We all need good news… let’s connect the dots

A look at some of the positive milestones SA has achieved.

I like to believe that people who know me see me as an optimist. I always try to find the golden lining in every dark cloud. With turmoil in the markets, a war in eastern Europe and a failing SA government resulting in power outages and tired and broken infrastructure, it is really hard to remain positive.

As South Africans, it is extremely difficult to see our way clear to a better more financially secure future where all can prosper. Beware, bad news is like cancer… It will consume you and destroy you if you surrender to its threat. Unfortunately, we seem to zoom in on bad news often ignoring the positive news…

With social media, there is no limit to the amount of information we can access. As the first port of call, I urge you to not believe everything you read or hear via social media. There is probably as much misinformation on the internet as there is factual information. News stories of the day get twisted and manipulated to attract readership and to increase the number of views which ultimately determines the monetary value of the article. There is also no shortage of doomsday prophets…

I try to make a concerted effort to find good news stories. I do this to keep on convincing myself that there is in fact a golden lining on those very dark clouds looming on the horizon. I try to find facts that can show my clients and people who I meet that there is hope. Even if it is a slither of hope and that all is not lost as is so often portrayed.

I recently came across an article that provides such hope and I would like to share it with you.

The article is an investigation of facts. When it comes to governments (our government maybe even more so than others), we get lip service by the tons to the point that we do not believe a word they say! JP Landman took the view of let’s forget what we are promised by our politicians. Let’s go back to 2018 when Cyril Ramaphosa became president and let’s connect the dots of what actually has been done thus far.

I am not going to harbour on corruption, the split within the ANC, unemployment or anything else politically. We know the sad state of affairs within SA. My intention is to see if there is a silver lining anywhere on the edge of this dark cloud currently waiting to spew hail and thunder on patient South Africans. Is there a possibility that rays of the sun can break through and shine upon us?

This is a summary of JP Landman’s “Connecting the dots” script that was kindly sent to me by Nedgroup Investments.

Monetary policy 

The SA Reserve Bank’s independence came under severe attack at the ANC’s Nasrec conference in December 2017, a resolution was adopted to nationalise the Sarb. In June 2019, Ace Magashule pushed to have the mandate of Sarb changed. Jacob Zuma tweeted support and Julius Malema and his EFF made noise about nationalising the central bank. Connect the dots and they suggest a total onslaught on the Sarb.

However, 48 hours after Magashule’s June 2019 statement, the ANC top 6 six issued a statement affirming the mandate of the central bank and that nothing would change.

An independent Sarb is crucial for stable, non-political inflation targeting and control.

Connect the dots and June 2019 was the month that the tide turned on the Sarb.

Fiscal policy

In February 2019, the president made a commitment in the state of the nation address (Sona) “not to spend our way out of our economic troubles”. That was three months before the general election and a spending splurge was predicted. Spending in that year was only 0.3% above the ceiling set by National Treasury.

The commitment to fiscal discipline was severely tested over the following three years with Covid-19, load shedding, state-owned enterprise bailouts and the July 2021 unrest.

What do the connected dots suggest?

  • In the 2020/2021 financial year, the government broke the three-year wage agreement on civil servants’ increases. For two years increases were held tight. Let’s see what happens this year…
  • Covid-19 spending was mainly funded by cutting other expenses. All department’s budgets were cut.
  • This discipline led Moody’s to change its outlook this April from “negative” to “stable”.

All this must be seen against the very different pattern of dots of Zuma’s attacks on the Treasury in 2016 and 2017. 

Structural reform 

Beyond macro policy, the single most important pattern of economic policy dots concerns the government’s commitment to structural reform.

  • Structural reform has become the key economic policy of the Ramaphosa administration. This follows when Tito Mboweni published the Treasury paper on structural reform in August 2019. Six months later the president declared at Sona that the Treasury’s paper “is now cabinet policy”. All departments now defer to it.
  • The biggest reform is playing out in the so-called network industries: spectrum/telecommunications, transport and digital migration and the concomitant spectrum release have been completed after 10 years of delay (the first eight-year delay was due to political ineptitude, the last two years due to private sector resistance). It’s now done and dusted. The auction netted R14.4 billion for the Treasury. A dot of note!
  • Dots outside government are investments by Google and a Facebook consortium in undersea cables linking SA to the wider world, more than doubling all current capacity. Inside the country MTN, Vodacom and Remgro subsidiaries are all extending fibre connections beyond the usual areas into poorer communities at affordable prices. A total of R2.5 billion has been put into the budget for the SA Connect project which aims to bring broadband access to all South Africans, prioritising rural and under-serviced areas. Better connectivity leads to better education opportunities.
  • Next came railways and harbours. First, regulating functions in both railways and ports were separated from operations. Next, infrastructure was separated from operations to determine proper charges. That opened the door for private operators to enter railway and port operations. In April 2021, the president announced that a new pier would be built in Durban harbour by the private sector in a R100 billion project. Since then, requests for proposals for new terminals in Ngqura and Richards Bay have been issued. Work is also being done to upgrade the railway from Tshwane to Gqeberha to facilitate vehicle exports. This is a R 7 billion project. More dynamic and modern ports will improve our trade efficiency enormously.

