Eskom's Shock! Can SA Afford the Rising Cost of Electricity?
South Africa faces a daunting challenge: the rising cost of electricity. Over the weekend, Electricity & Energy Minister Kgosientsho Ramokgopa expressed concern over electricity costs and strategies for tariff rationalization. But is the issue simply about Eskom and municipal revenue?
The Thembisa Protests: A Litmus Test
As demonstrated by the Thembisa protests, electricity tariff hikes are a sensitive indicator of the nation's condition. Electricity is a basic necessity, and its high cost is undeniable. The protests highlight the frustration of citizens struggling to afford this essential service.
Beyond Eskom: A Deeper Economic Problem
The problem extends beyond Eskom and the municipal revenue model. South Africa's economy has grown at an average of only 1.5% over the past decade, lagging behind BRICS peers (4.5%) and emerging markets (5%). This sluggish growth is the root of the issue.
Unemployment Crisis: A Symptom of Stagnation
Unemployment remains stubbornly high at 33% because the economy cannot absorb new or existing workers. An economy that struggles to employ qualified professionals like doctors, teachers, nurses, and technicians is clearly not thriving. A sustained GDP growth rate of 2%-3% or higher is generally considered necessary to support increased formal sector jobs, but even this may be insufficient to address South Africa's unemployment crisis.
Radical Policy Shifts Needed?
Countries facing similar challenges of low economic growth, high unemployment, political instability, and capital flight are implementing radical policy shifts. These often involve a combination of fiscal, monetary, and structural reforms. Is it time for South Africa to consider similar measures to revitalize its economy and address the electricity affordability crisis?