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South Africa’s increasingly unstable power supply will not only leave the economy on its knees, but will also lower investment appetite and increase the already “unacceptably high” unemployment figures.
Although the actual economic impact was yet to be calculated, Azar Jammine, director at Econometrix, said the stage 6 rolling blackouts were going to hit the economy hard, with sectors such as mining, manufacturing and tourism and hospitality, which are heavily dependent on electricity, bearing the brunt.
“Generally, it is a big deterrent for any kind of investment in the country, because it impinges on so many different sectors of the economy,” he said.
Jammine said following the pandemic, the electricity crisis in SA was an additional shock for small, micro and medium-sized enterprises (SMMEs), putting further pressure on their operations, with the petrol hike eventually putting in the final nail in the coffin.
“And under those circumstances, investors are now going to be really scared about committing to investment. Obviously, some sectors will be more vulnerable than others, but it really affects most sectors of the economy,” he added. “And, indirectly, a lot of industries can only survive through generators and that kind of thing. So it really does depend on which industry you’re talking about.”
He said apart from industries, government itself cannot operate properly in such an environment. Labour analyst Tony Healy noted: “So, the bigger organisations, which would be the medium- to larger-sized companies, very often are able to manage around it without much difficulty and with great expenditure on generators and uninterrupted power supply backup.
“But the SMME industries are severely hit because they don’t have that and other industries, hospitality in particular, are hit very hard by this,” he said. “So if you have to just switch it on and switch it off, it can take a couple of hours for a business to have their manufacturing ready again or production ready after the outage.”
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The chief executive of Business Leadership South Africa, Busisiwe Mavuso, said South Africans could not rely on Eskom any longer and many companies were recently forced to lay off staff because they simply couldn’t keep the doors open.
“Those with generators couldn’t get diesel to fill them fast enough. Those on batteries found them running dead,” she said. “This was obviously also a crisis for Eskom, with the loss of generation capacity directly linked to illegal labour action, accompanied by sabotage and violence.”
Mavuso said the only one way to ensure SA did not face such occurrences was to diversify the sources of electricity. She said the Renewable Independent Power Producer Programme could procure far larger power production and within a matter of years, SA could substantially diversify the producers of electricity.
“We cannot rely on a single state utility any longer. We have known this for some time and had we acted more vigorously sooner, experiences like last week could have been avoided,” said Mavuso. “We have the right ingredients – the private sector can now build plants of up to 100MW without a licence. We have made progress but it is too slow.
“One very good intervention has been the decision of Eskom to make available the vast tracts of land it owns in Mpumalanga to independent power producers.”
ALSO READ: SA can’t rely on single state utility any longer, says Eskom board member amid load shedding