President Cyril Ramaphosa will deliver the State of the Nation Address (SONA) on 6 February 2025, marking the first speech of the Government of National Unity (GNU). With businesses eagerly awaiting the address, there is hope for prioritization of economic growth initiatives amid challenges facing the South African economy.
Business Leadership South Africa CEO Busiswe Mavuso outlines key expectations for the President, particularly the aim to achieve 3% economic growth by the end of 2025. Mavuso emphasizes this growth target as critically necessary to make substantive strides toward reducing unemployment, enhancing investment opportunities, and generating the tax revenue needed for government social programs. "That is the kind of growth... required to support government's social programs," Mavuso stated, highlighting the urgency behind these expectations.
The anticipated economic growth hinges on addressing several dire issues plaguing the nation, including electricity shortages, logistics challenges, water constraints, and governance failures. These are seen as fundamental roadblocks hampering productivity and confidence across various sectors. Mavuso noted the importance of continuing to improve electricity security and reinforcing efforts with Eskom’s unbundling and new generation commissioning. "While we have made dramatic progress... the reform process still has some way to go to assure load shedding is well behind us," she added.
Awareness of the interconnectedness of economic growth and social welfare continues to take center stage. Ramaphosa has reiterated the importance of the Social Relief Distress (SRD) grant aimed at assisting millions of impoverished South Africans. Speaking about the SRD, he stated, "We will use this grant as... source of income for unemployed people," reflecting the government's commitment to providing basic support to citizens faced with severe unemployment rates exceeding 32%.
Mavuso also raised attention to the broader impact of the anticipated G20 summit South Africa will host later this year. The President can leverage the SONA to stake the country’s commitment to leading the G20 agenda, promoting global policy shifts conducive to growth, especially within the sphere of developing nations. "Momentum is also building... G20 event later this year," suggested Mavuso, indicating the potential for showcasing South Africa's recovery and robustness to international stakeholders.
Looking beyond the SONA, the Finance Minister, Enoch Godongwana, will deliver the 2025 Budget Speech shortly thereafter. This budget is particularly anticipated as it will serve as the financial roadmap for the upcoming fiscal year, with analysts closely monitoring potential reforms aimed at improving the business environment. Economists speculate on changes from tax structures to revenue collection efficiencies, with possibilities of no significant increases to personal income tax or VAT rates. There is optimism within the financial sector about government actions post-SONA.
Mzimasi Mabece, Head of Fixed Income at Melville Douglas, noted, "Expected to deliver... healthier prognosis of government finances," considering the recent improvements within the nation’s economy, including strengthened currency exchange rates and reduced inflation forecasts for 2025. The anticipated budget address is set against the backdrop of encouraging winds for South Africa’s investors, expecting clear and consistent policy direction from the government following the SONA.
The forthcoming SONA promises to be pivotal for South Africa, guiding not only the G20’s strides forward but also shaping the economic philosophy of the GNU. With businesses and citizens alike watching closely, President Ramaphosa will bear witness to the weight of expectations resting heavily on his address.