SA’s delegation has returned from the World Economic Forum (WEF) in Davos, Switzerland, where it shared the message that the country is open to investment.
In a statement released on Wednesday, finance minister Enoch Godongwana said SA is ready to partner with the local and global community to lift the country’s economy on to a higher, jobs-rich and more sustainable growth path.
“SA used the gathering to give the world details about the ambitious suite of reforms in energy, infrastructure development, food security, job creation and the green transition — that the county is implementing to create a sustainable, vibrant and inclusive economy,” Godongwana said.
The WEF meetings took place at a time when the country was experiencing back-to-back power outages, subjecting households and businesses to as much as 10 hours of power cuts a day.
SA President Cyril Ramaphosa had to cancel his attendance at the meetings to deal with the national power crisis after Eskom announced “an indefinite reintroduction of stage 6 load-shedding”, or 6,000MW of rotational power cuts, compared with demand that typically fluctuates at about 30,000MW.
The power utility’s energy availability factor stood at just 50% due to 18,041MW (or 38% of installed capacity) unavailable caused by breakdowns and 5,739MW (or 12%) offline amid planned maintenance.
The Eskom crisis is a major deterrent for investors. Not only are the blackouts more frequent, but they also appear to be getting worse and longer than previously expected.
The weaknesses in energy supply are set to remain over the next six months, resulting in downward revisions of the country’s economic growth prospects.
The International Monetary Fund and the World Bank recently cut SA’s GDP forecasts, citing the “worsening electricity supply” as one of the reasons.
South Africa is on the road to economic recovery, the world recognises that
— Finance minister Enoch Godongwana
At the pre-WEF media briefing, Godongwana said the National Treasury itself had followed suit, revising SA’s 2022 economic growth to 1.6%, which is lower than the World Bank’s 1.9%.
The African Development Bank’s newly launched Africa Macroeconomic Performance and Outlook showed that even though Africa’s GDP growth is projected to average about 4% in 2023 and 2024, SA’s real GDP growth more than halved to 1.9% in 2022 from 4.9% in 2021, due to subdued global demand, power outages and devastating floods that affected industrial production in KwaZulu-Natal.
Godongwana said the SA delegation in Davos acknowledged that addressing the electricity shortage in the country is the first and most important step to unlocking faster economic growth, creating employment and attracting investment.
“South Africa is on the road to economic recovery, the world recognises that,” Godongwana said. “We have a long way to go, and [the] economic outlook is fraught with risks and uncertainties. It will not be easy, but the WEF meeting has shown us that we are not walking alone.”
He said the worldwide energy, food and cost-of-living crises, driven by the conflict between Russia and Ukraine and fast-rising consumer inflation, were among key issues discussed by policymakers and businesspeople.
The climate crisis and its related socioeconomic and ecological impact were also high on the agenda, he said.
Godongwana said the WEF meeting also allowed Africa to highlight the abundant benefits and potential of the African Continental Free Trade Area (AfCFTA).
He said the AfCFTA secretariat and WEF, in a report titled “A New Era for Global Business and Investment in Africa”, revealed that the single market is projected grow to 1.7-billion people and $6.7-trillion in consumer and business spending by 2030, with the latter set to more than double to about $16bn by 2050.
Ministers Naledi Pandor, Ebrahim Patel, and Mmamoloko Kubayi were also part of the SA delegation.
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