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Reaction to the State of the Nation address

Reaction to the State of the Nation address

General comments:

“It is a glaring omission that there was no reference made to the Employment Equity in SA, with respect to the new legislation and the new Codes.”

Terry Ramabulana, Partner and Head of Public Sector Advisory at Grant Thornton South Africa

“We are surprised that nothing was mentioned about our Private Sector taking a front seat in the transformation of our economy.  This refers to creation of jobs, public-private-partnerships and as far as infrastructure is concerned.”

Terry Ramabulana, Partner and Head of Public Sector Advisory at Grant Thornton South Africa

“We’re concerned that the President didn’t say more about the management of the cost of production in relation of helping SMMEs grow.”

Terry Ramabulana, Partner and Head of Public Sector Advisory at Grant Thornton South Africa

“In terms of the topic of skills in the Public Sector, the President spoke about local government hiring more of the right skills and particularly about competent staff and effective administration.  He did not talk about upskilling existing staff and the usage of competent consultants in the upskilling of these staff, which is disappointing.”

Terry Ramabulana, Partner and Head of Public Sector Advisory at Grant Thornton South Africa

On environmental impact study and mines

“We applaud the President for amending the environmental impact study to 300 days in terms of obtaining of licenses for mining – including water, environment and mining licenses.  This is a welcome improvement.”

Jacques Barradas, Partner: Grant Thornton Johannesburg 

On state-owned entities – SAA and Eskom in particular

“It is disappointing that no mention was made on the position of privatisation of state owned assets. With debt to GDP ratios approaching 46% over the next three years, the privatisation of selected state assets will provide a significant capital injection into the coffers to settle debt or fund critical infrastructure.”

AJ Jansen van Nieuwenhuizen, Partner: Tax, Grant Thornton Johannesburg

“As was expected, Government announced an overdue bailout for Eskom and a turnaround strategy for SAA. We wait with baited breath for Minister Nhlanhla Nene’s Budget Speech on 25 February as to how these will be funded.”

Andrew Hannington, CEO, Grant Thornton Johannesburg

“It is good news that the viability of SAA will be addressed. Air lift is most important to foreign tourism.”

Martin Jansen van Vuuren, director: Advisory Services, Grant Thornton 

On Eskom matters

“It is disappointing to hear that taxpayers will continue to fund Eskom, not just through increased tariffs, but also through a commitment by the President to give Eskom R23bn over next year. How are taxpayers assured that this will make a difference to the now critical energy crisis?”

AJ Jansen van Nieuwenhuizen, Partner: Tax, Grant Thornton Johannesburg

“The the June 2014 SONA the President mentioned that progress of Medupi power station construction will be accelerated.  Although this year’s SONA touched on the construction of the three new power stations continuing, no indication was made on whether acceleration has been achieved or is still planned.  This is disappointing given our current power crisis and business would have welcomed some clarity here, especially given that Grant Thornton’s IBR statistics show that 80% of business were negatively affected by poor Government Service Delivery and Utilities in particular during 2014.  Grant Thornton hopes this does indeed feature in the war room arsenal.”

Christelle Grohmann, Director: Advisory Services, Grant Thornton Johannesburg

On Land ownership by foreigners

“We send a delegation to Davos, saying that we are open for investment and business, but then follow this up by saying that foreigners cannot own land.  These inconsistencies do not help our cause in any way.”

AJ Jansen van Nieuwenhuizen, Partner: Tax, Grant Thornton Johannesburg 

“It was very surprising to hear that the President announced the conversion of freehold property rights of foreigners to leasehold. It begs the question whether this will unintentionally discourage Direct Foreign Investment into South Africa. We urgently need foreign funds to grow our economy.”

Andrew Hannington, CEO, Grant Thornton Johannesburg

“The President’s announcement this evening that foreigners cannot own land immediately raises concerns about how this will impact on foreign land ownership of game farms as well as foreign investments in hotels in South Africa.”

Martin Jansen van Vuuren, director: Advisory Services, Grant Thornton

On wages

“It is encouraging to hear that the commitment made in the June 2014 SONA to introduce a national minimum wage is still on the agenda, which will make a positive impact on reducing income inequality. However, to get the buy-in of business, labour laws need to be neutralised to serve not only the interests of employees and labour unions, but business as well.”

AJ Jansen van Nieuwenhuizen, Partner: Tax, Grant Thornton Johannesburg

On infrastructure

“Although the R26bn investment in road improvement and maintenance is welcomed, it is concerning that transport infrastructure only received a brief mention in the SONA tonight.  Particularly as our IBR stats identified that 62% of private businesses were negatively affected by poor government service delivery issues related to road matters in 2014 (Q4:2014)

Christelle Grohmann, Director: Advisory Services, Grant Thornton Johannesburg

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