Hello darkness, my old friend
NORMAN CLOETE, SAMEER NAIK AND SHAUN SMILLIE
African News Agency
LOAD shedding has become another pandemic in South Africa. Data from the Council for Scientific and Industrial Research (CSIR) shows that the total economic impact of load shedding in South Africa over the past 10 years could be as high as R338 billion. In 2019 alone, there were significant impacts on the economy – the estimated cost being between R60bn and R120bn. Now economists are warning South Africans that darker and tougher financial times lay ahead. Economist and Wits University senior economics lecturer Dr Lumkile Mondi said the country should brace for tough times. “South Africans are facing a difficult period ahead as price point increases (inflation) are here to stay for a longer period than anticipated as a result of supply constraints emanating from the Covid-19 economy lockdown and the European war,” Mondi said. “Not only are fuel prices rising sustainably because of the war, but the major grain suppliers – Ukraine and Russia – are impacting global food security. South Africa is likely to witness deepening poverty, rising child mortality, and stunted children because of hunger.” He said the increase in load shedding would also have a severe economic impact on South Africans. “Households with employed members are likely to find themselves insecure in their jobs as costs for doing business continue to rise because of Eskom and other SOEs such as Transnet. Going back to basics (biomass, fossils) is coming back. These are hard and difficult times for South African households.” Mondi said it’s important that the government introduces basic income guarantees in order to try to mitigate the struggle. “This includes food stamps to support vulnerable households in addition to economic reforms that can remove major micro-constraints that have increased the cost of doing business including the privatisation of some of the state assets that are a source for self-enrichment and increasing cost of doing business because of malfeasance,” said Mondi. Mondi said it was also important that South Africans begin to save their money. “Those that can save, need to by postponing some of the discretionary expenses (holidays and some non-core recreational expenditure) because of the uncertain future.” Head of the Wits Business School Professor Jannie Rossouw said the price increases in fuel and food could lead to higher inflation rates. Interest rates may soar and many households will be left with less disposable income. Rossouw said while it was not his place to dictate spending, he would encourage tightening the “proverbial belt”. “Every household should look at expenditure and try to cut back. Now is also not a good time to borrow money. We have to contain inflation,” he said. But it’s not only at home that consumers are feeling the pinch. “The US inflation rate is higher than in SA at the moment. This is also true for many developed countries. People often feel that the inflation rates published by Stats SA are overestimated, but that is not the case,” he warned. In a tweet published earlier this week, Dr Ridhwaan Suliman summed up the bleak future South Africans are likely to face as the economy heads for a beating. He wrote on Wednesday: “I’m not sure South Africans realise some of the many challenges ahead; even in the short term there’s likely fuel price hikes, increasing power blackouts, interest rate hikes, rising food costs, inflation, the above leading to greater inequality, protests, mental illness.” Suliman, a senior researcher at the CSIR, is perhaps better known as the Twitter go-to resource for explaining the Covid-19 statistics and graphs. This time he felt he had to reach out to the Twitterverse to warn of the challenges facing South Africans that many are not fully aware are coming their way. “I put out the tweet because we need to speak openly about it. I feel generally the public needs to be more aware. And we can’t rely on government interventions to simply prevent these things from happening.” The problem, said Suliman, is that South Africa is still reeling from the Covid-19 pandemic that not only caused severe financial hardship but also left psychological scars. Now with the war in Ukraine, those financial woes are set to continue, made worse by food shortages and fuel costs that seem set to rise yet again next month. “Social unrest is probably going to become more prominent. We shouldn’t be ignorant of the fact that people are restless. Just look at the unemployment figures,” said Suliman.