South Africa’s electricity crisis could have been mitigated with the implementation of policy reforms proposed as far back as the 1990s.

This is according to energy and government panellists at a discussion hosted by the Southern Africa – Towards Inclusive Economic Development (SA-TIED) research institution in Johannesburg on November 29. The event focused on the long-term impact of load shedding on South Africa’s economy and energy landscape.

The decade leading up to 2019 was “characterised by neglect”, said Chris Yelland, Managing Director of EE Business Intelligence. He noted that reaching stage six load shedding in 2019 was a wake-up call for government, prompting policies like the energy recovery plan. “Long-term policy issues now require diversification. Diversification is essential for managing risks in a system where Eskom is the dominant generator and coal makes up 85% of our primary energy mix. This is where policy is headed.”

Joanne Yawitch, Head of the Just Energy Transition Project Management Unit in the South African Presidency, agreed. “It is absolutely critical that we don’t place all our eggs in one basket, particularly when that basket has got some very old eggs. We can’t rely on a single source; we need a diversified energy mix.”

However, the need for diversification and structural reform is not new. A 1998 government white paper highlighted the importance of unbundling Eskom at horizontal and vertical levels, said Aalia Cassim, Acting Chief Director of Macroeconomic Policy at National Treasury. “The paper recommended measures such as competition in generation, open access to the grid and exploring alternative energy sources. These critical steps were delayed for decades.”

The 1998 white paper acknowledged the benefits of competitive models and private-sector participation, stating: “The government will initiate a comprehensive study on future market structures for electricity supply. In the meantime, the initial exploratory steps will include the unbundling of Eskom’s generation and transmission groups.” However, the political momentum to implement these measures only materialised when the electricity crisis peaked around 2019, Cassim said.

The problem is lack of an integrated energy plan. “Since 2008, we’ve been required to have one yet we don’t. Our electricity plan is outdated and we lack a gas master plan or coal roadmap. Early-stage planning was inadequate and this remains the case today,” Yelland said.  

The panel also examined the economic toll of load shedding. The long-term effects of the electricity crisis have marked various sectors, said Yolande Smit, Chief Director of Macroeconomic Policy at National Treasury.

Studies show that a 1% increase in load shedding results in a 4% decline in GDP, said Haroon Bhorat, Director of the Development Policy Research Unit at the University of Cape Town. Cassim noted that manufacturing, agriculture and telecoms are among the hardest-hit sectors while Bhorat argued that all sectors are equally impacted through direct and indirect effects.

“The cost of doing business in South Africa has gone up. We’ve lost foreign and local investors, seen dwindling investment and declining GDP growth,” Cassim said.

Yawitch added: “The impact isn’t always measurable – it’s about what doesn’t happen: the businesses that aren’t opened, the investments that aren’t made, the tourists who don’t visit.”