BLSA CEO's weekly - 3 May

CEO’s Weekly Newsletter – 11 December 2023

POSTED ON: December 10, 2023 IN by Admin
BLSA CEO's weekly - 3 May BLSA CEO's weekly - 3 May

By Busiswe Mavuso

While I think we can say that we broke the back of the electricity crisis in 2023, I hope to be able to say the same of the logistics crisis in 2024.

As we conclude 2023, I am struck by both the progress and the setbacks that we have faced in our efforts as organised business to help put the country on track to deliver the economic growth we desperately need.

A highlight has been the new partnership established between organised business, represented by Business for South Africa, and the government, represented by the Presidency. This has established three workstreams to deal with the energy crisis, logistics crisis, and crime and corruption. Certain initiatives within those streams are now making good progress.

I think the clearest win is that the electricity crisis is now on its way to resolution, thanks to the extraordinary amounts of investment the private sector is pouring into new generating capacity and the work business and government have done together. We certainly can still do more and faster, but the regulatory space that was opened up for private generation has meant that the private sector is now investing. In 2023, Nersa received registrations of 4.1GW of new generation, adding to the 1.7GW of registrations last year. Around R111bn of investment is going into making that happen. That capacity is gradually coming on stream, adding around 20% to the country’s total working generating capacity. Also, a significant amount of small-scale generation has also been added – from households to small businesses – that have taken advantage of tax incentives and the falling cost of solar energy to install their own panels (which some estimate at over 4GW).

Already we are seeing improved resilience of the economy to loadshedding to the extent that, despite record levels of load shedding this year, the economy still managed to eke out some growth. It has not all been positive – a clear problem is constant delays in the Renewable Energy Independent Power Producers Programme, which has gone from the envy of the world in effective power procurement to barely managing to procure any new electricity this year. Some are declaring the end of the programme, but its role in acquiring new utility-scale electricity production remains important. Add to that two other fronts where we need to continue making progress: the unbundling and establishment of an independent system operator out of Eskom, and the publishing of an updated Integrated Resource Plan that sets out a rational least cost vision for energy development in the country for the future. The former requires the completion of the Electricity Regulation Amendment bill currently before parliament among several steps that must be made to get the independent grid operator up and running.

The appointment of new Eskom CEO Dan Marokane provides an opportunity to accelerate the process of establishing the grid operator and improving the performance of Eskom. I congratulate Mr Marokane on his appointment and look forward to working with him. Business and Eskom have established a good working relationship that has allowed us to, for example, fast track the return to service of Kusile units 1 and 3. Together I believe we can achieve much more to consolidate the country’s escape from the power crisis.

However, on the other side of the balance sheet, the logistics crisis has emerged as the next major challenge to the economy. We have seen sharp reductions in the volume of materials we can move across the rail network and through the ports for export. This is critical to the whole economy that now struggles to get goods into or out of the country. There are many reasons, from theft and vandalism to poor maintenance, but the impact is now clear in our economic growth numbers which are showing falling sales and production of commodities and other goods because of the crisis.

The good news is that there has been more urgency in tackling this crisis, and there is now a strong joint effort through the National Logistics Crisis Committee. Learning from successes in the electricity sector, the NLCC has drawn up a road map that will see major participation by the private sector in logistics. Some steps toward this have been made, including a process to concession the Durban container port terminal, but this needs to accelerate, including allowing the private sector to operate certain rail corridors. There are task teams already working to improve performance of key lines and we are starting to see some successes, although more could be done. Chief among those is the appointment of a new leadership team at Transnet that is committed to the roadmap, after the resignation this year of the CEO and several other executives. .

While I think we can say that we broke the back of the electricity crisis in 2023, I hope to be able to say the same of the logistics crisis in 2024.

Unfortunately, there is one area that I think things are getting worse without prospect of recovery – the health sector. The passage last week of the National Health Insurance Bill into law, barring the ascent of President Cyril Ramaphosa, is a shocking negative. The bill, as I wrote earlier this year, is hopelessly unworkable. It will never be implemented. Yet the pretence of trying to make it work is doing serious damage. It has created uncertainty for the health sector, leading to delays in investing. Medical professionals, who can work anywhere in the world, face yet another reason to exit. There is serious damage being done to both the private and public health systems as a result as government attempts to set up a single payer fund to acquire all significant health services in the country, effectively destroying the private health system in the process, without any plan on how capacity will be created in the public health service.

The National Council of Provinces passed the law last week completely unaltered from earlier drafts despite extensive representations from many parties, including business, on how it is unworkable and unconstitutional. The tragedy is that business put together a proposal on how the bill could be amended to deliver on its aims of universal health cover by drawing on the strengths of both private and public sectors. We know that can work – the Covid crisis showed how public and private sectors can work together to deliver health services effectively through our joint effort in the vaccine rollout. But those representations were ignored by the NCOP.

The bill now sits before the president for his signature. There is still opportunity to change course. It would be a tragedy if we undermine the good work business and government have managed to achieve together by weakening the health system, forcing not just health professionals to emigrate but also the many businesspeople who would lose faith that they and their families can rely on access to healthcare.

The NHI Bill has been a low point in a year in which partnerships have proven themselves to work to deal with the challenges we face as a country. As we rest for the Christmas period, I hope that we are able to return reinvigorated to tackle our challenges. I have seen the good that can come from positive partnerships between business and government, and I look forward next year to building those. I wish you all the best for the holiday season.


BLSA is a business organisation that believes in South Africa’s future and shares the values set out in the Constitution. BLSA is committed to playing its part in creating a South Africa of increasing prosperity for all by harnessing the resources and capabilities of business in partnership with government and civil society to deliver economic growth, transformation and inclusion.


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