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Financial Planning
June 24, 2019

Few new major reforms announced at SONA

<strong>By:</strong> <b>Sanisha Packirisamy, Economist at Momentum Investments</b>

<h2>Few new major reforms announced, but financial support to Eskom frontloaded and Sarb independence reaffirmed</h2>

Momentum Investments macro research team gives highlights from the <b>State of the Nation address (SONA)</b> by President Cyril Ramaphosa.

<h3>Highlights</h3>

<ul>

<li class="m\_-7483217728267028513MsoNormalCxSpMiddle">The rand was little moved in reaction to the State of the Nation Address (Sona) as few new reforms were announced. A number of growth, job and investment initiatives were reiterated in relation to achieving the goals of the National Development Plan (NDP).<u></u><u></u></li><li>The president echoed the sentiment of the South African Reserve Bank (Sarb) on the dangers high inflation posed to the purchasing power of citizens and to the country’s relative competitiveness. Encouragingly, the constitutional mandate of the Sarb was reaffirmed.</li><li>Further detail on the unbundling of Eskom will be divulged at the medium-term budget policy statement in October 2019, but the president noted a “significant portion” of the allocated R230 billion to Eskom (for the next 10 years) would be brought forward to support the ailing energy utility in the near term.</li><li>The importance of rebuilding a social compact was highlighted as necessary to create an enabling environment.</li><li>In Momentum Investments’ view, garnering positive sentiment requires political will, a reduction in political and policy uncertainty and the implementation of growth-enhancing reforms. The president’s plan to accelerate SA’s growth trajectory remains heavily reliant on the ability of the top leadership to execute on the economic plans put forward.</li><li>Although this Sona addresses some pertinent issues, lingering political uncertainty remains in areas such as land reform, longer-term solutions for spending commitments and financial sustainability for state-owned entities. In these uncertain times, Momentum Investments’ well-diversified outcome-based solutions provide protection against volatile economic conditions and ongoing uncertainty in the local environment, by incorporating a risk-adjusted investment approach through diversified exposure to a variety of asset classes, as this should shield retirement goals from the risk effect on any specific asset class.</li>

</ul>

<strong>To download the full document, please <a href="https://www.cover.co.za/wp-content/uploads/2019/06/Sona-20-June-2019.pdf" target="_blank" rel="noopener noreferrer">Click Here</a></strong>

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