South African leader grapples with ever-worsening power cuts

By AP News

Share:

South Africa’s ever-worsening power crisis — putting homes and businesses without electricity for up to 10 hours per day — is strangling Africa’s most developed economy

South Africa Power Cuts

JOHANNESBURG (AP) — South Africa's ever-worsening power crisis — in which homes and businesses go without electricity for up to 10 hours per day — is strangling Africa's most developed economy.

President Cyril Ramaphosa hopes that by creating a new Cabinet post, electricity minister, his government will be able to curb the rampant corruption and mismanagement that have put the country in the dark. Ramaphosa is to name the new minister in a reshuffle later Monday.

The new minister will focus solely on dealing with the crippling power cuts, Ramaphosa said in his State of the Nation address last month, when he declared a state of disaster to deal with the electricity shortages affecting the country's 60 million people.

While Ramaphosa is expected to also announce the appointment of a new deputy president in the reshuffle and deal with Cabinet ministers who have openly challenged him, the naming of a minister to try to resolve the electricity shortage is what everyone is talking about.

South Africa’s state-owned power utility Eskom has implemented rolling power cuts across the nation for years but 2022 was the worst and 2023 has started with even longer outages and no solution in sight.

As a result of the extensive power cuts, South Africa's central bank now forecasts GDP growth to be just 0.3% in 2023.

Eskom, which marks its 100th anniversary this month, is struggling with the frequent breakdowns of many of its aging coal-fired power stations. The biggest problem is corruption in which at least four gangs are draining the company of $50 million per month, Eskom CEO Andre de Ruyter said recently. His scathing indictment in a television interview of the government's inability to curb the corruption led to his immediate resignation.

The power cuts are the biggest threat to South Africa's economy, said Mark Swilling, co-director of the Centre for Sustainability Transitions at Stellenbosch University.

South Africa's economy is in decline due to the wide-ranging effects that the power crisis was having on businesses, he said.

“The combination of rising interest rates and load-shedding is simply making things worse, so our economy is indeed in decline," Swilling told The Associated Press.

The naming of a new electricity minister is a positive step, said Swilling. “It is encouraging that the president will now have someone to focus specifically on dealing with the crisis, and people will expect to see actual results,” he said.

South Africa's small businesses are among those heavily affected by the rolling power outages, forcing them to spend money on fuel-powered generators and operate at reduced hours daily.

Mothibedi Mohoje, a small business owner in Johannesburg's Soweto township, said that his internet and printing business is suffering as a result of the frequent power cuts.

Mohoje said he is often forced to close his operations for about four hours a day because he needs electricity to power laptops and printing machines to serve his clients.

Although he has invested in a diesel-powered generator, the expense of running it, amid rising fuel prices, makes it difficult to run the business at a profit.

“We lose a lot of hours because of the power cuts, which often go on for longer than they are scheduled for,” Mohoje said. “For my business, it is very problematic because we use electricity for all the equipment that we use.”

Share:

In this article:

Industries:
Utilities

Author: AP News

This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

Originally published by Associated Press Valuethemarkets.com, Digitonic Ltd (and our owners, directors, officers, managers, employees, affiliates, agents and assigns) are not responsible for the content or accuracy of this article. The information included in this article is based solely on information provided by the company or companies mentioned above.

Sign up for Investing Intel Newsletter