On 2 February 1990, for example, the late President FW de Klerk used his State of the Nation speech to announce his decision to release Nelson Mandela from prison and to unban the African National Congress and other banned liberation organisations. The SONA is the speech that outlines the government’s political priorities for the year.
The SONA is then followed by the Budget Speech at the end of February, in which the minister of finance outlines how we are going to pay for the president’s plans. On 21 February 2018, for example, the then minister of finance Malusi Gigaba announced the controversial increase in VAT from 14% to 15%. It was the first VAT increase in 25 years and was expected to raise approximately R22.9-billion more for the fiscus.
Expect February 2024 to be pretty much the same, but there is one complication: it’s an election year. As we have noted in this column in the past, election years are full of noise, promises, and empty talk. Much of the noise of February will be about politicians crying out to you, the voter, that you must notice them. They want to be seen, to get your attention, so that they can get you to vote for them.
So, briefly, this is what February will likely hold for us and how to navigate it:
February is full of noise: As usual, parliament will feature members of the opposition shouting down and possibly even protesting loudly against President Cyril Ramaphosa delivering his State of the Nation speech. It is all spectacle, largely from the Economic Freedom Fighters, to draw attention to themselves. The anger they display is not real. It is for the cameras.
Try to remember that when they have finished performing for the cameras, the ANC and EFF are in coalition in cities such as Johannesburg, Ekurhuleni, and others. The more useful thing to do, as an ordinary citizen, is to listen to non-governmental organisations such as Section 27 and others who usually make very credible demands and suggestions to the president around his SONA speech.
This year’s February speeches will be hot air: Because the SONA and the Budget come just before the 2024 election, it means they are effective for a mere three or so months. After the election, a new president and new finance minister will have their own priorities. So, please take these promises with a pinch of salt.
Polls indicate that the ANC could perform so badly that an opposition coalition could take power. My view is that the ANC will indeed take a beating, but I also believe that it will still be able to form a coalition and lead the new government.
What is crucial here is that the ANC will need to accommodate the policies of its coalition partner, which means that a new SONA after the election will be different from this one. Bottom line: We will have to wait for the composition of the next administration to see where South Africa is really going.
February is always a tough financial month: Budget Month is always tough because markets are always looking out to see whether there is any new economic direction that the government is taking. The markets are jittery. Bloomberg points out that February has historically been a terrible month for the rand.
The news service points out that in February 2023 the rand fell 5.2% against the dollar. In February 2020, the rand slid by 4% while in February 2019, it slumped by 5.9%.
“All in all, data show the rand has endured an average 2.9% loss in February over the past five years, while the EM (emerging markets) currency index slipped 1%,” it said.
Given that the political, economic, and fiscal issues in SA have heightened in the past year, it is likely that the rand will take a beating again. So, hold tight.
February may mean ANC-Business fight deepen: A major battle is brewing between government and the business sector over the National Health Insurance scheme. South Africa’s umbrella business body, Business Unity SA (BUSA) has written to Ramaphosa and urged him to send the controversial National Health Insurance (NHI) Bill back to Parliament for re-evaluation and amendments.
It said the bill could spell disaster for the country’s health system in its current form. This long-running battle will, in my view, become one of the biggest between business and Ramaphosa in the next few months and years. Indeed, if the Ramaphosa administration signs the bill into law (it is on Ramaphosa’s desk) then the warm relationship between the ANC and the private sector will enter a brittle, even adversarial, phase.
February brings us closer to the elections – and resolution: A pre-election period brings a lot of uncertainty along with it. An election date will give companies and individuals clarity to plan.
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