Sona: Investors want policy certainty, reform agenda and NHI clarity, say economists

President Cyril Ramaphosa is expected to use the planned National Health Insurance as his trump card.

President Cyril Ramaphosa is expected to use the planned National Health Insurance as his trump card.

Published Feb 8, 2024


Even though there will be no announcement of the 2024 general election date during President Cyril Ramaphosa’s State of the Nation Address (Sona) tonight, investors are expecting policy certainty, reform agenda, and clarity on the implementation of the National Health Insurance (NHI) to be primary items on top of his list.

This comes as analysts and economists have questioned whether Ramaphosa’s Sona would give a true picture of the reflection of the state of affairs in the country, or it will simply be a repetition of the ruling party’s successes over the past 30 years with a view to the upcoming election.

Ramaphosa faces a daunting task to inspire investor confidence on the back of low-growth trajectory, stubbornly high rate of unemployment, inequality, crime and corruption, decaying infrastructure, energy and logistical crises, and growing expenditure demands, among others.

Old Mutual Wealth investment strategist Izak Odendaal said he did not expect anything new from Sona.

Odendaal said Ramaphosa would focus on the government’s achievements over the past 30 years and generally put a positive spin on things since this was an election year.

“There will be another Sona after the election, when perhaps then we will get a more sober assessment of the country’s challenges and what needs to be done. That should include an update on the mooted restructuring of government departments, agencies and programmes to achieve a more streamlined and cost-effective government,” Odendaal said.

“The key thing from an economic point of view will be full-throated support for the various reform initiatives already under way, particularly those led by Operation Vulindlela (OV). In fact, since OV comes to an end with the president’s term in office, it would be good for him to commit to its continuation should he once again be sworn in as president after the election.

“He should also give his full support to the joint government-business workstreams tackling crime and corruption, electricity and logistics. These remain crisis areas for our economy.”

Last year, Ramaphosa said his Sona was about seeing hope where there was despair and pointed out solutions to the crises.

However, the crises have continued unabated and in some cases worsened.

Private investment and wealth management firm Everest Wealth CEO Thys van Zyl yesterday said Ramaphosa was expected to use the planned NHI as his trump card.

Van Zyl said promises would be made about the State wanting to ensure free, high-quality healthcare for all citizens.

“However, there are numerous examples of the large-scale failure of projects undertaken by the government due to mismanagement. Where the government fails, the private sector intervenes with alternative solutions,” Van Zyl said.

“There is more and more emphasis on the private sector's involvement in the economy and this holds a promising prospect. But now the government wants to come and take over something that was built by the private sector because they failed to do it themselves.”

The NHI Bill has been passed by Parliament, but has yet to be signed into law by the president, and he can send it back to Parliament to address certain shortcomings.

Business has raised serious concerns with the Bill as it stands, including its potential unconstitutionality and the fact that the NHI has not been properly costed or budgeted for.

Economists have also warned that Ramaphosa needs to give his support to ongoing efforts by the National Treasury to reduce government borrowing and stabilise debt levels, despite a looming election.

Also of concern to economists is the progress that the government has made in fixing the bottlenecks around the energy supply and logistical challenges, which continue to stifle growth.

Momentum Investments economist Sanisha Packirisamy they would like to see progress made in alleviating the national energy crisis, including the regulatory changes, the pipeline of renewables and maintenance work that has successfully been carried out such as the Kusile power station.

“We believe that further encouragement of private sector renewables will help to ensure security of energy supply and lower costs for consumers,” Packirisamy said.

“We would also like to see progress on resolving issues in the logistics sector, including the Freight Logistics Roadmap, political willingness to allow private sector consortiums to operate the ports and railway lines can improve railway densities and efficiencies.”