Self-inflicted and entirely preventable

2008-02-02 00:00

The continuing national electricity crisis is making daily life miserable, but it may have far more devastating long-term consequences, including undoing South Africa’s economic boom and efforts to halve poverty and unemployment by 2014.

President Thabo Mbeki’s government has set itself a number of minimum targets, which include raising yearly economic growth to six percent and beyond by 2010 and halving poverty and unemployment by 2014. Unless a quick way is found out of the crippling energy crisis, the government is unlikely to reach its growth, unemployment and poverty reduction targets. The power crisis may also push South Africa’s current R400 billion effort to boost the ailing public infrastructure within five years out of kilter. At

the same time, government’s service delivery, already sluggish, will now probably slow down even more.

With the African National Congress leader, Jacob Zuma, preparing to face his trial on 16 charges, including corruption and fraud in August, the combination of preventable bad news, such as the power crisis and the ANC’s election of Zuma as leader instead of electing one of the dozens of younger capable ANC leaders, will only increase negative sentiment about the South African economy.

Sadly, the election of Zuma and the crisis in the ANC, combined with South Africa’s hosting of the 2010 Fifa Soccer World Cup, will mean that every political and economic crisis in South Africa will now be magnified. The Eskom power crisis will feed into a cycle of negativity that is likely to slow South Africa’s economic growth. Given Eskom’s regional importance, the energy crisis is also likely to slow economic growth in some neighbouring countries. All of these crises could not have come at a worse time, with increasing global market volatility and regional political turmoil — Zimbabwe is stumbling towards its decisive general elections in 2008 and the ongoing political crisis in Kenya. As Africa is often viewed as one entity by many influential foreign market players, these crises will start another round of Afro-pessimism. Ironically, South Africa, has just been able to sell itself as an individual economic success story.

Both the Eskom and ANC leadership crises were preventable. This is perhaps the story of Mbeki’s presidency — most of the big crises were self-inflicted and were entirely preventable. The government was repeatedly warned to invest in power. This Eskom scandal is a consequence of the extraordinarily dismissive attitude of Mbeki and ANC economic reformers allied to him. Uncharacteristically, Mbeki apologised for the power scandal — the first major admission on his presidential watch.

The short-sightedness of the opposition parties is also exposed in this scandal. Being in opposition is about imagining one is in government, which means forward thinking, planning and providing relevant alternatives.

The Eskom crisis also exposed the extraordinary lack of planning at the heart of South Africa’s economic administration. Eskom was supposed to be one of the lynch pins of the modernisation of South Africa’s industrial base. It should have been obvious that having to provide additional power for millions of new users would mean that Eskom’s capacity would have to be increased. Added to that are the plans to expand the industrial base of the economy, which will also require more energy.

When government announced the growth, employment and redistribution strategy in 1996, it initially set a target of an annual economic growth of three percent. But even then, there was no planning as to how power would be expanded to drive that economic growth. Between 1994 and 2000, when the economy could not break through the three percent growth ceiling, it was already clear that Eskom’s energy capacity, given the focus on expanding to poorer areas, could, at best, match the economy growing at a rate of one percent. Now with 5,1% average growth, there is just not enough power.

The Eskom crisis also exposed the lack of planning in co-ordinating visions across government departments. Economic reforms are really conducted at cross-purposes in this country, unlike East Asian developmental states, where there was clear identification of the weaknesses of the economies, what needed to be done to rectify them, where the economy was going and, importantly, the co-ordination to make it happen. If this is the only lesson to be learnt from the East Asian developmental states, it will be a good one.

Early in 2006, China adopted its 2020 vision, which set out clear targets of where its economy should go and how to get there. Part of that forward looking is to ensure that the country maintains its two-digit economic growth by securing its energy cheaply from Africa.

Another lesson to be learnt from the Eskom power crisis is that not openly debating economic policies is expensive. If open debate and transparency were allowed and if the government was open to criticism, this whole crisis could have been averted. The Eskom crisis is a valuable example of why there should be greater debate about economic policies, greater accountability and greater access to information.

Eskom’s management must share the blame. If managers are going to get huge bonuses, then they must deliver. And the government must set clear and transparent guidelines for delivery to state-owned companies: they must meet their social obligations, while at the same remain efficient.

It is extraordinary that no heads are rolling at Eskom and within the government over this scandal. Where is the accountability?

The government’s critics have, for years, urged it to consider alternative energy sources, for example, the wind and the sun, both abundantly available in South Africa. South Africa churns out huge amounts of waste every year. In China, whole villages are electrified by reusing waste. And they do it very cheaply.

To be competitive, we will have to do more inclusive forward planning, and use the resources we already have, more efficiently and more cleverly.

• W. M. Gumede is the author of Thabo Mbeki and the Battle for the Soul of the ANC.

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