#SONA2020 – Ramaphosa backs use of pension funds to rescue Eskom as he vows to fix fundamentals

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PARLIAMENT, February 13 – Facing crises all round, President Cyril Ramaphosa on Thursday decreed 2020 his government’s year of tending to the fundamentals required for a well-run South Africa and gave his support to a contested plan to use civil service pension funds to bail out Eskom.

Ramaphosa began his state of the nation address (SONA) 90 minutes later than expected after tireless objections and points of order from the Economic Freedom Fighters forced an adjournment, after which Julius Malema and his fellow 43 MPs held a media briefing on the steps to the National Assembly and said they would not return for the speech.

The theatrics focused on former president FW de Klerk, seated in the public gallery, and their most recent number one enemy, Public Enterprises Minister Pravin Gordhan, and were clearly expected by the African National Congress (ANC), who kept a dignified united front behind Ramaphosa.

The president promised to establish a sovereign wealth fund and a state bank, to use one per cent of the budget towards creating youth employment and to extend Eskom’s capacity while easing its debt burden.

Click here to read President Ramaphosa’s 2020 SONA 

He began his speech with a quote from late former statesman Nelson Mandela clearly chosen to galvanise a country battered by stalled economic growth, record unemployment and the prospect of another 18 months of load-shedding.

“Our march to freedom is irreversible. We must not allow fear to stand in our way,” he quoted from Mandela’s famous speech on the balcony of Cape Town City Hall upon his release from prison in February 1990.

Ramaphosa said similarly, South Africans at present did not have the option of succumbing to fear and despondency.

“As we confront great challenges, as we endure troubled times, we too cannot allow fear to stand in our way. We must forge ahead, permitting neither adversity nor doubt to divert us.”

He said the country faced stark realities, with economic recovery stymied by persistent electricity shortages. It was ordinary South Africans who bore the brunt of the crisis, Ramaphosa acknowledged, as forces beyond their control prevented them from bettering their lives.

“Even as jobs are being created, the rate of unemployment is deepening. The recovery of our economy has stalled as persistent energy shortages have disrupted businesses and people’s lives. Without growth there will be no jobs, and without jobs there will be no meaningful improvement in the lives of our people.”

He acknowledged that public finances were weak, and state-owned enterprises chronically in distress. Ramaphosa said critical steps would therefore be taken in 2020 to build a capable state and place the country’s stalled economy on the path to recovery.

“This year, we fix the fundamentals. We pursue critical areas of growth. And we ensure excellence in planning and execution in government.”

Turning to Eskom, he appeared to give fulsome support for the proposal by the government’s labour partners to delve into Government Employees Pension Fund under the management of the Public Investment Corporation (PIC) to cut Eskom’s debt by more than half.

Ramaphosa lauded as “historic” inconclusive talks held in recent days at the National Economic Development and Labour Council (NEDLAC) on the proposal to give Eskom a bail out of R254 billion, but has met with opposition from several quarters.

The PIC issued a statement on Thursday morning saying it had not been consulted and would have to consider such a move cautiously.

“The social partners – trade unions, business, community and government – are committed to mobilising funding to address Eskom’s financial crisis in a financially sustainable manner,” Ramaphosa continued.

“They would like to do this in a manner that does not put workers’ pensions at risk and that does not compromise the integrity of the financial system.”

But Ramaphosa conceded that the reality was that, an eventual deal on PIC funding alone would not resolve the country’s energy crisis.

“While they work to finalise this agreement, the reality is that our energy system will remain constrained until new energy generation comes on stream.”

Government intended to sign deals that would increase Eskom purchase from wind and solar plants to augment capacity as it battles a maintenance backlog that around 10,000 megawatt off the national grid daily.

Similarly, Ramaphosa said, the government alone could not solve the country’s economic woes or stimulate the inclusive growth that was needed, a message that speaks in part to sectors of his own government stubbornly attached to a state-led economy.

“Let us frankly admit that the government cannot solve our economic challenges alone. Even if we were to marshal every single resource at our disposal, and engage on a huge expenditure of public funds, we would not alone be able to guarantee employment to the millions of people who are out of work,” he said.

“As we work to fix the capabilities of the state, we know that growth and job creation will in large be driven by private enterprise.”

He said the government would work with urgency therefore to create “an operating environment that is favourable to doing business” and suggested it would negotiate with labour to “address several issues that have been barriers to job creation”.

To tackle youth unemployment of 50 per cent, his Presidential Youth Employment Intervention would be implemented immediately to turn back the problem over five years. Finance Minister Tito Mboweni would give more details on the initiative in his national budget later this month, he said.

Ramaphosa also left it to Mboweni to say more on the state bank and sovereign wealth fund meant to “preserve and grow the national endowment of our nation”. He promised far-reaching economic reforms but gave scant detail beyond saying it would include the blueprint for economic transformation National Treasury’s released last year. At the time, it earned Mboweni the wrath of the ANC’s partners to the political left.

– African News Agency (ANA)