Miguel Da Silva, MD at Retail Capital
A broken record is annoying, even if it plays your favourite track. Commenting as a proudly South African small and medium enterprise (SME) financier over the past few years has been akin to broadcasting a broken record against a solid brick wall. Then, out of the blue, President Cyril Ramaphosa delivered his reform-themed 2022 State of the Nation Address (SONA).
If this address were delivered in another country, no doubt those with an interest in economic growth would be incredibly excited. If we had a competent government, I would be excited. Instead, we find ourselves in the precarious position of hearing the right words, but them coming from an estranged spouse whose track record tells a disappointing story.
For years we, active stakeholders in the private sector, have asked the government to undo the unnecessary and obstructive red tape that makes it easier to just not do business in South Africa. 2022 SONA… check.
Since the onset of the pandemic, we have bemoaned so-called relief schemes for SMEs, specifically micro-enterprises, citing their unfair leverage against small businesses. We have called for SME-specific and non-government lenders to be pulled into the discussion. 2022 SONA… check.
Year after year, month after dark month, we have called Eskom the single biggest threat to the economy and have urged the speeding up of Eskom’s restructuring and efforts to promote a bourgeoning renewable energy economy. 2022 SONA… check.
We have bemoaned the delays and endless back and forth around the allocation of spectrum, noting how it is choking advancement and development in the country. We have urged government to put a firm timeline on proceeding. 2022 SONA… check.
The entire private sector, and all those with an interest in seeing SMEs thrive, has called on the government to fast-track large-scale infrastructure investment. The benefits of these programmes extend beyond getting a piece of the construction pie. They involve the ease and efficiency of doing business not least with a functional rail, road and freight industry. 2022 SONA… check.
We have, which feels like since the beginning of time, hammered the point that government cannot be the gatekeeper of job creation. We have said that business creates jobs but needs a conducive environment to do so. We have repeatedly shouted from the rooftops that the private sector generally, and the SME sector specifically, is the engine room where SA’s unsustainable unemployment will be tackled. 2022 SONA… check.
Of course, the President said a lot more, but the point is that it feels as though someone in the presidency’s office has finally listened to the ideas, advice, pleas, and outright rage emanating from the private sector. However, saying something and then doing it are two very different things, and frankly, the South African government’s track record on delivery leaves a lot to be desired. Even more frank, it is atrocious.
On the other hand, if one reads between the lines, it can be said that the President has lost faith in the lieutenants at his command. Perhaps the continued and concerted efforts to outsource government work to the private sector is the reason the 2022 SONA was not tone-deaf, but spot-on tonally. The question then becomes: will the private sector brains parachuted into government meet resistance or will their input be implemented?
In that context, it was a brave SONA, because the President is operating in an environment where radical populists and infighting is seeing a resurgence of the type of rhetoric that is the opposite of a business-friendly country. This toxic context will no doubt test the mettle of the President in seeing things through, especially in light of Ramaphosa being accused of preferring panels and task teams to decisive action.
Be that as it may, the SONA hit the right notes for business, and this will have a positive impact on confidence. Whether this confidence is sustained or short-lived will depend on the Budget to be delivered by Finance Minister Enoch Godongwana and then a clinical and uncompromising implementation of the President’s high-level plan.
Ramaphosa implored South Africans to band together and fight for the soul of the country, to work together to resist attempts to weaken the country’s democratic institutions and to continue rooting out corruption – the cancer we’ve all seen destroy so much already.
All patriotic South Africans with the best interests of the country at heart will no doubt be inclined to support this call. However, to use the analogy of an entrained relationship once more, this is a two-way street. And so, to the President we say: We will meet you halfway, Mr President, and do everything in our power to support SMEs, grow the economy, and create jobs, but please, for the sake of the soul of the small business sector, ensure that we finally see decisive action and implementation. The alternative is more of the same, and we all know that’s unsustainable.