Cyril ignores the biggest elephants

MIXED BAG: CORRUPTION CONSEQUENCES AVOIDED

President Ramaphosa addressed the key challenges in his speech, offering some tangible solutions.

Eskom remains the number one short-term threat to our economy. The announcement of the unbundling of Eskom into three parts is hopefully the first step to increased “private sector involvement”.

The acknowledgement that unemployment is at desperate levels, requiring urgent interventions to accelerate job creation. However, despite his frankness, there were a few elephants in the room.

The biggest was corruption and the fact that many of those implicated were sitting metres away from the podium. The state capture and other inquiries have revealed the extent of corruption within the ANC, government and South Africa’s top leadership. Promises to curb corruption ring hollow when implicated Cabinet ministers applaud the announcement of anticorruption plans.

We need to see the arrests of high-profile individuals and aggressive prosecution to restore meaningful confidence in government. This must include Jacob Zuma and his top state capture lieutenants.

Dire fiscal position

A second elephant, which didn’t receive sufficient airtime, is South Africa’s dire financial position. Finance Minister Tito Mboweni will soon sketch a grim picture of our finances.

We will see a budget deficit of nearly 5% and debt to gross domestic product (GDP) levels of 60%, excluding the potential impact of an Eskom bailout.

Thus, South Africa’s wallet is empty and the credit card maxed out. There isn’t any money left to fund ambitious projects.

In this context, it was interesting to hear Ramaphosa’s promises of increased infrastructure spending and investment to create jobs and accelerate economic growth. Government must realise it cannot “create jobs”.

Trust implosion

A third elephant is the total implosion of trust between private sector and government.

The jobs South Africa so desperately needs can only flow from the private sector, where entrepreneurs invest in new ventures because they believe they can make money from capital deployment. The private sector in this context is the army of small entrepreneurs. If Ramaphosa can restore their trust in government and the country’s future, job creation will accelerate quickly.

All in all, South Africa’s a better place today than it was in February 2018. Hopefully Ramaphosa can keep the trajectory on the right track.

Ryk van Niekerk is managing editor Moneyweb’s