#SONA2013 1

Today President Zuma will deliver the State of the Nation Address in Parliament and expectations are high. We though it might be interesting to look back at last year’s SONA and the year that was 2012.

Last year he started with the familiar challenges of unemployment, poverty and inequality. He mentioned that unemployment is structural and made the case that government have been taking steps and will be taking steps to meet the challenge. These steps included increased spending on social security, infrastructure development to stimulate the economy and the establishment of the National Planning Commission. President Zuma also reviewed some of the progress on the undertakings made in the 2011 SONA – it is easy to forget about the Jobs Fund, incentives for new industrial projects, local content procurement regulations and the R10 billion that the IDC set aside for job creation.

The address identified a number of key issues for 2012. The list included:

  • An infrastructure development drive.

This was driven and overseen by the Presidential Infrastructure Coordinating Commission. It included five geographically focused programmes and social infrastructure programmes. The argument was “The massive investment in infrastructure must leave more than just power stations, rail-lines, dams and roads. It must industrialise the country, generate skills and boost much-needed job creation”.

  • The extension of basic services, including housing, housing, electricity costs and water supply.
  • Education – where the President argued that the focus on education is paying off and 300 million rand is being allocated for the preparatory work towards building new universities in Mpumalanga and Northern Cape.

There was also mention of  health,  land reform,  BBBEE,  crime and corruption.

The year the followed was marked by failures in many of the spheres mentioned. There was opposition to e-tolls and the Limpopo textbook scandal. A year of labour unrest was punctuated by the tragedy at Marikana en violent protests at De Doorns. Nkandla-gate says it all. There was policy uncertainty and some mad ideas were mooted including nationalisation of mines, a new system for redistribution of land, a tax on businesses to be paid to local municipalities and a tax on graduates. South Africa suffered a credit rating downgrade, the rand is weaker, growth slow and unemployment higher. What can we expect from the #SONA2013 this evening?

In a sense, not much. The challenges remain the same and are staggering. The solutions are familiar too. The blog wants to argue that we do not need more plans than those already made in the NDP. The question now is of implementation. The commentators are not hopeful:

Mike Schussler writes of the unsustainability of South Africa’s welfare state:

South Africa has more people on welfare than those who are working, but still the pseudo intellectual hearts tell them that the solution is more welfare.

There is no money for roads, dams or sewerage. It is needed for welfare, education and health. Current expenditure fills the ‘now’ but infrastructure helps reduce future needs and produces returns.

Consumers also need to pay extra for everything they need, from electricity to roads. The result is that employees demand more money from their employers, who also need to pay more for transport and electricity.

This leads to more closures or mergers and the loss of even more jobs. This in turn, leads to more inequality. And I will wager a bet that inequality will also be the theme of the president’s speech next year, and that he may deliver it with an angrier voice.

The outcome may depend more on politics than economics. This SONA is sandwiched between Mangaung and the 2014 election, which may mean more talk and less implementation than South Africa can afford.

One comment

  1. Pingback: The Economics of Valentine’s Day | Economics is Everywhere

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