CEO of Greeff Christie's International Real Estate Mike Greeff weighed in on State President, Cyril Ramaphosa's State of the Nation Address. The speech focused on key areas affecting South Africans namely; job creation, education programs, State Owned Enterprises (SOE's) and load shedding.
The President's address to the nation started with optimism and he made a point of reflecting on the good that has happened during the past year. He said that although the economy is in a dire state, the youth population has grown significantly and that there is more access to education across the board. He furthers the positives by saying that we are a country with boundless potential in our minerals, wildlife, infrastructure and tourism - all of which could improve our economy.
However, he goes on to saying that it is necessary to recognise what's wrong with the country in order to retain complete transparency. Ramaphosa says that the economy has not grown significantly for over a decade and that unemployment has still not grown enough to render it a non-issue. Further to this, state-owned enterprises and public finances are under severe pressure and the goal, moving forward, is to repurpose SOE's to bring about wealth - ensuring that all SOEs can fulfill all their requirements and be financially sustainable without relying on government financing.
With regards to Eskom and load shedding, the President mentioned that, as we all know, load shedding has had a negative effect on the economy. This is largely due to debt, lack of capacity, gross mismanagement as well as the state capture. Unfortunately, load shedding is unavoidable and is set to remain a constant in South Africa for the next few months. The bright side being that is should be more predicative and less disruptive. There is a goal to pursue renewable energy ie. Hydro-electric systems that can be added to small scale energy production. Eskom still needs to de-bundle into three sections with each section having its own board. It is unclear as to whether these divisions will be private, or state led. On the plus side, NERSA will be processing applications for alternative energy which makes it possible for more privately owned companies/entrepreneurs to take advantage of their skills.
The subject of land expropriation without compensation was not as clearly addressed as I would have liked, however, it is a positive to note that 700,000 hectares of state-owned land will be given for agricultural land production.
The real estate sector can take a lot away from the President's address and should have a fair amount to look forward to post budget speech. The President is positive that by combating unemployment through education and post-school programs, the economy's stability should improve. He is also positive about the effect the prospective improvements of our ports (mainly Durban's) will have on import and export and as a result, will make South Africa a more willing investment for our foreign investors.
The President has plans to make Lanseria a city full of state-of-the-art infrastructure - a ''smart city'' as he called it and with this comes an invitation to foreign investors. The development of infrastructure is an excellent way to encourage foreign companies to prove to the world that we have first-world capability as well as infrastructure that works and is reliable. The re-announcement of entrepreneurship support structures means that young people will have more disposable income to spend on long-term purchases like homes as well as a lessening of student debt. While on the topic of students, the President has also promised R64 billion over the next few years in building student accommodation which is a definite plus for the real estate industry as foreign investors would be more prone to invest in the youth.
Accountability of civil servants was prominent in the address and this should also help restore faith in South Africa on a global scale. Ramaphosa promises to expose corruption amongst civil servants and to prosecute implicated parties. This is a very welcomed statement of intent as many South Africans feel jaded as a result of the wheels of the justice system moving very slowly or not at all in the past.
All in all, despite the rocky start to the SONA, the President's address was one filled with not only transparency but promise as well. As in previous years, only time will tell if these goals will be achieved but we, as South Africans, wait with bated breath.