Economists optimistic about Ramaphosa’s Sona, but…
The president’s commitment to making South Africa more business-friendly to attract more foreign investment was welcomed.
President Cyril Ramaphosa delivering his 2019 Sona in parliament, Cape Town, 7 February 2019. Picture: ANA
Leading economists are optimistic about President Cyril Ramaphosa’s business-friendly approach and the targets set in his State of the Nation address this week.
Neil Roets, CEO of Debt Rescue, said Ramaphosa’s pronouncements would be a ray of light for consumers, many of whom were at the end of their tether over mounting debts.
He said the apparent determination to end theft of state funds and corruption might be the incentive needed to get the economy back on track and create hope.
The president’s plan to help many near-bankrupt municipalities to settle Eskom debts would give the struggling utility a breather, while the plans to increase exports and the role of agriculture in growing the economy were encouraging.
But Roets said the debt counselling industry was unsure how the state planned to assist deeply indebted working people.
“We have seen the impact the steady rise in fuel prices last year and the VAT increase has had on the population. Many consumers would simply not be able to handle another round of tax increases. The same is true for corporate taxes. Raising taxes would have a profoundly negative impact on foreign direct investment.”
Dawie Roodt, chief economist of the Efficient Group, said the president’s commitment to making South Africa more business-friendly to attract more foreign investment was welcomed.
“It is not going to be an easy task. There is far too much political interference in the business world and the state’s commitment to black economic empowerment and land grabs remain major problems that appear to remain on Ramaphosa’s agenda,” Roodt said.
He warned it was highly likely there would be further downgrades by ratings agencies.
“The biggest single problem is the vastly overstaffed civil service and that government employees consistently get increases well above inflation.
“The state also needs to drastically reduce its debt burden, which is now growing on an almost daily basis,” Roodt said.
Fay Mukaddam, CEO of 4 Africa Exchange, said Ramaphosa’s message remained consistent that there must be collective accountability to create a new era.