Wednesday, January 26

2021: the year SA’s energy crisis reached its peak

When we look back at 2021, I think we’ll notice it as two clear markers: it was the year the energy crisis peaked, and the year we started to win against the pandemic. As we look into the new year, both of you will be of great use to us.

Make no mistake, this year has been the worst we have ever had in terms of energy availability. In November, we had faced more than 1000 hours of unloading cargo for the first time since the crisis began. But it was also the year in which the first decisive step to end the crisis was taken with the modification of Annex 2 of the Electricity Supply Law to allow companies to create electricity generation facilities of up to 100MW without a license.

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We should start to see new production up and running in the next 12 to 18 months, signaling a fundamental shift in the way electricity is produced towards a greener, lower cost and more reliable future. Throw in the future rounds of the Independent Power Producers’ renewable energy program and we are diversifying our energy sources substantially, which is key to long-term supply stability.

It was also the year we took a decisive step against the Covid-19 pandemic with the launch of our vaccine program. As we approach the end of the year, we are going to be well below the 70% target we had set for ourselves to vaccinate the adult population, with only 44% achieved as of last week. After a late start, the government did well to ensure a good supply of vaccines and established an extensive distribution program in partnership with the private sector. But we have faced real challenges in reaching a larger part of the population. The reasons are complex, including logistics, economics, and attitudes. Too many of our population live precarious lives in which every hour of every day is a battle and it is not feasible to take time for vaccines.

Vaccine mandates from employers are becoming more prevalent and right now they seem to be the best tool we have to drive greater acceptance. But we also need more creative interventions to bring vaccines closer to people, so that the cost to them of getting vaccinated is minimized and more incentives are added, such as vouchers.

I hope that one day we can also say that this year was the worst for employment. But I’m afraid we’re not doing enough to change the trajectory of the shocking unemployment figures reported for the third quarter, which show that nearly half of the workforce was out of work in the expanded definition. Economic growth figures told the story behind the job slump, with the economy contracting 1.5% between the second and third quarters.

As we approach the holidays, my burning wish is that we return full of energy to face our economic crisis. Many times in this space I have defended the structural reforms that we need. Some, such as the power supply, have been partially realized, although we have yet to deliver a fully restructured Eskom that includes the creation of an independent system operator that can purchase electricity from lower-cost providers. But many other reforms have yet to take place. Spectrum auctions should be concluded in the new year. We must fix visa policies that continue to make it difficult for businesses to attract the skills we need and limit our tourism industry. We must cut red tape that limits businesses in many ways, from the specifics of BEE regulation to exchange controls. We must continue to fix our state companies, including Transnet, which must incorporate private operators to improve the efficiency of ports and railways. We must launch the major infrastructure investment program we need, with private sector funding mobilized to invest in well-structured and bankable public infrastructure projects.

The unemployment crisis needs a new maturity to remove taboos on the revision of labor laws. We must take seriously the potential for reforms to make the labor market work better and create more jobs. We must confront the negative incentives that employers face to expand employment. We must also fix the structure of the negotiation processes, including the mandatory extension of agreements to employers who have not even participated in the negotiations.

As always, we go back and forth. I think 2021 has seen some very solid progress. Next year will be the time to capitalize on them as we finally quell the pandemic and the energy crisis. Additional reforms must be vigorously addressed to ensure that 2022 marks a turning point in economic recovery. I look forward to working with counterparts in government, labor, and civil society to make that happen. Until then, I wish all of our members and partners a good night’s rest and a happy new year.

It is amazing that there is 660,000 fewer employed persons in the third quarter of this year than the previous year, considering that a year ago we were locked up. This reflects a collapse in business confidence beyond the effects of Covid and the riots in July. Our companies simply do not believe that it is profitable to invest and expand. The tragedy is that the solutions have long been recognized and widely recognized as such but, for various reasons, the implementation of reforms to accelerate economic growth and create jobs has been long delayed.

Last year the Department of Tourism instituted the Tourism Relief Fund in response to the initial devastation caused to tourism businesses by hard closures. Sadly, it appears to have been closed, but it is critical that this fund be reactivated or replaced. The Covid pandemic has devastated the December season for two years in a row, which is all the more concerning as tourism is a major employer of women and youth.

Busi Mavuso is the CEO of Business Leadership South Africa.

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