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JOHANNESBURG. – Escalating power cuts are having a “disastrous effect” on the South African economy, with National Treasury downwardly revising its growth forecast for 2022 from 2.1 percent to 1.9 percent.
Presenting the Medium-term Budget Policy Statement (MTBPS) to Parliament on Wednesday, Finance Minister Enoch Godongwana to Parliament noted with concern the increasing intensity of load shedding in recent months, which has disrupted economic activity.
“The intensity of load shedding is having a disastrous effect on our economy,” Godongwana lamented.
In the policy statement, Treasury describes load shedding as a “feature of South African life”, having occurred since 2007. “A decade and a half of this binding energy constraint has discouraged investment and weighed on economic growth and job creation.”
Increasing power cuts are compromising an already fragile and recovering economy, which warrants the urgent implementation of energy sector reforms announced by President Cyril Ramaphosa earlier this year. The interventions would add 14GW of power to the grid within two years. Currently, there is a generation capacity of 4GW and 6GW.
Other factors that impacted economic growth this year include the flooding in KwaZulu-Natal and Eastern Cape, industrial action in the mining and electricity sectors, as well as global supply chain constraints. Godongwana noted that “inefficiencies” at the port and rail sectors are costing the economy billions and “undermining” efforts to raise growth. – News24.com
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