South Africa has plunged back to prolonged power outages after easing over the past two months due to breakdowns and urgent repairs, as per the reports.
Africa’s most developed economy is on track to have its worst power cuts on record in 2023, thus impacting businesses, which are already feeling the heat of the rising interest rates.
The rand weakened against the dollar and shares fell amid the power cuts.
“There is short-term pain for longer-term gain,” President Cyril Ramaphosa said in his recent televised address, while referring to the urgent maintenance work being carried out at the power stations across the country.
“I think we are obviously worried whenever there’s load-shedding but as we go through this process now, we might see a positive light in the long term,” he added further.
The workers’ union of Eskom, South Africa’s electricity public utility, asked the company to implement a measurable strategy to overcome the power cuts, while stating that the country’s economy “cannot afford to endure the adverse effects caused by the unreliable electricity supply.”
Although South Africa’s economy expanded by 0.6% in the second quarter of 2023, compared to 0.4% in the first quarter, analysts attributed the easing of power cuts behind the ‘growth’. However, they warned about the further increase in power outages damaging future growth prospects.
In year-on-year terms, the South African economy grew 1.6%, Statistics South Africa said, while noting that six of 10 industries recorded growth in the second quarter, with agriculture and manufacturing sectors leading the way.
While the agriculture industry grew by 4.2% in the second quarter, manufacturing increased by 2.2%. The latter contributed 0.3% to GDP growth, the statistics agency said.
“The outlook for the rest of the year remains relatively bleak. Load-shedding has returned with a vengeance as Eskom resumed regular maintenance,” the Nedbank Group Economic Unit said in a note to its clients.
Investec Bank said in its note that the second quarter GDP figures show that “electricity generation declined by -7.0% y/y during the period and remains a significant impediment to the country’s growth potential.”