Losses due to continuous blackouts overshadow any supposed economic growth
9 December 2022
This year is the most intensive loadshedding year to date and the effects of the latest high-level rolling blackouts in South Africa are wreaking havoc on fundamental sectors of the economy.
This week it was announced that South Africa narrowly escaped a technical recession. However, despite economic activity having rebounded slightly (which highlighted an environment of pent-up demand), rolling blackouts make it increasingly difficult for any business sector to up its activity as both large and small businesses in all sectors across the country are experiencing the effects of load-shedding on their performance.
Recent estimates suggest that economic losses for 2022 due to continuous blackouts have scaled up to R 950 billion. With no end to Eskom’s woes in sight, the damage to the South African economy is set to breach R 1 trillion before year end for 2022 alone. This is the inevitable result of the ANC's approach to management which emphasises the removal of competent people, their replacement with party loyalists, and the pursuit of the extraction of wealth to feed cadre deployment networks.
The South African economy is facing an unprecedented scenario as load shedding not only impacts food security and mobile networks, but entire business sectors and industries. Losses in the manufacturing and finance sectors have both been estimated at more than R 200 billion for this year, with the transport and mining sectors not far behind.
The power utility’s problems set a hard cap on South Africa’s growth potential and GDP growth per year is therefore unlikely to breach the already low 2% level anytime soon. As a consequence, South Africa experiences less substantive economic activity, lower confidence and investment, fewer job opportunities, and soaring costs of living.
When factors such as population growth, interest rates, and upwards spiralling inflation are taken into account, South Africa have effectively become poorer as a result and can no longer afford to burden the economic cost of an ANC manufactured electricity crisis. The effects of which compound exponentially by the day.
The response to the electricity crisis must now be treated as a matter of National Security. Accordingly, the DA has resubmitted our request for a ring-fenced State of Disaster on Eskom, which will enable disaster relief funding to be sourced from other departments and government resources, to be placed on the agenda of the next Cabinet meeting.
The ANC and Eskom have effectively become the most destructive force the South African economy has ever experienced as rolling blackouts are evidently a threat to national security, at economic and social levels.
Our economic growth for next year is expected to be amongst the lowest in Africa. If Eskom is left to its own, without the participation of other Independent Energy Producers in the energy market, there is no way that South Africa can aspire to growth numbers and economic expansion that come near other emerging markets. The implications for employment, taxation, the budget deficit, living standards of South Africans and country wide political stability are very serious.
South Africans have been misled. There is no workable solution to the electricity crisis under an ANC government. The South African economy and therefore livelihoods of millions of South Africans are at great risk. The DA reiterates that the national focus should be on finding short term solutions to stabilize energy supply and calls for the urgent implementation of energy sector reforms as proposed by the DA.
Issued by Dion George, DA Shadow Minister of Finance, 9 December 2022
