2022 State of the Nation Address Debate by Chief Whip of the National Council of Provinces Cde Seiso Mohai

Theme: "Defending our democratic gains to build a united and prosperous South Africa"

15 February 2022

Speaking to: A practical guide to what Economic Reconstruction and Recovery means for the people.

Honourable Speaker and Deputy of the National Assembly
Honourable Chairperson and Deputy of the National Council of Provinces
Honourable President and Deputy of the Republic of South Africa
Honourable Members

A State of the Nation Address debate is about the assessment of progress since the previous State of the Nation Address against the backdrop of the 5-year Medium Term Strategic Framework. It is about assessing the impact of policies and programmes of the government in addressing the needs of the Nation. It is also about assessing the political and economic state of health of the Nation. In our engagement we should be able to persuade one another through superior logic, rational theory and ideology.

What has not assisted the debate on day one is rhetoric, cliches, generalisations, statements which have neither facts or evidence other than the individual subjective pinion.

We should extol the art of argumentation and not leave the nation believing that all we can do is to simply use political vulgarity, and in some cases just be vulgar and think that anyone can is going to respect you or be impressed. We look forward to a day of quality debate, with informed recommendations.

Our lived experience in Provinces as we do our constituency work is that the emergence of the signs of economic ghost towns occur within one decade. From an industrial area like Welkom, to the distressing signs of manufacturing shut downs and secondary industry withdrawing and moving elsewhere are common. Common to all of this is rising unemployment, widening inequality and deepening poverty.

So, what does it practically mean and what do we see across our Provinces? Our stated policy position is that an infrastructure led growth drive is the best proven mechanism to use not only to create jobs but to provide critical infrastructure for local economies to grow.

This infrastructure led growth, in-turn provides the opportunities for re-industrialisation and manufacturing to have a base from which to grow. Both of these interventions provide for manufacturing of goods that produce the resources to feed back into re-industrialisation and manufacturing. The ERRP through its sector master plans sets out immediate and short-term measures that provide different stimuli in the economy, focused on industrialisation and localisation;

But progress is there, for those who have the honesty to admit it is there - for example in 2021 the President opened a number of new production lines around the country one of these being for the new Toyota Corolla Cross manufactured in eThekwini; vaccines and anaesthetics made in Gqeberha by South African workers and technicians; wear clothes made in Cape Town by South African designers and clothing workers; soya-oil and poultry feed that comes from Mpumalanga, made by South African workers, and so on. Localisation is increasingly being supported by retailers, Shoprite Checkers buying all their sugar from local farmers, Woolworths and Pick 'n Pay supporting local farmers.

These initiatives are supported by Government's procurement policies, set asides for women and youth and by master plans of the Economic Reconstruction and Recovery Plan.

And yet we must listen to those who want to tell us nothing is happening, nothing is being done, remove the whole cabinet. What is worse it comes from Members of Parliament who are supposed to have some integrity and not use false statements to generate support for their parties or use deflection to detract attention away from their own problems.

Our push is for an inclusive transformative economic project involving those who are defined as being economically active, being part of the initiative to bring them into the economy. Policy and projects are designed for progress, growth and development and using where possible, labour-intensive methodology.

We can justifiably state that, in our Provinces we have infrastructure investment projects as part of the R340 billion network industries such as energy, water, transport and telecommunications. Whilst progress is uneven for the people, the arrival of infrastructure means better access to things and job creation.

Our focus therefore must be on where we can exert maximum growth and development. Household consumption contributes the highest % towards GDP growth followed by government spending consumption and that both state and private sector investment have roughly the same % contribution towards GDP growth.

As part of building an inclusive economy, this needs to inform us where emphasis should lie in how we allocate our budget.

The period between 2003 and 2008 produced our highest GDP growth and if we are to examine why, it was driven by household consumption, the demand side of the economy.

It is also true that we did not during this period, experience huge employment growth but we certainly had growth which we have not experienced since 2008. This experience needs to inform us of where we need to go, by investing more in our people.

Therefore, in welcoming the R350 social relief of distress grant extension, and other practical forms of stimuli to our people, their intension is to provide a basic economic platform for people to create and contribute into the economy at an initial rudimentary level as they become drawn into the economy. It is also about providing the means to prevent hunger and to survive.

