Founder: Turnaround Talk
One of the most common comments during the recent funeral of Queen Elizabeth II was that we were witnessing an historic moment. Those present made this clear and identified it as a reason behind queuing for close to 40 hours to see her coffin lie in state at Westminster.
Many of us were fortunate to witness an historic moment in South Africa’s history. Our emancipation from apartheid in 1994 gave birth to one of the world’s most progressive democracies. It was a time of significant change an unparalleled economic growth which saw South Africa become the largest economy on the continent.
We faced our struggles in the past. However, since 2010, South Africans have unfortunately been witnessing the dramatic collapse of the South African economy to a point where we now struggle to create jobs and keep the lights on.
As the world faces an energy crisis, it is important to take a look at what we are seeing and the potential impact it can have.
The South African crisis
A Business Tech article points out that Alexforbes Chief Economist, Isaah Mhlanga, said Eskom’s prolonged Stage 6 load shedding has already caused significant damage to the country’s economy, with over R4 billion wiped from the GDP for each day it continues.
Francis Stofberg, Senior Economist at Efficient Group told Business Tech that if it were not for Eskom’s failings, the country’s economy could be between 8% and 10% larger.
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The article adds that, Speaking to The Money Show on 702, Director at Trade and Industrial Policy Strategies, Saul Levin, said that small businesses in the country are being heavily impacted by load shedding – more so than their larger counterparts.
“Small businesses are usually on the municipal grid, not Eskom’s grid, so they can’t even negotiate special deals like big business can,” he said.
He noted that the SME sector experience load shedding “with the rest of us”, and typically can’t afford backup generators or the solar system installations that bigger businesses can install to mitigate the impact of power outages.
The article adds that, on top of this general vulnerability, Levin said that load shedding also carries a huge cost for SMEs.
There’s the cost of downtime, the cost of business disruption – up to three times daily, and many businesses are at high risk with their equipment, so maintenance costs also escalate, he said.
Levin said that following the Covid-19 pandemic there has been a pick-up in small business activity in the country, with the hope of resurgence – but the current electricity crisis does not help, he said, as SMEs lack the necessary support structures to take the hit.
The article points out that aside from the damage done to the economy in general, specific sectors are now sounding alarms over the harm caused by Eskom’s load shedding.
The European crisis
While many countries were counting on a swift recovery from the Covid Pandemic, Russia invaded the Ukraine.
An article by AP points out that, as Europe heads into winter in the throes of an energy crisis, offices are getting chillier. Statues and historic buildings are going dark. Bakers who can’t afford to heat their ovens are talking about giving up, while fruit and vegetable growers face letting greenhouses stand idle.
In poorer eastern Europe, people are stocking up on firewood, while in wealthier Germany, the wait for an energy-saving heat pump can take half a year. And businesses don’t know how much more they can cut back.
“We can’t turn off the lights and make our guests sit in the dark,” said Richard Kovacs, business development manager for Hungarian burger chain Zing Burger. The restaurants already run the grills no more than necessary and use motion detectors to turn off lights in storage, with some stores facing a 750% increase in electricity bills since the beginning of the year.
The article adds that, with costs high and energy supplies tight, Europe is rolling out relief programs and plans to shake up electricity and natural gas markets as it prepares for rising energy use this winter. The question is whether it will be enough to avoid government-imposed rationing and rolling blackouts after Russia cut back natural gas needed to heat homes, run factories and generate electricity to a tenth of what it was before invading Ukraine.
Europe’s dependence on Russian energy has turned the war into an energy and economic crisis, with prices rising to record highs in recent months and fluctuating wildly.
The article points out that, in response, governments have worked hard to find new supplies and conserve energy, with gas storage facilities now 86% full ahead of the winter heating season — beating the goal of 80% by November. They have committed to lower gas use by 15%, meaning the Eiffel Tower will plunge into darkness over an hour earlier than normal while shops and buildings shut off lights at night or lower thermostats.
Europe’s ability to get through the winter may ultimately depend on how cold it is and what happens in China. Shutdowns aimed at halting the spread of Covid-19 have idled large parts of China’s economy and meant less competition for scarce energy supplies.
Photo By: Canva
Where are the solutions? We are tired of promises
When the ANC took over in 1994, they made a lot of promises to the South African public. Over the years, they have failed to deliver on these promises.
In 2020, Former President, Jacob Zuma, addressed a crowd in KZN promising that the country will never experience load shedding again. Theis, to, was an empty promise.
More recently, there were assurances that Eskom would be split into three separate units. Government promised that this would make management of the utility easier and that problems would be easier to identify and rectify. Where are we in this process? The South African public is tired of empty promises to the loadshedding situation and are desperate for solutions. We have gone from the biggest economy on the continent to the laughingstock of the continent. Government needs to urgently address the loadshedding situation before the economic damage to the country becomes irreparable.
South Africa is also presented with a unique business opportunity as Europe is desperate for South African coal. Where are the reforms to Transnet that were promised? are we going to miss this boat as well?
