South Africa


Amid lights-out, rising hunger and joblessness, Finance Minister Godongwana must ditch the pretty words

Amid lights-out, rising hunger and joblessness, Finance Minister Godongwana must ditch the pretty words
Illustrative image | Sources: Finance Minister Enoch Godongwana. (Photo: Gallo Images / The Times / Moeletsi Mabe) | Waldo Swiegers / Bloomberg via Getty Images | Gallo Images / Rapport/Deon Raath) | Gallo Images / Fani Mahuntsi

Eskom power cuts undo whatever economic respite emerged from eased restrictions of the Covid-19 lockdown… and the mining tax windfall estimated at around R160bn won’t sustain the national purse to deal with joblessness and the brutal reality of people’s heightened vulnerability and increasing hunger.

The blunt reality is that the current round of Stage 4 rolling electricity outages is no surprise. Eskom has long been on public record as saying that power cuts would continue for years — five years, according to the 15 March 2021 State of the System briefing, though this may be a movable window. 

“Load shedding will be with us until we get that extra 4,000MW to 6,000MW,” said Eskom CEO André de Ruyter at Tuesday’s briefing. 

The rotational power cut reality is steeped in politicking on energy. All the way to the Cabinet, where Mineral Resources and Energy Minister Gwede Mantashe, Public Enterprises Minister Pravin Gordhan and other ministers do not see eye to eye. 

Some of those dynamics emerged publicly when President Cyril Ramaphosa, in June after a bout of Stage 4 rolling power cuts, announced the licencing threshold for embedded power generation would rise to 100MW, in a surprise move of double what business had proposed and 10 times the extent the ministry had considered. The required regulations came on the last day of the 60-day deadline period. 

The reality of continuing rolling power outages is also enmeshed in an antagonistic relationship, often played out in court, between Eskom and the National Energy Regulator of South Africa. 

Tensions unfolded as the power utility pushed for cost recovery through substantially above-inflation tariff increases — even as its own figures show a consistent drop in sales. 

So for politicians, including Ramaphosa on and off the ANC local elections campaign trail, to promise stable and affordable electricity is at best misleading. 

The year 2021 has been and is hard, and 2022 will not be much better. 

This emerges from Eskom’s own figures, but also other modelling, some of which indicates a possible easing of rotational power outages in 2023. 

Former Council for Scientific and Industrial Research Energy Centre researcher Jarrad Wright, in Engineering News, estimated that about 1,100 hours of rolling power outages had been implemented this year, shedding between 1,700 and 1,800 gigawatt-hours. That’s more than the 825 hours of rotational power cuts in 2020, or 1,269GW/h, while there were 529 hours of electricity outages, or 1,090 GW/h, in 2019, according to the report

Calling for the resignation of De Ruyter is more politicking, whether it’s from the National Union of Mineworkers asserting its political muscle, the Black Business Council, or anyone else. 

Eskom, its R401-billion debt, the politicking alongside corruption and eyebrow-raising incidents like the Karpowership saga now playing out in court are all huge headaches. 

Finance Minister Enoch Godongwana would be wise to stay away from the pretty words and optics the Ramaphosa administration favours when he delivers his maiden Medium-Term Budget Policy Statement (MTBPS) on Thursday. 

Godongwana has a thankless task. 

No pretty words can spin the reality of 44.4% joblessness (on the broad definition that includes those just too disheartened to try), and youth unemployment of 74%. While the Presidential Employment Stimulus may well create temporary work opportunities, by its own acknowledgement the 2021 targets were missed. 

Neither can control of optics blind people to the evidence of rising poverty, including malnutrition among children, which, while not caused by the Covid-19 lockdown — Wednesday marks lockdown Day 594 — was certainly exacerbated by the worsening living circumstances of most South Africans. 

The Nids-Cram survey provides insight and data into the unravelling socioeconomic fabric of South Africa. This multidisciplinary, multi-institution research is freely available

Meanwhile, the SA Human Rights Commission has stepped in as most primary schools countrywide continue to implement rotational school attendance even though all learners were meant to be back in classrooms, because young children carry almost non-existent Covid-19 risks. A return to the classroom is central to stemming the deterioration of learning outcomes. 

It’s understood that what stands in the way of full operations at primary schools is a directive on 1m physical distancing that remains on the Covid-19 State of Disaster rulebook, without any amendment to ensure that full primary school attendance is possible. 

This failure to cohere at the political and policy level is not isolated. Neither are the implementation failures. 

