Economic growth, service delivery, infrastructural development, and job creation are some of the key issues that president Cyril Ramaphosa is expected to address in his highly anticipated State of the Nation Address (SONA) scheduled for Thursday, 6 February 2025.

Professor Dirk Kotze from the University of South Africa’s (Unisa) Department of Political Sciences, noted that economic growth will take centre stage in the president’s speech.

“I think first of all, what President Ramaphosa will focus on is, as always, on the economic matters – economic growth; the economic plan that he has developed since 2018,” Kotze said.

“Yes, electricity is definitely becoming more of a success story, but he will continue with that,” he added.

According to the political analyst, other important areas, including health, education, defence, and Home Affairs, will also be addressed.

Kotze explained that SONA focuses on the current year and outlines the government’s plans and the legislative agenda for Parliament. This includes the introduction of new legislation, as well as a medium-term plan covering the next three years.

“He will also refer to some matters that will later be presented in more detail in the budget speech by the minister of finance [Enoch Godongwana]. So, these two, the budget speech and the SONA address, are very much linked to each other.

“I don’t think one can expect new issues,” he added.

Godongwana is set to deliver the annual budget speech on 19 February.

In addition, the professor stated that the president’s address will reaffirm the government’s position on issues, such as climate change.

“Renewable energy will receive, I think, a lot of attention, given the developments in the US, president [Donald] Trump, who wants to move away from that,” he said.

Tomorrow’s SONA will mark the president’s first SONA as the head of the Government of National Unity (GNU) in the seventh administration.

Deputy minister in the Presidency, Kenny Morolong, said that Ramaphosa will address the nation following an election that led to the formation of a GNU, as no single political party received enough support to govern independently.

“This SONA will outline the three priorities and strategic direction of the GNU which are to drive inclusive growth and job creation, to reduce poverty and tackle the high cost of living, and to build a capable, ethical and developmental state.”

Investec chief economist Annabel Bishop said that the SONA tends to touch on the same themes each year, comparing progress against the prior year.

Investors will focus on the various crisis gripping the country such as weak growth, freight constraints, poor governance at a number of state entities, particularly municipalities and the need to fight crime and corruption, the economist said.

“The water and sanitation crisis, still high unemployment (poverty and weak growth) and GBV will also be in focus, while SA has seen greatly improved electricity supply stability which will be noted in particular.”

“A quicker turnaround on the water crises and at Transnet, particularly better enabling PPPs is a key theme investors are focused on, along with a sharp reduction in red tape, reduction in the regulatory burden.”

Bishop said that SONA’s typical blandness supports unchanged medium-term Budget direction, but greater fiscal consolidation is needed to return SA to investment grade and inspire business and investor confidence.

Bishop said that the Budget on 19th February is expected to see similar fiscal ratio projections to 2024’s Medium Term Budget Policy Statement (MTBPS), where gross loan debt was revised up, both for the current fiscal year, and over the projection period, with the same case for the budget deficit.

Turning to inflation targeting, in the MTBPS, National Treasury stated more work needs to be done in this regard, and some update is expected in the Budget later this month.

“While National Treasury sets the inflation target, and the Reserve Bank is tasked with achieving the target, the Reserve Bank has stated it believes there is a need to lower the inflation target.

“National Treasury has worried about negative effects that could ensue on the economy and households, while the SARB has already published research on the positive implications from lowering the target.

“Overall, for the Budget, state finances are not strong, and this weakness, combined with better-than-expected inflation but lower than expected GDP outcomes, means further fiscal slippage remains a risk,” said Bishop.

In an opinion piece for Daily Maverick, Dr. Ross Harvey, Director of Research and Programmes at Good Governance Africa (GGA) and senior research associate at the Institute for the Future of Knowledge at the University of Johannesburg, argues that for South Africa to achieve sustained economic growth, the GNU must address systemic governance failures, ensure political accountability, and overhaul economic and security policies.

Harvey stressed that beyond traditional economic indicators, policy must prioritise labour absorption and a more dynamic private sector. This requires a fundamental shift in approach, focusing on skills development, market-aligned industrial policy, and simplified regulatory frameworks.

“Governance remains South Africa’s Achilles’ heel. The country’s political institutions must be rejuvenated to enable economic dynamism. While the GNU represents a shift in political power, it has yet to prove its ability to deliver meaningful change.

“Coalition politics needs built-in commitment devices to avoid instability and consequent policy paralysis, from the national level right down to local municipalities,” Harvey said.

At the local level, ineffective municipal governance continues to hamper service delivery. Harvey suggests that a national municipal performance dashboard, tracking spending, service delivery, and infrastructure projects in real time, could enhance accountability and transparency. Without stronger municipal performance, South Africa’s growth will continue to be stifled by local inefficiencies, which deter investment and hinder progress.

Earlier this week, the World Bank raised its growth forecast for South Africa, citing a sustained recovery in the energy and logistics sectors. However, it warned that the nation will still struggle to achieve the level of growth needed to significantly reduce poverty and unemployment.

In its latest South Africa Economic Update report, the Washington-based lender increased its GDP growth projection for 2025 to 1.8%, up from a previous estimate of 1.3%. The bank also predicts growth will pick up to 2% by 2027.

The modest recovery is expected to be driven by improvements in infrastructure and a relatively favourable external environment. The bank noted that inflation is expected to remain stable, supporting further monetary easing, which could boost credit to businesses and households, supporting economic growth.

Since September, South Africa’s central bank has reduced its key interest rate by 75 basis points to 7.5%, as inflation stays below the 4.5% target midpoint. However, the World Bank cautioned that even with this growth, it would not be sufficient to tackle the country’s high poverty and unemployment rates.

It noted that each 1% increase in GDP is expected to generate only 30,000 to 50,000 jobs due to the low employment elasticity to GDP growth in South Africa.

Consequently, it projects poverty and unemployment rates will remain elevated, with poverty above 60% and unemployment over 30% for the foreseeable future.

With interest payments consuming a significant portion of government revenue, South Africa will need to reduce its fiscal deficit from 6% to 4.6% of GDP by 2027 to ensure public debt remains sustainable.

However, the country faces numerous risks, such as global trade tensions, political instability, high crime, and persistent social unrest.

Additionally, the government’s fiscal consolidation efforts could be hindered by labour unions seeking higher wages and the financial needs of state-owned companies like Transnet and various regional governments.