#SONA2019: SA government 'building a mansion on a foundation of termite-ridden wood'

Yael Geffen, CEO of Lew Geffen Sotheby’s International Realty

“There are a million jokes with that punchline, but I’m currently seeing the dark side of Chögyam Trungpa’s brain bender that goes ‘The bad news is you’re falling through the air, nothing to hang on to, no parachute. The good news is there’s no ground’.

“For the country, the good news is that the government’s foreign investment attraction strategy seems to be on track. Last year’s investment conference generated pledges of around R300bn in investments, and in the first nine months of the year, R70bn in FDI arrived in the country, according to President Cyril Ramaphosa.

“FDI is critical for economic growth, but the bad news starts with yet another rescue plan for Eskom and while Ramaphosa is adamant that the fiscus won’t shoulder the SoE’s debt, there seem to be few qualms about passing the burden of payment onto the private sector.

“Eskom is R420bn in debt, energy experts estimate it has a staff bloat of more than 50% and AfricaCheck has put the average cost to company per employee at R600,000 per annum. This while Eskom is asking Nersa for a tariff increase this year of more than 15%.”

Serious spadework needed

Geffen says the fundamental failing in the president’s plan is that the government is attempting to build a mansion on a foundation of termite-ridden wood. It looks pretty to the world for now, but it will fall in on itself sooner rather than later unless some serious spadework gets done.

“We can attract investment and shout the good news, but when the global money and the investors arrive in South Africa, we have to start the narrative with the bad news of how operational costs will drive their profit margins into the ground because the power utility is broken and that they’ll have to pay staff more to cover basic bills at home.

“But wait; there’s more. The other bad news is if investors sink billions into land and create infrastructure, we’ll also have to tell them they’re in the same boat as the country’s citizens and there’s no guarantee they’ll get to keep it or see a cent for it should the government decide to take it away. This with Ramaphosa’s adamant reiteration during the SONA that the government is going to drive through the amendment to Section 25 of the Constitution that will confer on them the right to expropriate land without compensation.

“And just like that, the pretty mansion that the government is trying to tell the world is the new ‘us’ collapses, and those who’ll suffer most if that happens are South Africa’s citizens.”

'Suitably cheery opening of Parliament'

Geffen says that on the face of it, Ramaphosa’s second SONA was upbeat and would most likely be broadly hailed as good news for the country – a popular and suitably cheery opening of Parliament in an election year – but a single scratch to the glossy coat of paint would reveal the sharpness of the precipice below.

“Too many people fought too hard for liberation and they don’t deserve to have their dream ripped away from them in this manner. Cabinet needs to think long and hard about who its members work for – not the state, but its people.

“As with all election years, though, it’s probably best to consider any speech to be a campaign speech, and with any luck on May 9 after the poll the cabinet will crack the whip and get the government working hard to affect a successful turn-around strategy for the national economy.

“They’re responsible to around 50 million bosses, so hopefully they’ll put their backs into it and get the job done.”