Menu Close

Load shedding catastrophe for SA economy

Add to my bookmarks
ClosePlease login

No account yet? Register

Share This Article:

Picture: REUTERS – The latest economic indicators for the fourth quarter show that Eskom’s frequent load shedding continues to damage the South African economy which will not fully recover until the problematic matters have been fully and effectively addressed, says the writer.

By Bonke Dumisa

President Cyril Ramaphosa’s January 8 Statement, when the ANC was celebrating its 111th anniversary in Bloemfontein, made four important points that are directly linked to the catastrophic impact of Eskom’s load shedding on the South African economy.

Ramaphosa said people across the country were going through tough times; that the energy crisis undermines economic growth and investment prospects; that persistent load shedding destroys businesses and compromises the production of food and provision of social services such as water, sanitation, community safety, education and health.

One of the ANC resolutions at its recent 55th elective conference specifically said the government must accelerate the resolution of the energy crisis to end load shedding.

This just shows how seriously the ANC takes the issue of electricity load shedding and that the party realises if the Eskom load shedding is not effectively resolved now, that may cost it the provincial and national elections in 2024.

Some of the country’s top economists have pronounced as follows on the continuing Eskom load shedding. Isiah Mhlanga, Alexander Forbes chief economist, said Eskom’s prolonged stage 6 load shedding was causing significant damage to the country’s economy, wiping off more than R4billion from GDP for each day it continues.

Another economist, Francis Stofberg, said the South African economy could at least be 8 percent to 10 percent larger if there was no Eskom load shedding. It is an established fact that in 2022 South Africa had more than 200 days of Eskom load shedding; and that the country has had non-stop continuous load shedding for at least the past 60 days or so.

The country’s gross domestic product for the second quarter of 2022 contracted by -0.7 percent, mostly attributed to rolling blackouts. The 2022 third quarter GDP results were positive albeit compared to a negative base; there were concerns though that Eskom’s load shedding continued to seriously negatively affect the economy.

The latest economic indicators for the fourth quarter already show Eskom continues to damage the economy: The Manufacturing Production figures for November 2022 showed a contraction of -1.1 percent year-on-year. The Mining Production figures for November 2022 showed a contraction of – 0.9 percent year-on-year.

An edition of the Sowetan this week listed Small Medium and Micro Enterprises (SMMEs) that had already been forced to close down due to Eskom’s load shedding.

One radio station decided to dedicate at least an hour to interviewing owners of small businesses battling to survive in mostly black town areas. All of them gave painful accounts of how this continuous load shedding was destroying their businesses.

There is a painful video making the rounds on social media showing one farm where more than 50,000 chickens had died due to complications caused by load shedding and farmers having to use a lot of diesel during such load shedding.

How will the economy recover from this?

Resolving the Eskom problem will need the political will to embark on a multipronged approach, where the government must not just focus on the symptoms of Eskom’s load shedding but on the actual causes of Eskom’s problems.

The South African economy will not fully recover until the following matters have been fully and effectively addressed:

All those Eskom staff members who are fingered in corruption and the sabotaging of Eskom infrastructure must be arrested and successfully charged and prosecuted.

There is plenty of collusion between corrupt Eskom employees and its corrupt service providers that has been uncovered. Many such staff members and service providers were arrested and charged. There has been slow progress, if any, in seeing most of these criminals joining the orange overalls club in prison.

There are unfortunately high levels of increasing lawlessness in South Africa, as clearly highlighted by Ramaphosa in his January 8 Statement. The government must proactively use the full might of the law to deal with the lawlessness relating to Eskom having to resort to load shedding. It has already indicated that with the stationing of SANDF personnel at the major power stations.

No one has the constitutional right to steal electricity.

The recent Johannesburg CIty Power’s campaign to cut off electricity to all non-paying households or businesses must be replicated in all parts of the country, including Kennedy Road in Durban where there is a substation where all and sundry steal electricity as they please.

They must also cut off all municipalities that receive electricity payments from the public but choose not to pass it on to Eskom.

Professor Bonke Dumisa is an independent economic analyst.