SA’s economic recovery will hinge on the faster implementation of structural reforms and ensuring a speedy resolution to the electricity crisis that has crippled the country in recent times, finance minister Enoch Godongwana said on Sunday.
“The key challenge facing us now is recovery and reconstruction,” Godongwana said during a SA Jewish Board of Deputies national conference titled “Hope and Recovery”, which was sponsored by specialist bank and wealth manager Investec.
Godongwana pointed out that for the past 13 years Eskom has had outages, which has been flagged by ratings agencies as an impediment to economic growth.
“But what has happened is that over the past 13 years, government spent more time in fixing Eskom, but has never been able to fix it and ensure there is electricity supply. For me what I want is power to the grid. Who brings it is immaterial, so that this economy can come back,” Godongwana said, signalling his support for faster procurement of renewables.
Eskom, which supplies virtually all SA’s power, has been struggling to stay afloat and keep the lights on. Before Covid-19 hit, ratings agencies cited its debt load of about R400bn as among the risks to the sustainability of the nation’s finances.
Eskom CEO André de Ruyter has set his sights on a “just transition” transaction for Eskom in which some of its coal-fired plants are retired earlier than the timetable contained in the integrated resource plan and replaced with 7,400MW of newly built renewable energy.
Godongwana said without a reliable supply of power, the drive to boost economic growth will be dead in the water.
He also highlighted the need to resolve the impasse on the spectrum issue. Releasing additional spectrum is one of the cornerstones of President Cyril Ramaphosa’s reform agenda because it will lower SA’s internet costs, which have been partly blamed for the sluggish economic growth over the past decade as operators repurposed frequency bands historically used for voice calls. But the government’s push to release more spectrum remains in a state of unpredictability and legal uncertainty as players differ on the process to be followed.
Godongwana said he remained confident that the issues will be resolved out of court.
Speaking during the same event, De Ruyter emphasised the need for an aligned fiscal, environmental and energy policy framework that moves SA away from coal to a greener and cleaner energy future in a just way.
“We have an incredibly carbon intensive economy. We emit 25% more per capita than China ... it is clear we have to do more about carbon emissions. What excites me is we have some of the best wind and solar [resources] significantly better than Germany. Now if the Germans can make the transition to renewable energy, invest in wind and solar, surely so can we,” De Ruyter said.
He said transitioning away from coal could also help drive demand for local renewable energy components, and establish SA as a leader in developing financial packages where the developed world assists in fast-tracking the transition.
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