a pace the country could afford.

Improved migration policies

Zuma has addressed issues raised by businesses who have planned to, or already employ foreign nationals. The greatest concern is the slow issuing of visas which hampers the acquisition of scarce skills from abroad.

Main concerns about SONA 2016

Though Zuma has suggested governmental cost-cutting and a paced uptake of nuclear projects, there are concerns about his implementation and enforcement of these measures based on his notorious lack of budgeting foresight and adherence.

His comments on minimum wage implementation echo major concerns from businesses across South Africa, but these, as well as improvement of migration policies have also raised red flags. There is a concern that these proposals may not be readily accepted by ANC alliance partners like Cosatu.

The 2015 SONA proposals regarding land ownership which were yet again reiterated in this year’s address have been vehemently criticised and opposed by civil society and the agricultural industry.

Opposition MPs have argued that the concept of a single capital, Pretoria, was erroneously introduced as a measure for curtailing spending. Their retorts include sentiments that cost-cutting should start with cutting the size of the parliament, and that this could be seen as a ploy to ostracise the DA-managed Western Cape Province. It was further noted that such a move would place additional strain on the fragile South African economy.

There are also concerns that Zuma has not discussed the issues of SOEs in enough detail, nor put forth an actionable strategy for their transformation and stabilisation.

Though the SAP are happy with Zuma’s endorsement of law enforcement’s self-defence legal experts have warned that this could be viewed as consent to possible police brutality which has been an increasing trend in the last few years.

Agricultural experts have balked at the feeble coverage of farming and drought concerns by the president. They believe the lack of concern and initiatives would further hamper an exhausted industry and lead to widespread loss of income, equity and jobs – pushing the economy further into financial dire straits.

Analysts have voiced their concern for the lack of innovative and progressive thinking at 2016 SONA by President Zuma. Market leaders such as Peter Attard Montalto have projected that this ‘business as usual’ approach by the President will have a negative knock-on effect on South Africa’s economy and that it has proven that Finance Minister Pravin Gordhan does not have sufficient clout to avert further economic drawbacks.

Do you have financial concerns following SONA 2016?

If you are concerned regarding your money still in South Africa, why not talk to cashkows.com? We can give you valuable advice on moving your money safely and efficiently wherever you are in the world.

 

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