Did SONA 2020 restore investor confidence in SA?

While it is hardly news that what is desperately needed in South Africa is economic growth and a dramatic increase in the employment rate, it was nevertheless reassuring to have President Cyril Ramaphosa address these issues and flag them as a key priority in his State of the Nation address last night. 

BetterBond CEO, Carl Coetzee says that restoring investor confidence by tackling corruption and government debt through realistic and attainable measures is foundational to demonstrating to ratings agencies and investors that we are serious about sustainable change and a better, more stable future for all. 

Eskom & load-shedding 

CEO of Jawitz Properties, Herschel Jawitz believes that the key to restoring economic growth is confidence by business to invest and consumers to spend. Key comments by the President in his address that may start to restore confidence include decisive action on Eskom, load shedding and the need to accelerate the inclusion of alternative energy sources.” 

“We remain concerned about the economic burden Eskom and other State-Owned Entities place on the fiscus and, by extension, the consumer. A vast portion of the population is already struggling to make ends meet, leaving little room for them to pay rent, save for a deposit on a property or be in a favourable position to qualify for a bond,” says Coetzee. 

Land Expropriation 

“In addition, his comments regarding the finalisation of the amendment to Section 25 of the constitution that affects land expropriation are welcomed. It is, however, the uncertainty around the amendment which is causing the damage and not necessarily the bill itself.”

Coetzee says that the question around land expropriation without compensation, or rather the lack of a clear policy on the matter, has been plaguing the country and it was a pity the President did not use this opportunity to offer clarity around this contentious issue.

Jawitz says: “Markets and investors don’t like uncertainty and the sooner this bill is finalised the better. Once again, the key test for the implementation of the many initiatives highlighted by the President was summed up in his comments that ‘we will embrace change and fear nothing’. If confidence is to be restored, South Africans will have to see action on the ground.”

Investor Confidence 

“From a residential property market point of view, the current market in terms of bank lending, interest rates and property prices offers the best buying opportunities since 2008. The lack of confidence to think long term and invest long term in residential property is what is holding the market back rather than affordability. The state of the residential market is a crisis of confidence,” adds Jawitz. 

“While some might feel that the presidency has not done enough to solve the country’s most pertinent issues, others will have had their confidence restored by the solutions posed in this address. Though we might notice a positive upswing in market activity following the SONA caused by this renewed confidence, this momentum will wane if people become disillusioned by a lack of implementation. Only once his statements around lowering unemployment, improving economic growth and dealing with the Eskom crisis come into being, will we start to see a notable and sustainable change in the real estate market,” says Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett.

Goslett concludes: “At the end of the day, this country does not have an economic problem. It has plentiful resources and immense growth opportunities. There should be no reason we are not among the world’s elite economies. Unfortunately, we have too many people in positions of leadership who have a lack of integrity and a culture of greed and indifference. True change in the form of investment and economic growth will only come about if there is follow through on corruption and consequences for corrupt individuals. The other solutions President Ramaphosa posed during his address will mean little to nothing if we do not get this right,” Goslett concludes.