Page 12 - AfrElec Week 03 2023

AfrElec POLICY AfrElec

SA’s economic growth could

slump below 1% in 2023

SOUTH AFRICA+ SOUTH Africa’s economic growth could led the South African delegation at the WEF, said
slump below a predicted 1% in 2023, despite he would provide details of how the state plans
its post-pandemic recovery, as a result of severe to take on a share of Eskom’s ZAR400bn (about
ongoing power cuts, ratings agency Moody’s $23bn) debt in his February 23 budget presenta-
Investors Service said on January 17. tion, bneIntellinews reports.
The warning comes as the struggling national Though a partial debt transfer to the govern-
power utility Eskom continues to implement its ment would improve the SOE’s balance sheet,
worst-ever power cuts which affect productivity Mali said, the debt relief cannot of itself address
in every sector of the country’s economy amid multiple complex issues, including the poor
an absence of an energy security plan from the operational performance, the lack of cost-re-
government, Independent Online (IOL) reports. flective tariffs and rising overdue debt from
According to Aurelien Mali, Moody’s municipalities.
vice-president senior credit officer, South Afri- “Despite South Africa’s ambitious Just
ca’s gross domestic product (GDP) was now [Energy] Transition Plan for cleaner energy,
likely to track below the previously downward there is still a lot of uncertainty concerning the
growth forecast of 1% in 2023. reform. Moreover, independent producers will
This prediction would be significantly lower take time before reaching critical mass to stabi-
than the National Treasury’s downwardly revised lise the energy supply,” Mali was cited by IOL as
growth forecast of 1.6% and the 1.1% growth saying.
earmarked by the South African Reserve Bank The Allianz Risk Barometer 2023, compiled
(SARB) in 2023, writes IOL. by risk analysts at Allianz Global Corporate &
The heavily indebted state-owned enterprise Speciality (AGCS) based on surveys from 94
(SOE) implemented load shedding on more than countries, showed that critical infrastructure
200 days in 2022, the most in a calendar year. The blackouts and cyber incidents were top threats
continuous multiple breakdowns of Eskom’s in South Africa as energy crisis and natural
old coal-fired plants, Mali says, will cripple any catastrophe risks rise.
marked activity. Chronic power outages across the country
The indefinite declaration of power outages are forcing some energy-intensive industries to
(known locally as load shedding) of up to 12 consider relocation or temporary shutdowns.
hours a day, which Eskom announced on Janu- The resulting supply disruptions are affecting
ary 10, is seen by analysts as extremely damaging a number of critical industries, including food,
to businesses and the economy. agriculture, chemicals, pharmaceuticals, con-
“Daily rolling power cuts are likely to further struction and manufacturing.
erode the country’s weak economic growth, rep- The Steel and Engineering Industries Feder-
resenting downside risk to our 1% growth expec- ation of Southern Africa (SEIFSA) on January
tation for 2023,” Mali said as quoted by IOL. 17 said the level of the crisis and the risk to the
“In fact, South Africa is one of the few emerg- economy requires a response as aggressive as the
ing markets that has seen its annual electricity response to the Covid-19 pandemic, writes IOL.
production contracting over the last six years, According to SEIFSA’s CEO Tafadzwa Chiba-
which indicates the poor state of the electricity nguza, a very concerning long-term implication
sector,” he added. was emerging, apart from the fact that the energy
President Cyril Ramaphosa on Monday (Jan- crisis detracted from the investment attractive-
uary 16) convened a meeting of political parties, ness of South Africa.
the Eskom board and the National Energy Crisis “Companies are sacrificing long-term capital
Committee (NECCOM) to address the escalat- that could otherwise be invested in expanding
ing energy crisis after he cancelled his working their operations and are spending these scarce
trip to the World Economic Forum (WEF) in resources in pursuit of immediate survival,” he
Davos, Switzerland. said as quoted by the media outlet.
According to IOL, several organisations The long-term implications will be a con-
have written to the government threatening tinued structural decline in the performance of
legal action if load shedding is not ended with the metals and engineering sector, Chibanguza
immediate effect, while others want to challenge warned, adding that employment in the sector,
the high electricity tariff which will be hiked by especially among women and youth, has con-
18.65% from April to boost Eskom’s balance tracted, contributing to the socio-economic
sheet. calamity that the country already faces.™
Finance Minister Enoch Godongwana, who

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