News in South Africa 10th February:

1. SONA 2023 disappointing:

Reactions to president Cyril Ramaphosa’s State of the Nation Address are flooding in, with most commentators left wanting.

SONA 2023 disappointing
President Cyril Ramaphosa during oral replies” by GovernmentZA is licensed under CC BY-ND 2.0.

Ramaphosa delivered his by-the-numbers address on Thursday evening (9 February), featuring all the qualities South Africans have come to expect from the annual event.

Proceedings were disrupted by the Economic Freedom Fighters, who were subsequently ejected from the sitting, and the president delivered a speech touching on all the expected points: the power crisis, economic growth, poverty, and promising a better life for all.

The stand-out announcement from the address was the declaration of South Africa’s energy crisis as a national state of disaster. However, even this was broadly expected, after the ANC last week indicated that this was the path it was going to take in government.

The rest of the address was littered with information South Africans are already aware of (there is an energy crisis; there is a plan to deal with the energy crisis; the plan is not happening any time soon), and ultimately painted a bleak picture for the state of the nation, with a hopeful message that the country will rise up to meet the challenges.

Broadly, the SONA:

  • Emphasised the risk that insufficient energy supply poses to growth and investment in the economy.
  • Noted the need to arrest the deterioration in basic service delivery rolled out from defunct municipalities.
  • Acknowledged the widening trust deficit between itself and other key stakeholders in the economy as is evidenced by slow progress in socioeconomic development.
  • Highlighted the shortcomings of law enforcement agencies which have led to a rising level of lawlessness in the country.
  • Confirmed the continuation of the social relief of distress (SRD) grant.
  • Underlined the poor performance of the country’s municipalities and offered up interventions to improve professionalism in public service.

Civil society, businesses, unions and political parties were not convinced, however.

More empty promises

According to civil action group Outa, the president’s speech missed the mark, and delivered only more empty promises.

“The President’s State of the Nation Address failed to inspire confidence. He acknowledged many of the problems but did not offer believable solutions. He offered many promises, many of which we’ve heard before,” the group said.

“It would be wonderful if all these promises were realised or even underway. The President sought to inspire hope, but he succeeded in reminding us how bad the situation really is. His address confirms the country has been poorly managed for too long.”

2. State of disaster for load shedding:

In 2015, and many, many times since, President Cyril Ramaphosa promised that load shedding would soon be history.

For the past five years, Ramaphosa has been where every buck stops, but for years before that, he was Jacob Zuma’s delegated Eskom saviour, setting up war rooms and commanding structural changes to the electricity system.

On Thursday night, he handed that torch – or perhaps poisoned chalice – to Nkosazana Dlamini Zuma, the candidate he beat to become president despite her backing from the ANC faction mostly referred to as the Radical Economic Transformation (RET) group.

That gives Dlamini Zuma a tremendous amount of theoretical as well as practical power, which ANC politics will make almost impossible to wrest away from her again.

“In a time of crisis, we need a single point of command and a single line of march,” Ramaphosa said in his State of the Nation Address, in what was likely intended as a continuation of his recent message on load shedding: everyone needs to pull together to solve a problem that the government manufactured.

But 50 words later, Ramaphosa referred to a just-declared national state of disaster on electricity, and that document very firmly makes Dlamini Zuma the single point of command.

In its invocation of legal powers, the disaster declaration is a direct copy of the one which put South Africa into a state of disaster due to Covid-19. It gives the exact same five reasons why Dlamini Zuma could issue “directions”, or rule by decree: to protect the public, to offer relief, to protect property, to combat disruption, and “dealing with the destructive nature and other effects of the disaster”.

3. Load shedding not covered:

Short-term insurance companies are facing significant headaches in South Africa as the country faces ever-worsening load shedding, says Mtho Maphumulo, an attorney at law firm Adams & Adams.

Maphumulo said that some short-term insurers have clarified this week that they will not provide cover for damages flowing from an electricity grid failure.

According to the legal expert, there have been reports of global pressure from reinsurers that South Africa is becoming riskier to insure. This follows recent compounding calamities such as the pandemic, Durban floods and July 2021 unrest adding to the damaging energy crisis.

This seems to have now triggered some short-term insurers to reconsider their position insofar as cover for electricity grid failure is concerned.

“This approach – not ensuring grid failure related claims – is most likely to be adopted by most short-term insurers, given the fact that there is no end in sight about the energy crisis – the powers that be do not seem to have a concrete solution to remedy and stabilise the situation.”

Most insurance companies will likely make new changes to reduce their risk exposure, stated Maphumulo.

“It is therefore critical that the insured are aware of the industry changes so that they can take necessary decisions regarding their insurance policies and be covered for exactly what they want to be covered for,” said.

Adams & Adams listed the below considerations for the insured:

  • Be on the lookout for correspondence advising of the changes. The insured must ensure that their contact details (with the insurer) are up to date, failing which the insured may be caught by surprise at the time of claiming.
  • Where a broker is involved, it may be prudent to ensure that you, as the insured, verify whether there has been any communication from the insurer regarding changes to the policy.
  • Some changes are effected at the time of the annual assessment – therefore, you, as the insured, must be on the lookout for whether the relevant provisions on the policy wording/schedule have been changed in any way and whether there has been any change in the premiums. Where a broker is involved, there is a duty on the broker to explain to the insured if there are any changes to the policy.
  • It will also be crucial to check whether such an event is regarded as a special peril in the policy – in which case you, the insured, will need to decide whether you want to take out cover for such.
  • Cover for special perils comes at a price, so one must be cognisant of that fact. For some businesses, especially those handling combustible material, flammable liquids, heat-generating objects and farms, may need to seriously consider taking out such cover, given their exposure to the risk.
  • Where terms of the insurance policy have been changed without any notification to you as an insured, you are most likely to successfully challenge any repudiation that may result.

4. Unstable power and SOEs cripple growth:

Standard Bank sees South Africa’s escalating power crisis, and the country’s ‘political climate’ which is crippling state-owned entities (SOEs), weighing on growth in 2023.

Delivering its economic outlook for South Africa for 2023, Standard Bank chief economist Goolam Ballim said he anticipates that South Africa’s GDP will expand 1.3% in 2023, quite a retreat from the bank’s previous forecast of 2.3% for 2022.

It predicts 1.8% growth in 2024.

Its forecasts closely mimic those of the International Monetary Fund (IMF), which predicts the economy will grow 1.2% this year, and is far more upbeat than that of the South African Reserve Bank (Sarb), which sees South Africa’s GDP growing by a meagre 0.3% this year.

Delivering the first Monetary Policy Committee (MPC) statement for the year last month, Reserve Bank Governor Lesetja Kganyago slashed South Africa’s growth forecast by half, saying the burden of load shedding will hamper growth.

More disturbing than the rolling power cuts that South Africans have become accustomed to is the level of unplanned outages, Ballim said.

“Last year, we estimate that growth could have been 1.7% stronger, with the rather utopian belief of unblemished power supply, which of course was not the case. And as we spill over into 2023, it’s quite conceivable that we could have a similar level of subtraction to economic growth, as a function of power rationing,” said Ballim.

5. Household tech upgrade:

Ramaphosa says government will migrate all remaining households to digital television signals and will switch off all analogue transmissions.

He said that this will release valuable spectrum for the rollout of 5G mobile networks and will reduce the cost of data.

This is in line with the government’s vision to have affordable, high-speed internet for all, limiting the digital divide.

All information sourced from articles posted by: BusinessTech, Business Insider, Moneyweb, and SANews.

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