Business Leadership South Africa (BLSA) expects a few vital aspects to be addressed this week during the President’s State of the Nation Address (SoNA), including the vaccine strategy, spectrum auctions and a fifth round of the renewable energy programme.

Consulting Engineers South Africa (Cesa) CEO Chris Campbell and BLSA CEO Busi Mavuso agree the business realm wants to see a clear roll-out plan that details when vulnerable groups will receive vaccinations and, in turn, when the need for lockdown measures will dissipate.

Clarity on these aspects will help businesses plan around the risks of a third wave of infections, which may hit before critical mass of vaccinations has been achieved.

Mavuso acknowledges that, to reach 67% of the population, or about 40-million people, is no easy feat and she has committed that business will assist government in numerous areas to support a successful vaccine roll-out programme.

Campbell notes that a credible and appropriately supervised vaccination programme should not mean the death of infrastructure development and the construction industry, which was already on its knees before the pandemic struck. He refers to approved projects such as those from the South African National Roads Agency that should still be executed.

“In the upcoming State of the Nation Address, we would like to hear more about government’s coordination with business, the medical sector, and civil society in the vaccine roll-out. We believe such a partnership is vital to the success of this ambitious but vital programme.

“But we also want to know that the momentum gained last year with the gazetted Strategic Infrastructure Projects is not lost. Implementation of key projects need not be delayed and could in fact go a long way in boosting the state of our ‘ill’ economy,” he says.

Further, in last year’s SoNA, the President promised that spectrum auctions and a fifth round of the Renewable Energy Independent Power Producer Procurement Programme would happen in 2020.

However, that had been interrupted by the pandemic, but it is now crucial that the President provides evidence that these will happen in short order, Mavuso stresses.

Along with these, she laments that South Africa urgently needs wider reforms to energy policy, as well as to finalise long-promised reforms to visa policies for scarce skills, solidify the infrastructure strategy to actually reach construction stage and finalise mining sector reforms.

Last week, Eskom CEO Andre de Ruyter backed reforms to allow anyone to build their own generation facilities of up to 50 MW without needing a licence, a move that would rapidly lead to large investments by companies in their own energy infrastructure.

“That, along with clarity on renewable energy timetables, could spur a green economy industrialisation wave to position South Africa as global leader in green tech. It would create many jobs and spur small business.

“But for that to happen, we need clear timetables, clear policies and accountability for delivering on them. Clarity on the renewable energy programme means backing the successful formula that has delivered four rounds so far, one that everyone from banks to construction firms understands well,” Mavuso states.

Introducing uncertainty, particularly around the extent of local input required, would delay energy security, increase costs of bids and ultimately slow down the economic recovery and green industrialisation process.

Infrastructure has been central to the President’s economic strategy since he took office, calling for private investment to spur development. Yet there have been no new public-private partnerships (PPPs) registered since and, therefore, no opportunity to invest, Mavuso points out.  

In the economic recovery plan, however, there is clear agreement that the Public Finance Management Act, Municipal Finance Management Act and their respective regulations need to be amended to make both PPPs and on-budget infrastructure delivery more straightforward.

Mavuso believes the public sector has suffered a skills exodus and the cumbersome procurement process frustrates those left from quickly delivering infrastructure at all levels of government.

A wastewater treatment plant in a small town has to follow the same process as a megaproject such as the Gautrain to be delivered through a PPP. “This is poor use of scarce resources. Yet we have heard nothing from National Treasury, which oversees the legislation, of plans to undertake amendment,” Mavuso avers.

She says that business is ready to pick up the infrastructure baton and run with it. Regulatory clarity would trigger major investment from communications infrastructure to mining exploration, without costing the State a cent.

Similarly, an appropriate PPP framework would open many opportunities for the private sector to invest in, construct and operate public infrastructure.

“We are ready to support the effort. This week the President can earn our trust and confidence to work with government on delivering. The future we see ahead would be far brighter for all South Africans.”

INCENTVISING BUSINESS

From a jobs acceleration point of view, the 12J Association of South Africa hopes that the President will extent Section 12J of the Income Tax Act, which is due to expire on June 30.

In extending this incentive, the association believes Cyril Ramaphosa will signal that South Africa is once again open for business and that he is serious about growth, jobs and transformation.

Section 12J was first introduced by government in 2009. Following certain amendments necessary to make the legislation operational, implemented in 2015, the industry has been enabled to invest more than R5.5-billion, creating about 10 500 new jobs.

The 12J Association of South Africa expects the legislation to create tens of thousands of additional jobs over the next five years, with an additional R4-billion having already been raised and pending investment into small, medium-sized and microenterprises across the country. But these great expectations will soon end unless government extends Section 12J, which is currently subject to a ‘sunset clause’.