The previous period when the global order was in such disarray was during World War 2. At present, Europe and the US, via Ukraine, are at war with Russia. The EU is bracing itself for a cold winter and negative economic growth as it enters a period of almighty struggle with Russia, its former largest energy supplier.
The Chinese government has its own hands full. The once seemingly endless flow from populous rural areas to factories in the cities has all but dried up; the era of double-digit economic growth based on mass manufacturing has ended. Beijing needs to redouble its efforts and find ways to break through the middle-income trap and reinvent its economic model from mass production to one based on innovation and technology.
Given the problems in both the East and West, the second decade of the 21st century will be a white-knuckle ride. The globalised world order, in which the US-led West provided the rules and security, is over. The peaceful and predictable period in global affairs, where trade and commerce thrived, has passed.
The only certainty is that there will be more disruptions to energy supply and more volatility in energy prices. The just-in-time logistics that became the backbone of the globalised economy, where phones and cars are assembled from parts manufactured in different factories all over the world, had been thoroughly disrupted by Covid-19 lockdowns. The war in Europe has only made the logistics problem even more acute.
The current shift in the global order and the resultant global uncertainty can be a blessing in disguise for SA. We know that World War 2 was a period in which SA industrialised. No longer able to rely on the UK and European supplies for industrial goods and chemicals, SA had to industrialise to support its domestic needs by necessity. The current global supply chain disruptions and volatile energy prices may mean, by necessity, that we must find domestic solutions. Supply chain disruptions mean we need to rebuild our manufacturing base, and supply disruptions in energy mean renewable energy solutions.
Speaking to the CEO of an engineering consulting practice in Johannesburg a couple of weeks back, I was told that SA’s electricity supply problems will be a thing of the past in four or five years. The energy problem will be solved, not because the new board at Eskom will be endowed with magical powers, or that the ANC cadres deployed will suddenly become competent. Rather, five years from now, we will all have our own power solutions independent of Eskom.
As news broke this week that Anglo American and EDF Renewables will jointly develop 5GW of renewable energy in SA, we know almost all other major mining houses have their own energy projects in the pipeline. Large metros such as Cape Town and Johannesburg have all announced they are aggressively trying to find renewable energy alternatives to Eskom. As large corporates and metros find their own supplies of power, medium-sized businesses and municipalities will pool resources to build their own renewable energy solutions.
By necessity, medium-sized manufacturers, municipalities and even households, will find their own solutions away from the unreliable, ever more expensive — and polluting — state electricity monopoly. There will be a pooling of resources among medium-sized companies and municipalities to build microgrid power solutions while households put up solar panels, inverters and batteries.
On the manufacturing side, SA’s motor industry has stood the test of time and continues to adapt and manufacture through thick and thin. The textile industry that thrived in the 1980s and 1990s appears to have turned the corner as Covid-19 logistics disruptions mean large factories in the Far East can no longer reliably supply and SA fashion chain stores are again placing orders with local apparel and footwear manufacturers.
With every crisis there is an opportunity. As SA businesses, we cannot let this crisis go to waste.
• Dr Kuo, a former lecturer at the Shanghai International Studies University in China, is adjunct senior lecturer at the University of Cape Town’s Graduate School of Business.
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