JOHANNESBURG: South Africa’s economy could have been 10 percent larger if power shortages hadn’t stifled growth and investment and put the nation’s debt at risk of being cut to junk, economists’ estimates show.
Eskom Holdings SOC Ltd, which supplies about 95 percent of the country’s electricity, is rationing supply because it can’t meet demand from ageing plants following years of underinvestment. Its chairman stepped down last month after losing the board’s support over a decision to suspend the chief executive officer and three other top managers, leaving it without permanent leadership.
South Africa’s estimated economic expansion of 2 percent this year could have been at least 1 percentage point higher had it not been for the cuts, said Dawie Roodt, chief economist at Efficient Group Ltd. Rolling blackouts have curbed mining and manufacturing, both knocked by strikes that limited 2014 growth to the slowest pace since a 2009 recession, and prompted rating downgrades.
“If we’d had enough electricity since 2007 and it was not a limiting factor, the economy could have been about 10 percent bigger than it actually was by the end of 2014,” Pretoria-based Roodt said by phone on April 2. “That is more than 300 billion rand ($25.4 billion), or more than a million job opportunities.”