SA economy receives rude introduction to 2020

Eskom South Africa

Eskom Head Office

Executive Editor
JOHANNESBURG, (CAJ News) SOUTH Africa has gotten off to a worst possible start to the New Year with load shedding returning to haunt the country.

The setback that is an indication of the struggles that lie ahead for an economy that is the most advanced in the entire African continent but beset by a myriad of challenges.

South Africa was plunged into darkness last weekend, a development that flew in the face of pledges made by President Cyril Ramaphosa late last month (December) that there would be no blackouts until at least the middle of January.

The president gave that assurance following an urgent meeting with Eskom management after touring the Medupi power station.

Over the weekend, Eskom implemented Stage 2 load-shedding, dropping 2 000 megawatts from the struggling grid. An unexpected breakdown of a coal conveyor belt at Medupi was blamed.

In the economic powerhouse of Gauteng, load-shedding intervals last four hours.

There are fears load shedding could escalate to Stage 6, as Eskom’s plant breakdowns remain at precariously high levels.

This stage, implemented once in the country’s history (in December last year), seeks to shed 6 000MW off the grid.

It could mean electricity going off for an average 10 hours per day.

This has raised alarm among the business community and households.

“The knock-on effects of load shedding on every aspect of the political economy in South Africa are now severe,” said Daniel Silke, the political economy analyst.

He said without power stability, growth would be illusive while inequality and loss of opportunity would rise.

“This is an emergency issue requiring a response of same proportions,” Silke said.

Businessman and former Johannesburg mayor, Herman Mashaba, said the problem with load shedding was not just its inconvenience but it was hurting confidence in business and productivity.

“This all impacts our economy and our ability to create jobs. South Africa needs to get the basics right,” Mashaba said.

Absa, one of the biggest local banks, said with electricity demand likely to return to normal by mid-January, after dropping about 4 000MW over the holiday season, load shedding remained an ongoing risk.

“We think that bouts of load shedding are likely to persist into 2020, creating downside risks for sentiment and the economy,” Absa stated.

Eskom urged its customers to reduce demand as a concerted collective effort could help to avoid or lessen the level of load shedding.

The possibilities of power cuts are a blow to an already fragile South African economy.

Economic growth is projected to be lower than 1,5 percent this year.

The International Monetary Fund (IMF) forecast the economy to grow by 1,1 percent during the period.

This, according to the IMF, is below the growth of the population (about 1,6 percent) for the sixth consecutive year.

The unemployment rate in South Africa edged up to 29,1 percent in the third quarter (Q3) of 2019, its highest level since comparable data began in Q1 in 2008.

– CAJ News

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