In its latest analysis of the world’s economy the IMF, the 78-year-old Bretton Woods brainchild, released a sobering prognosis. The IMF’s practitioners expect a “broad-based and sharper-than-expected slowdown” for 2023, making this year the weakest global growth profile since 2001.
While US President Joe Biden and UK Prime Minister Rishi Sunak gathered to celebrate the 25th anniversary of the Good Friday agreement, British business converged in mourning over the 0.3% contraction of the UK economy and its crowning as the worst-performing economy among the G7 nations.
Adding insult to injury, Russia is expected to grow 0.7%, despite sanctions and an exodus of skilled labour. For the UK, sticky inflation will mean a tougher time for consumers and homeowners as they feel the bite of higher and sustained interest rates.
For its part, SA is projected to “grow” (if you can call it that) by 0.1%. According to the IMF, domestic inflation has for the last 40 years (bar one) exceeded growth.
SA and the UK are quite different economies. Where one has world-leading rates of unemployment, the other cannot get enough workers to fill vacancies. Despite their differences and the IMF’s bleak prognosis for both, the UK and SA have something in common — they can both benefit from a faster, concerted and competitive transition to renewables and the green economy.
SA citizens are rightfully fed up with an energy provider that has failed in its only mandate; to bring light, power and productivity to the country. Without electricity, a precondition for modern economic activity, the country is left literally sitting in the dark while other economies speed ahead.
Local microgrids
Citing reasons for SA’s economic woes, the IMF finds that a “significant increase in the intensity of power cuts” is a key factor holding back the country’s economic potential. Had load-shedding not occurred, it is estimated that SA’s economy would be 17% larger than it is now. Economists have estimated losses of R1.5bn-R4bn (about $87m-$232m) per day due to rolling blackouts.
There is little choice left in the matter; SA must transition away from Eskom and dirty fuels. A transition to green energy and independence from the economic deadweight that is the national grid is technically feasible via distributed generation. The connection of solar panels into local microgrids allows consumers and industry to insulate themselves from load-shedding.
Eskom has touted its role in introducing such microgrids, but it should not be trusted to lead the way in their development. Doing so would be the definition of insanity: to repeat the same mistake and expect a different outcome. Home-grown SA companies such as Sola Group present competitive, viable energy and grid solutions for business and industry. Perhaps entire municipalities could take a leaf out of the private sector’s book and move onto their own grids too.
The UK has a similar opportunity in positioning itself as a leading renewables powerhouse. The country has abundant wind (especially known to those who have visited Scotland), as well as start-ups and technical expertise to advance and scale new green technologies such as hydrogen fuel cells.
For a historic polluter such as the UK, carbon offsetting is not just a climate priority but a national security one too. Russia’s invasion of Ukraine made it clear to the UK government and citizens alike that it must secure its energy sources, lest they suffer crippling rates of energy price inflation again. Going green provides energy independence, climate progressive economics, and economic potential.
Despite the IMF forecasting a tough time for the world’s economy — and an especially tough time for SA and the UK — opportunity is to be found among a thicket of ominous forecasts.
• Nott works for a venture facility for public benefit and is based in London. He writes in his personal capacity.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.