Energy reform

 We are all experiencing SA’s energy crisis, and it just seems to get worse. However, the biggest reform of all is taking place in electricity. Not just the biggest, but also the most important since load shedding is the biggest constraint on the economy. The following points focus on load shedding and overcoming it.

  • In April 2018, 27 independent power producer (IPP) contracts from Bid Window 4 that were suspended by Brian Molefe in 2016, were signed. SA’s renewable program could restart. The last 500MW from that bid is now being connected to the grid. Currently, 93 completed projects have added 6 855MW to the grid. Imagine load shedding if we did not have that!
  • In August 2020, the emergency or “risk mitigation” programme was launched. 1 200MW was awarded to the now infamous Karpowership. Thankfully that deal appears to be stuck, but the 800MW given to other operators is in construction and will be connected to the grid.
  • From October 2020, municipalities were allowed to procure their own power. In June 2021, Johannesburg Metro opened bids for 220MW from solar and gas. In February 2022, Cape Town opened a bid for 300MW.
  • In April 2021, Bid Window 5 for 2 600MW renewable power was opened. Twenty-five successful bidders were announced in October 2021. The 2 600MW can be connected to the grid by 2023/2024.
  • In June 2021, the president lifted the threshold where no licence is required to generate electricity up to 100MW. Several companies (SAB, Amazon Cape Town, BMW and others) have signed agreements to procure power from renewable producers. A total of 58 projects are currently being pursued by 12 companies for 4 500MW. The mining companies are the big ones. Anglo signed an agreement to switch 100% to renewable power by 2030. Sasol is pursuing 900MW. Eskom has made land available for renewable operators to put up plants below 100MW on Eskom land. The list goes on, but this illustrates the galvanising effect of the president’s 100MW announcement.
  • During the weekend of April 23 2022 news broke that the unit in the presidency dedicated to helping to implement structural reform has succeeded in getting some restraints removed that hinder projects below 100MW.
  • In April 2022, Bid Window 6 opened for another 2 600MW renewable power. This can be connected to the grid by 2025.
  • Note that all the money for this new power generation comes from the private sector. 

The dots above add up to more than 11 500MW that will be connected to the grid by 2025. It excludes 1 200MW from Karpowership. Compare that to the 4 000 to 6 000 MW current deficit. We can be assured that more Bid Windows will open…

Loadshedding will not be a permanent feature of our future. Mistakes have been made and delays occurred, but the trend is clear…


 A key element of economic recovery is more infrastructure.

  • The budget has increased by 22% in 2021/2022 for infrastructure spending.
  • Transport and logistics get the biggest chunk and water and sanitation get the second biggest allocation. The third biggest to energy and to expand power-generation capacity.
  • After a three-year struggle, the infrastructure fund which blends public and private money to facilitate infrastructure investment became operational in 2021. This year Treasury put R4.2 billion into the fund with another R13.3 billion to follow over the next two years. Over 10 years Treasury will contribute R100 billion.
  • Seven projects totalling R21 billion have been approved by the fund, which will contribute R2.6 billion. The rest will be funded by the private sector and development institutions.
  • There is a deliberate effort to build skills. A dedicated unit, Infrastructure SA, was established to build a pipeline of projects where skills and capacity will be enhanced.

Growth dividend

Treasury modelling suggests that these structural reforms should add about 1.7% to GDP growth. It means that growth can go to 3.2% which is double our population growth.

Allowing the private sector into the network industries and financing infrastructure is new territory for South Africa. Converting to private sector participation requires new rules and practices. Developing them will necessarily take time.

As South Africans, we owe it to ourselves and our children to support the positive developments. We have 10 years of destruction under Zuma that we need to fix. SA has the ability to prosper but it is not going to happen overnight. Private sector involvement is encouraging!

We like to compare SA to other countries and often SA is compared to Nigeria. We hear about its growth and that it is destined to become the shining star in Africa. What one does not hear or see is that Nigeria only has four hours of electricity a day…a situation much direr than our own…

Look for the positives, be aware of the negatives but don’t let the negatives rule your life.

Hopefully, the recent announcement by the NPA that they are processing nine “seminal” corruption cases will lift the spirits of South Africans. The Zondo Commission has done its bit to identify those who lined their pockets, now it is time for the NPA to step in and hold those who caused so much harm accountable. Hopefully, we can join the dots in a year’s time and congratulate it on a job well done…

Stay positive and stay invested!

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Marius Fenwick

WealthUp (Pty) Ltd


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