Management Consulting, Accounting, Tax, Advisory.

State of the Nation Address – SONA 2022: Ready, Set, Budget! Looking ahead to the 2022 Budget Speech

The President of The Republic, in the State of the Nation Address – SONA 2022, declared three public enemies: “unemployment, poverty, and inequality”. All eyes are now on the finance minister to bring the broad outlines of the speech to life with clear plans, programmes, and most importantly, for the budget to meet SONA aspirations. This article outlines budget expectations with regards to energy security as well as infrastructure development.

Share This Insight:

state of the nation address SONA 2022
The President of The Republic through the SONA 2022, declared three public enemies: “unemployment, poverty, and inequality”. All eyes are now on the finance minister to bring the broad outlines of the speech to life with clear plans, programs, and most importantly the budget to ensure the realisation of the outlined aspirations on the 23rd of February 2022. Although the speech touched on a myriad of aspects, this article seeks to outline budget expectations with regards to energy security as well as infrastructure development. As advised in the SONA speech, the plans build on the Economic Recovery Reconstruction and Recovery Plan (ERRRP) foundation.

State of the Nation Address - SONA 2022: ENERGY SECURITY

The ERRRP sought to roll out “the rapid expansion of our energy generation capacity”. The backdrop to this undertaking was the identification of a 4 000MW electricity shortfall yielding unreliable electricity supply, thus indirectly hampering productivity in the overall economy. This was primarily set to be attained through the renewable energy programme. 

We expect the budget to:

  • shed light on the expected times of completion on the outstanding programmes and the estimated impact on the shortfall at each given time.
  • an allocation to the DBSA or an outline of the funding arrangements for the IPPs that were allocated a share in the 2 600MW in the renewable energy programme in 2021.
  • financial support for embedded generation at municipal level, as this is crucial in the short to medium term.
 

Since the unbundling of Eskom is expected to fully complete by year end, it would be crucial to observe the net effect of the liberalisation of electricity generation.

State of the Nation Address - SONA 2022: INFRASTRUCTURE

From transport networks, health care to information systems any world-class economy ought to build infrastructure that can sustain its socio-economic ambitions. The ERRRP outlines “a massive rollout of infrastructure”. To this end, the Infrastructure Fund was established with a R100 billion allocation over 10 years which is intended to serve as catalytic finance. The President indicated that the fund is working with state entities to prepare a pipeline of projects to the value of R96 billion. These projects will range from student accommodation, social housing, telecommunications, water and sanitization, and transport.

We expect the budget to:

  • spell out the number of projects already approved, and those in the pipeline.
  • clearly articulate the potential impact of the respective projects (jobs created, small business benefiting).
  • indicate a focus on high-impact infrastructure investments (access to the internet, access to quality facilities at government schools/libraries, etc.).
 

Most recent national budgets have leaned towards catering for operational costs with little capital expenditure taking place. If our recent history of budgets is anything to go by, this will most likely be the biggest challenge for the finance minister.

Finally, we look forward to the fourth South Africa Investment Conference on the 24th of March 2022 to assess the extent to which foreign direct investment will impact the infrastructure shortfall over the next few years.

For now, all eyes are on the National Treasury for brave and technically sound leadership.

Insight by:

Do you have comments or feedback about this article? We would love to hear it! Please send your comments/feedback via the form below.

Comments or Feedback?

    HomeAbout ServicesContact