Take social grants. More than 18 million South Africans rely on state pensions and childcare grants alongside grants for foster care, disability and others, while 9.5 million South Africans have applied for the R350 Covid-19 Social Relief of Distress grant. 

As South Africa’s left and progressives are lobbying for a more extensive basic income grant (BIG) that would pay more than the minimum food poverty level — set at a monthly R624 or the upper poverty band of R1,335 a month — the government’s proposed family grant, pegged at R624 per household, has been sharply criticised for effectively reversing social security — and for the opaqueness of its development.

On 18 August, Social Development Minister Lindiwe Zulu controversially gazetted a proposal that workers pay up to 12% of their incomes into a government-administered social security fund. It was withdrawn by 1 September. 

Zulu may have decided to act because of the ANC National Executive Committee (NEC) social transformation subcommittee’s apparent failure to finalise a new social grant policy.

The first draft on a BIG was meant to be completed in February, for presentation to the NEC and, with “its comments and guidance”, a final report was meant to have been completed in May in recognition of “the urgent decisions [needed] to address the devastating humanitarian crisis facing the country”, according to documents before the NEC. 

That apparently didn’t happen, leading to Zulu’s inopportune August intervention — and National Treasury stepping in by commissioning research that, according to Business Day, should be publicly released soon. 

And so Godongwana’s headache turns into a migraine — even as the MTBPS only adjusts government spending and signals priorities and shifts like tax increases that are announced in February’s Budget. 

Thursday’s numbers are straightforward — with around R160-billion extra in the national kitty, R32.8-billion is for the support measures announced earlier this year, such as the continuation of the R350 grant to March 2022, and the R3.9-billion for the government’s special risk insurer Sasria to support businesses hit in July’s public disorder and looting. 

Another R19-billion is taken to pay the recurring monthly R978 cash gratuity to all of South Africa’s 1.3-million public servants in what’s effectively a political accommodation after the government took a hard line of not implementing the salary increases in the third and final year of the wage deal. 

That leaves around R100-billion of the additional revenue collected mainly off the back of a mining tax windfall. But the begging bowl line is long — from state-owned entities like SAA, Land Bank, Post Office, SABC and Denel, to departments whose status has been boosted in the ongoing Covid-19 lockdown, like the SA National Defence Force and the SA Police Service. 

But throwing money at the problem hasn’t worked. Rolling power outages are continuing despite Eskom getting an annual R23-billion bailout over a decade from 2019, as announced in the 2019 Budget, plus an additional R59-billion over two years, which was announced in the October 2019 Special Appropriation legislation. 

What holds true for Eskom holds true across government. 

It’s not about the money or pretty words, but policy coherence, implementation and the necessary hard work to actually make it happen. That’s outside the purview of Thursday’s MTBPS. DM

[hearken id=”daily-maverick/8851″]


Comments - Please in order to comment.

  • Rg Bolleurs says:

    Going to be interesting to say the least. How to square ANC ideology with reality.

    Quite simply, an impossible task.

  • virginia crawford says:

    Eskom: it is not cost recovery if it trying to make up for all the millions that were stolen.
    Gwede Mantashe should be fired – the whole world is looking to renewables except him. He is just a compromised and incompetent person.
    Where are the wind farms and solar energy plants? Look at North Africa and Dubai – huge solar power plants – it creates jobs and power. The technology is improving all the time.
    Reality versus ideology and corruption!

  • Johan Buys says:

    “Load shedding will be with us until we get that extra 4,000MW to 6,000MW”

    He has 45,000MW but cannot look after it as 22,000MW is in unplanned maintenance.

    If we did not have the 4 to 5 GW of renewables we would be at stage 8 loadshedding. At least Eskom can’t screw up the IPP operations as I am by now certain that they could not keep a solar farm running.

  • Johan Buys says:

    The RET side of ANC is at it again. Vavi was on radio interview today, reckons they demand a R1,500 basic income grant. The money will come from the 1,400 billion that is all the cash in all the companies on the JSE. Literally that is what he said.

    So with a program cost of R400b per year the JSE cash is gone in three years. Never mind that then the JSE companies only have the R1,000 billion debt. But anyway, after three years, where to next?

    The grant proponents in general need a reality check. One detailed study got to R180 billion per year. That is about the same as giving free electricity to all businesses and households in the country. Madness

    Not popular : we need to get our population growth under control. It was good enough for our chinese comrades but it seems in SA it is a basic human right to bring forth five miserable kids per woman.

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