A Dark and Dreary Dilemma for South Africa

South Africa is heading back to the heart of darkness. After many years of being the leading light of development and hope in the continent, it now finds itself groping in the dark under an energy crisis which could lead to unsavory consequences. The economic achievements and growth of the last few years, estimated at 5% annually, may be overturned by a crippling under supply of electricity that could bring its economy to a grinding halt. The lights have shut down on its bright performance.

The post-apartheid government has done remarkably well in supporting local development leading to the emergence of a black middle class with new spending power. It has attracted foreign investments along with massive infrastructure development, fueling an economic boom that created surplus for the government. Commodity prices soared with these inputs, but it also triggered commerce catering to a new lifestyle for the populace. The government's social development policies provided enormous subsidies to connect the poorer people to the national grid, enabling two thirds of its 42 million population access to electricity to improve their living standards; doubling the 1994 levels of electricity consumers. But the supply side was inadequately provided for, leading to the worst nationwide blackouts in its history.

The declaration of a state of emergency was followed by the rotation of electricity under a load shedding program. The operations of all business establishments, shops, malls, stores, have to close during blackouts for security reasons; restaurants, bake shops, butchers suffer losses, banks and retail establishments have to suspend transactions; and buildings have trapped people in elevators until the lights go up several hours later. The country's gold and platinum mines, its most prominent industry, has also been severely affected. Eskom, the producer of 95% of the country's electricity, has been accused of ignoring warnings about inadequate energy supply and failure to invest in maintenance and coal supplies. Promotion of blacks over more skilled whites were also invoked, as well as corruption through fat salaries and perks. The government is also accused of neglecting the development of South Africa's decrepit energy infrastructure.

Companies selling generators have been the only beneficiaries, and are considered the savior of many entities and international operations. But it comes at a high price and few can afford it. South African consumers expect a doubling of their electric bills in 2009, to fund the investments in energy. But this will also subsidize those who cannot afford the increased rates for power. Households already burdened by rising fuel and food costs face an even bleaker future as a result, with inflation hitting 10% in March followed by interest rates rising to 11.5% in April.

South Africans will have to brace themselves some more for a future plagued with problems. The failure to factor in future growth adequately has cast a pall of gloom for companies, households and investors which could undermine its economy and erode the hopes of its people for a better life after white rule. As Eskom scrambles to find short and long term solutions, one could only hope that their bright boys are not in the dark about finding a suitable one.

Haaarrrwwwwk...Twooooooph...Ting!