Press release

Executives provide comments following SONA

Snippets on SONA from Grant Thornton

Key executives from Grant Thornton South Africa, provide commentary and snippets following President Jacob Zuma’s State of the Nation Address this evening, Thursday 11 February 2016:

GENERAL Comments:

“The indication from President Jacob Zuma during the 2016 State of the Nation Address is that the economic growth is going to remain stagnant and only grow by 1% in 2016/17 financial year.  This directly contradicts with the nation’s urgent need to curb growing unemployment.”

Kaya Mfono, Associate Director: Public Sector Advisory at Grant Thornton

“It is disappointing to note that the President omitted to mention any significant programmes or developments regarding the drastic state of unemployment in the country. As growth may be associated with increased income inequality – we note that there are no specific measures to assist with poverty alleviation in this time of a battling economy.” 

Terry Ramabulana, Director: Advisory Services at Grant Thornton

On INFRASTRUCTURE

“Outside of a brief mention at the outset regarding the National Development Plan and the Infrastructure Development Programme, the SONA this year did not address any new measures or focus for future infrastructure plans. All plans mentioned by the President in Ports, Water and Energy infrastructure have been long in progress.  No new focus, no new plans is very concerning.”

Christelle Grohmann, Director: Advisory Services, Grant Thornton Johannesburg

On TWO CAPITALS in SA

“There is a lot more to the costs associated with two capitals in one country.  Sadly, South Africa has a massive cabinet and if we were able to reduce the number of ministries significantly, it would then cost a lot less to move parliament around.”

Gillian Saunders, Head of Advisory at Grant Thornton

On COST CUTTING

“We are pleased that the President announced a policy directive to cut-off fruitless and wasteful expenditure.   In the State Of The Nation Address, President Zuma said that issues such as overseas trips by office bearers will be cut and there would also be a restriction on glamourous catering, entertainment, while budget vote dinners will no longer take place.  Unfortunately these cuts will not have a big impact on the growing budget deficit.  We hope that the Minister of Finance will add further detail to this topic during his National Budget Speech later this month regarding the reduction of fruitless and wasteful expenditure within government.”

Kaya Mfono, Associate Director: Advisory Services at Grant Thornton

“It is encouraging that the president emphasised the need to reduce government spending and specifically fruitless and wasteful expenditure. Although measures such as cutting on overseas trips and conferences as announced by the president will assist, the real focus has to be on ensuring value for money is realised on procurement of goods and services as this is where billions are wasted every year due to poor programme management and fraud.”

Cashmore Muchaonyerwa, Director: Advisory Services at Grant Thornton

On VISA Amendments

“We welcome the President’s acknowledgement that the visa regulations have been reviewed and changed in order to remove impediments to tourism development.”

Lee-Anne Bac, Director: Advisory Services at Grant Thornton

On SOEs

“It is encouraging from the President that there will be a greater focus on phasing out inactive state-owned companies.  In recent years, the financial and operational performance of several state-owned companies has weakened.  These state-owned companies are large contributors to the economic activity and account for 20 per cent of the gross capital formation.  However, where an unfavourable financial exists such as in Eskom and SAA, state-owned companies often turn to government for a lifeline.  We hope that the policy announcement in 2016 SONA will improve the performance of state-owned companies.”

Kaya Mfono, Associate Director: Public Sector Advisory at Grant Thornton

On FDIs

“We applaud the policy acknowledgement by the President that South Africa is open for business to foreign investors.  We hope that this could encourage Foreign Direct Investment (FDIs) though a lot of additional effort needs to be made to assist here – a good example is to properly tackle the energy challenges in our country.”

Kaya Mfono, Associate Director: Public Sector Advisory at Grant Thornton

On ENERGY ISSUES

It is encouraging to hear the President stating that the Gas, Renewables and Nuclear programmes are to continue ahead, building on the almost R200bn that already has been invested in the Renewables programme so far. We do note that little mention was made in relation to the other energy programmes such as Coal, Co-Gen and Inter-African Hydro programmes such as Grand Inga in the DRC – this is disappointing.

Grant Penrose, Director: Infrastructure Advisory at Grant Thornton

We applaud the President for formally stating that nuclear power investments would only be made at a scale and pace in accordance with what the country can afford.  His admission to this massive cost and South Africa’s current state of economy, is laudable.  We hope this process will open and transparent going forward.

Grant Penrose, Director: Infrastructure Advisory at Grant Thornton

On WATER and DROUGHT

“Given the expected impact of the drought on agriculture and the economy, we are disappointed that the President did not mention more drastic government interventions to give much-needed aid.”

Loshni Naidoo, Director: Sustainability at Grant Thornton

On a potential new government pharmaceutical company

While the establishment of the state-owned pharmaceutical company might be seen as  a positive step in improving health care in South Africa,  the private pharmaceutical sector is likely to see it as a blow with possible loss of FDI in this sector as they lose the massive public sector market.

Gillian Saunders, Head of Advisory at Grant Thornton

On Government’s new 10-point plan for municipalities

“It is surprising that the Back-to-Basics strategy for municipalities of five-building blocks of good governance, public participation, financial management, infrastructure services and institutional capacity has changed to a ten-point plan this evening as announced by the President.  This is disappointing as the strategy has just been recently introduced to municipalities.  The shift in this goal post will negatively affect municipalities.” 

Kaya Mfono, Associate Director: Public Sector Advisory at Grant Thornton

 

Notes to editors

About Grant Thornton South Africa
Grant Thornton South Africa is a member firm of Grant Thornton International Ltd (GTIL). Grant Thornton South Africa was founded in 1920. We are leaders in our chosen market, providing assurance, tax and specialist business advice to dynamic organisations – listed companies, large privately held businesses and private equity backed organisations.

We employ 1100 people in South Africa with 100 partners and directors. Grant Thornton has a national presence with offices in Bloemfontein, Cape Town, Durban, George, Johannesburg, Nelspruit, Polokwane, Port Elizabeth, Pretoria, Rustenburg and Somerset West. In Africa we operate across 23 member firms in Algeria, Botswana, Congo, Côte d’Ivoire, Egypt, Ethiopia, Gabon, Guinea, Kenya, Libya, Mauritius, Morocco, Mozambique, Namibia, Nigeria, South Africa, Senegal, Tanzania, Togo, Tunisia, Uganda, Zambia and Zimbabwe and are ideally positioned to facilitate clients’ expansion plans in these countries.

About Grant Thornton International Ltd
Grant Thornton is one of the world’s leading organisations of independent assurance, tax and advisory firms. These firms help dynamic organisations unlock their potential for growth by providing meaningful, forward looking advice. Proactive teams, led by approachable partners in these firms, use insights, experience and instinct to understand complex issues for privately owned, publicly listed and public sector clients and help them to find solutions.

More than 40,000 Grant Thornton people, across over 130 countries, are focused on making a difference to clients, colleagues and the communities in which we live and work.

“Grant Thornton” refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton International Ltd (GTIL) and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL and its member firms are not agents of, and do not obligate, one another and are not liable for one another’s acts or omissions.