Thought Leadership

The best laid plans

February 2023

When one fails to plan it has far reaching and complex implications that have never been more relevant, thus, the government cannot afford to take a casual approach to national governance. The responsibility demands meticulous strategizing and coordination.

Many South Africans have lost a considerable amount of faith in the ruling party and its leadership. President Cyril Ramaphosa's State of the Nation Address (delivered on the 9th of February) was met with bated breath by all and had different implications for many, but most assuredly it affected every citizen. The government's proposed plans to resolve the current energy crisis was the obvious focal point for all.

With these justified concerns at the top of the president's agenda, he informed the nation that:

  • Concessions would be made, and much needed tax breaks for businesses would be implemented to allow the affordable procurement and installation of solar energy.
  • Financial institutions would be expected to facilitate the leasing of solar energy where possible.
  • It was anticipated that there would be a diverse energy mix within 12 to 18 months, which would open up further economic prospects.
  • All businesses related to agriculture, particularly black farmers, water security, infrastructure and transport & logistics are viewed as priority sectors and will receive focused assistance and support from the government.

The government continues to place emphasis on the positive impacts that supporting small and medium enterprises (SME) has on the country's economy. Industries in the formal business sector generated R10.5 trillion in turnover in the 2019 financial year. Small businesses were responsible for generating R2,3 trillion (22%), while medium sized businesses contributed the smallest portion of about 10%. These statistics clearly indicate that reviving and nurturing SME's is necessary for economic prosperity. With that in mind, the president announced that the SA SME Fund has been allocated R10 billion to facilitate SME growth initiatives. A larger portion of the funds, namely R7.5 billion, was raised by the private sector. In addition to this, the president also announced that an exercise is underway to review Postbank's service offerings. Revamping these services will enable the institution to offer financial services to women and the youth.

After defining the plan of action on a macro scale, the president handed over the reins to Finance Minister Enoch Godongwana for a micro scaled perspective on how the desperately needed "breath of life", would be administered. The tax concessions for both individuals and businesses in favour of renewable energy solutions was the most prominent aspect of the Minister's budget speech, citing tax breaks of 125% for businesses and 25% for individuals who install rooftop solar PV systems. Renewable energy will most assuredly have positive impacts on both the economy and environment. R1.5 trillion has been set aside for the Just Energy Transition Investment Plan (JET IP) that will enable a stable energy supply crucial to increasing the country's productivity.

The projected R903 billion infrastructure investment for the development of South Africa's roads, water supply and power plant infrastructure has the added benefit of creating opportunities for entrepreneurs specialising in the above-mentioned industries. The plans laid out by the government are quite frankly nothing but plans. "The proof is in the pudding", therefore, until these elaborate plans for economic prosperity are executed, they will remain mere words to our ears.

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