Eskom load-shedding poses serious risks to the economy

Belinda Bantham -- Tue, 02/12/2019 - 10:46

Eskom load-shedding poses serious risks to the economy

“The deep concern expressed by President Cyril Ramaphosa about the economic and business implications of the shock decision by Eskom to escalate load-shedding to level 4 must be widely supported.”

This is according to renowned economist Prof Raymond Parsons from the North-West University’s (NWU’s) Business School.

He says early solutions are required if last week’s positive message of the SONA - to put South Africa on new and higher growth path - is not to be undermined.

Prof Parsons says all the main drivers of higher economic growth in South Africa, such as investment, jobs, consumer spending, budget projections, are in jeopardy if the latest crisis and uncertainty around Eskom's ability to supply power are not resolved as soon as possible.

“The government and the private sector need to urgently see what emergency and supplementary steps may be possible to minimize the negative impact on the economy,” he adds.

According to Prof Parsons the modest 2019 consensus growth forecast of about 1,4% for South Africa may well have to be reduced further if the Eskom situation is not stabilised soon.

“Credit rating agency Moody's now sees Eskom as the biggest single risk to the country’s economy. What now remains of overwhelming importance to business and investor confidence is security of power supply, if South Africa is to meet its growth and employment targets.”