Pretoria - South Africa’s electricity crisis is shaving 1 percentage point off economic growth annually and preventing the country from achieving its employment and development targets, President Jacob Zuma admitted on Tuesday.
He was giving a report back on the government’s implementation of the National Development Plan (NDP), the first since his government’s commitment to a nine-point plan to revive the economy, in his State of the Nation address in February.
The electricity crisis, which has seen businesses and ordinary South Africans facing almost daily blackouts as Eskom tries to catch up on maintenance backlogs, was the country’s biggest obstacle and costing the economy up to 1 percentage point in economic growth.
This has rendered the NDP’s ambitious target almost moot, and the economy now faces a new round of widespread job cuts that threaten to put the state and the ruling party at loggerheads with business.
“We committed ourselves to a 5 percent growth rate by 2019. The 1.5 percent economic growth rate attained in 2014 is a distance from that NDP ambition. Our estimate is that electricity shortages are currently costing the economy close to a percentage point in economic growth,” Zuma said.
He tried to rally the country as the economic crisis bites, reminding South Africans of the still unfavourable global economy. He also said forecasts predicted growth would double, to 3 percent annually, as the energy crisis eased and the economy responded to the nine-point stimulus plan.
Zuma was flanked by his cabinet ministers at Tuesday’s news briefing, which was preceded by meetings with the Presidential Business Working group on Friday.
It is understood that industry leaders spoke frankly about the obstacles to greater economic growth.
Zuma said progress had been made since the government had intervened in the Eskom crisis, which saw Deputy President Cyril Ramaphosa appointed to head a war room to sort out the state-owned enterprise’s problems.
This includes short-term agreements that have seen an additional 800MW added to the grid, while co-generation with independent producers realised 450MW through energy-efficiency programmes.
Another programme with renewable energy independent producers was contributing an additional 1 800MW to the grid, with a total of 6 327MW expected to be added in the next two years through 92 alternative energy projects.
“This is a result of South Africans working together to alleviate the impact of the electricity challenge, and over and above that, energy efficiency results in savings in energy costs and reduction in emissions,” he added.
Zuma said the government was concerned by the threat of job losses in the mining sector as mining remained a critical component of the economy, and should remain its backbone.
A task team established by Mineral Resources Minister Ngoako Ramatlhodi was expected to develop detailed proposals to avert the job losses.
“The threat to job losses in the mining and steel sectors is of serious concern to government, as it would have a negative impact on many families, communities and the economy,” Zuma said.
The task team was expected to report back to the minister this week.
But the looming jobs crisis could still be a bone of contention between the state and industry, with the government prepared to take a hard line against mass retrenchments. Last week, Ramatlhodi threatened to suspend mining giant Glencore’s operating licence over its plans to downscale operations at one of its mines, threatening thousands of jobs.
In a hard-hitting editorial in The Star on Friday, ANC secretary-general Gwede Mantashe accused South African business of being trapped in old ways of operating, using mass retrenchment as the first response to any crisis. He called on industry to take responsibility for the country’s jobs crisis.
“Working people are human assets, not tools of production,” Mantashe wrote.
Platinum producer Lonmin has said it intends retrenching close to 6 000 employees, while Anglo American Platinum is looking to cut its workforce from 24 000 to 16 500 in Rustenburg. Kumba Iron Ore has already shed 1 160 jobs.