Our debate needs to acknowledge that we are in a process and a deep engagement, very characteristic of the ANC, where evidence and facts prevail, informed by indicators such as the food poverty line. The totality of these must inform where we are going in the future.

The success of the comprehensive social protection programme is not a debate about whether we can afford it, but rather a debate about stimulating aggregate demand in the economy and providing transfers to households who in-turn push the demand side of the economy and stimulate growth.

So, we should treat consumption and expenditure as positive contributors to growth in the economy not the other way round. Health and Education must be treated as an investment in our people and in the economy in the present and the future.

As the 54th ANC National Conference of 2017 stated, the debate continues informed by the balance of evidence. In this context the important decision by the Reserve Bank in 2020 at the start of the Covid Pandemic, to make the cost of money cheaper, was an extremely important intervention in which it provided a stimulus to the economy, allowed economic space for business to adjust and provided relief for the banked in our society. It is indeed disappointing that it has not been seen as necessary to sustain the intervention as we move forward, unlike most other developed economies.

We need to re-emphasis, that a new consensus and the emergence of a social compact has to place the masses of our people who are poor, at the centre of benefitting from interventions.

The price of inequality which today we are seeing before our eyes, should instruct our institutions that they have a role to play that is not stuck mechanically behind a notion that we have no alternative or that our hands are tied.

Before our next speakers misconstrue what, I am saying, we have at all material times to be transformative, pragmatic and balanced. There are no populist and easy solutions. Rather we have to confront the challenges of Unemployment, Poverty and Inequality through practical interventions that involve working with our people, not making promises, but practically involving them in an inclusive way to help solve the challenges and they become their own liberators, a deep and thorough going exercise in which development takes place.

In this context let us examine the responses we have had to listen to since the President delivered his State of the Nation Address. One party is so excited that they clap hands and boldly claim that the President has adopted their blue economic policy book and that the State is out as it cannot achieve economic growth, the President has admitted this and is handing over to the private sector. This mechanical understanding of how an economy works is dangerous. The State leads in investment and this investment generates interest from the private sector to get involved and the State set the terms and conditions and what it wants to get out of any contractual agreement. At no time does the State leave the economic stage. In fact, if it is not satisfied, it penalises the private sector. Classically we have a mixed economy and for the ANC the adoption of such a model goes back to the 1969 Morogoro Consultative Conference. The debate on the nature and character of the mix is natural and will ebb and flow depending on influence at any point.

What the State is interested in amongst others, is the need for the correct skills set, the capability to deliver on a particular project, and competency. The decision around who can provide this, since skills reside both in the public and private sector, is what the State will resolve at any particular point in time. This is done not only to harness private sector capital for public good, but to strengthen State ability to deliver. At the end an agreement, the State, funded by through the Division of Revenue, provides the finances for any programme to get underway based on government agreed plans.

Our bigger concern as the ANC is that the levels of inefficiency in the private sector need to be far more rigorously addressed. We need to see indicators of performance that are far higher than they currently are. Consistent overruns on projects, spiking of prices, is all part of a form of corruption.

For those in borrowed red, who say SONA is a vote of no confidence by the President in the President and his Executive, because of the reference to the private sector and job creation. Again, this is another mechanistic approach, which is not supposed to be coming from so called Marxists who are supposed to be more endowed in theoretical understanding.

It is not a question of either, or. A developmental state leads, it directs, it influences, and it is open to be persuaded when it is in the interests of the masses. Without the State where would the private sector be? At all material times the State must retain a firm economic hand on where things are going, precisely because the people have entrusted the State through the governing party to lead. They did not vote for a private company to lead.

Economic and social transformation is driven by the State and this will remain so. The private sector knows this. If it were not so, they would turn everything into a commodity, that's the nature of capitalism. So, the state has to protect the people from such a situation.

State capability and capacity to deliver has been weakened, our oversight reports, the Zondo Commission, the High-Level Panel Report all demonstrate this.

Economies are built by working together in an inclusive manner focused on addressing needs, building skills that address the demands of a developing economy and changes in the economy, all of which require new skills sets.

Our economic vision has to be practically grounded on an economic theory, an economic plan and an ability through practice, to build the capability of each sector and rise to the changing nature of a complex economy like ours. We are dealing with a complex political economy that requires the capability of those who will shape it going forward to have the foresight that interventions have an impact and that impact must address the needs of our people first.