State of the Nation Address - SONA 2020

Posted 21 February 2020 under TaxTim's Blog

President Cyril Ramaphosa addressed South Africa for the fourth time on Thursday, 13 February 2020. The event commemorated the 30 year anniversary of Nelson Mandela’s release from prison.

In case you missed it, here’s a rundown on what happened in parliament at the 2020 State of the Nation Address in Cape Town.

Unemployment

Prior to the event, President Cyril Ramaphosa engaged the youth on some of their issues. After the constant criticism about the anti-youth agenda of the ANC, finally some steps have been taken to include the youth in their plans. 17-year old, Sinoyolo Qumba penned a letter to the president to express her dismay and to her surprise the president invited her to help edit his 2020 State of the Nation Address. Some of the issues raised in the pre-SONA dialogue included issues of unemployment, the increasing crime and teenage pregnancy. 

  • President Ramaphosa spoke of the National Development Plan to eliminate poverty and reduce inequality by 2030.
  • Speaking frankly and directly, President Ramaphosa was clear that even if the government were to spend every penny and every resource towards creating jobs, it would still be impossible for the government to create jobs for the millions of unemployed South Africans alone.
  • The Jobs Summit brings together the labour, business, and governmental communities to find solutions to unemployment. President Ramaphosa noted that they continue to meet every month to remove some of the obstacles that lead to retrenchments and unemployment in South Africa.
  • Water use licensing that is essential for job creation in the agricultural, industrial and mining sectors have previously taken up to 5 years to be issued. Water use licences will now take up to 90 days. 
  • Government plans on making business registration easier through the online platform Bizportal. The platform now allows entrepreneurs to register a business with the Department of Labour and SARS and even open a business bank account within a day.
  • The National Youth Development Agency and the Department of Small Business Development will be allocating funding and business support to 1000 entrepreneurs over the next 100 days. 
  • SheTradesZA has been established to support women-owned businesses and the Industrial Development Corporation will be allocating R10 billion in funding to women-owned businesses over the next 5 years. 
  • Competition authorities are working together with large mobile operators to cut the cost of data prices on monthly pre-paid bundles, discounts for low-income households, as well as free access to educational and other public interest websites.

The Presidential Youth Employment Intervention 

The plan includes 6 priority actions over the next 5 years to reduce youth unemployment. 

  1. Create pathways for young people to access economic activity, both online and offline.
  2. Introduce shorter, flexible courses in specific skills necessary in rapidly growing sectors.
  3. Develop new and innovative ways to support entrepreneurship and self-employment.
  4. Youth Employment Service is being scaled up and government is working with TVET colleges to ensure that students have enough practical experience to make them employable by the time they graduate. 
  5. Presidential Youth Service programme will provide opportunities for young people to generate an income while building the nation. 
  6. 1% of Treasury’s budget will be allocated to youth unemployment. 

STATE-OWNED ENTERPRISES

State capture

  • A national anti-corruption strategy and implementation plan will be launched in mid-2020.
  • The Zondo Commission continues and President Ramaphosa has received a report on the Commission of Inquiry into Public Investment Corporation, which will be made public together with further recommendations over the next few days.

Eskom

  • Load Shedding was addressed extensively and President Ramaphosa was clear that he understood the ways in which state capture has influenced the electricity crisis. He also addressed the ways that ordinary South Africans are affected by the disruptions, as it leads to low productivity and ultimately affects the economy in the long run. In the same breath, Ramaphosa noted that load shedding is set to continue further into the near future, in order for the power plants to undergo their necessary maintenance. 
  • Overdue measures are, however, being taken to increase energy generation outside of Eskom. One of such measures is the development of renewable energy sources. Emergency energy power plants will be initiated, with their first energy production set to take place within 3-12 months from the time of approval.
  • The National Energy Regulator will continue to register small scale energy distribution (under 1 MW) without a license.
  • Supplementary power purchase agreements will be negotiated in order to generate additional capacity from the wind and solar plants that already exist. 
  • Municipalities that are currently in good financial standing, will be able to procure energy from independent power producers. 
  • Eskom’s divisionalising has already begun, as the power facility’s three operating activities (generation, transmission and distribution) will soon have its own board and management structures.  

South African Airways (SAA)

  • SAA was placed under business rescue last year and the details of the restructuring will be revealed in the next few weeks. According to President Ramaphosa, the The aim is to create a financially sustainable airline that is not reliant on government funding.
  • Prasa is being modernised and a whopping R1.4 billion is being invested into the rail upgrades of Cape Town’s central and Pretoria’s Mabopane lines.

Climate change

  • The president pulled on our heart strings when he mentioned a visit with climate activist, Ayakha Melithafa. The young activist made President Ramapahosa promise that as we undergo these transitions to a low-carbon, climate resilient and sustainable society, that no African child will be left behind. 
  • It was promised that the Climate Change Bill will be finalised and that it will provide a framework that is set to be regulated, ensuring the effective management of the impact of climate change. 

Public finances

  • The Infrastructure Fund implementation has expanded private investment into public infrastructure sectors including, but not limited to, student accommodation, social housing, independent water production. 
  • President Ramaphosa mentioned that the low levels of growth means that the government is not able to afford their debt. This also means that spending is misdirected and instead of money being spent on production and infrastructure, money is being spent on servicing debt instead. 
  • Ramaphosa pointed out that the reduction of government expenditure, the effective prioritising of resources, and the improving of the tax system are effective ways to stabilise public finances.
  • A sovereign wealth fund was created to grow national endowment. The intention is to be practical in terms of all South Africans sharing in the wealth of the country, as well as the establishment of a state bank to further extend financial services to all South Africans. The details of this will be addressed in Minister of Finance, Tito Mboweni’s budget speech, which is set to take place in two weeks.  

Education

  • Government will be focusing on vocational and technical education.
  • Technical vocational specialisations have been introduced in 550 schools and 67 schools are piloting the occupational stream.
  • Tablet computers will be issued to school students to assist them with reading and comprehension. Government is in the process of rolling out this project.
  • Coding and robotics will be introduced to school goers in grades R - 3 in 200 schools. This will be fully implemented by 2022.
  • A new University of Science and Innovation has been established in Ekurhuleni. Ekurhuleni is the only metropole without a university.

Policing

  • In collaboration with the South African Police Service (SAPS) and the National Prosecuting Authority (NPA), a specialised unit will be established to fight economic crimes.
  • SAPS will increase visibility in tourist attraction sites to stabilise and secure investment.
  • Anti-gang units will be strengthened, with priority given to areas including the Western Cape, Eastern Cape, Gauteng and the Free State. 

Gender-based violence

  • An emergency action plan has been established with R1.6 billion re-prioritised until the end of the current financial year.
  • The Sexual Offences Act and the Domestic Violence Act will be amended with the aim of protecting those in violent domestic relationships and broaden the categories of sex offenders whose names must be included in the National Register for Sex Offenders.
  • A law will be passed to tighten bail and sentencing conditions of those convicted of crimes related to gender-based violence. 

Tourism

  • A Tourism Equity Fund will be established this year.
  • In Ramaphosa’s 2019 SONA, he asked the nation to join him in imagining a smart city, changing the social landscape of Apartheid’s spatial architecture. The smart city will be built in Lanseria with about 500 000 residents within the next decade. The smart city will be 5G ready and Ramaphosa anticipates that the smart city will lead the way for green infrastructure both locally and internationally. 


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