27 March

BLSA CEO’s newsletter – 13 March 2023


POSTED ON: March 13, 2023 IN by Admin
27 March 27 March

The electricity crisis has been exacerbated by the lack of alignment between key stakeholders.


If the President’s new cabinet is going to deliver the changes we need in the country, it needs to be proactive. I am glad to say that in the new electricity minister, at least, that is happening. Last week I had a very positive meeting with Kgosientso Ramakgopa. His office was quick to reach out and his message was that business has to play a critical part in resolving the electricity crisis. He understands that all stakeholders will have to work together.

In his previous role as a champion of infrastructure investment in the Presidency, organised business had many positive engagements with the minister. The hallmark of his approach has been to find solutions by working with partners.

The electricity crisis has been exacerbated by the lack of alignment between key stakeholders. Despite clear policies and plans, the reforms and decisions needed to implement them have regularly been bogged down in turf wars and ideological stand offs. We have scored many own goals as a result, from needless delays in procuring new electrical plants to delays in the unbundling of Eskom. A champion who can align all of the parties and drive reforms through to completion would be extremely welcome. The minister is clear that we do not need new plans – we just need to implement the existing ones.

Organised business is a willing partner. Last week we demonstrated that with the launch of the Resource Mobilisation Fund. BLSA is a significant contributor to the R100m fund which will pay for technical capacity to support the President’s energy plan drawn up by the National Energy Crisis Committee (NECOM). NECOM’s plan is already being implemented, having driven the issuance of a battery procurement round and the lifting of the licensing threshold for private generation, among other steps. The RMF will independently procure the resources that are needed to implement the NECOM plan.

The electricity minister can reinforce the plan and its progress. That is a clear part of his mandate and having a focused political principal could help smooth its implementation. I look forward to working with him to make that happen.

The urgency is, of course, obvious to all. The fourth quarter GDP shock last week was an unpleasant surprise. The economy shrank 1.3%, which the Financial Times noted means that it is now the same size as it was in 2019, despite our population having grown 3.5%. We should still be seeing a strong recovery from the Covid epidemic and lockdowns, as in much of the rest of the world, but loadshedding has slammed the economy hard.

Ratings agency S&P Global was quick to react to the GDP numbers by downgrading the outlook for South Africa. While our credit ratings are still firmly in the junk category, the agency had a positive outlook thanks to the positive progress made to stabilise government’s debt levels. But those achievements have now been swamped by the economic outlook, leading the agency to note that downside risks are prominent, with the country having failed to capitalise on the global upswing in commodity prices amid continued electricity shortages. The clear message was that if we don’t get the electricity recovery plan right, further downgrades are coming.

This is the context in which the minister and everyone involved in the NECOM plan are working. I am positive. The plan is a good one – it does reflect the best options we have as a country to end the loadshedding crisis as soon as possible. It will take years to firmly put the crisis behind us, but the plan has the right balance of short-term wins and long-term fixes. There is accelerating momentum, and I felt that keenly last week in engaging the minister and in the launch of the RMF. BLSA will continue working to support that progress.

cabinet

BLSA sincerely hopes that the new cabinet will provide fresh impetus to the important structural reforms under way, I write in News 24 Business. BLSA also hopes that President Ramaphosa follows through on his promise to rationalise government departments, entities and programmes at the next appropriate opportunity.

business

Business is under no illusions as to the scale and urgency of the problems SA faces, but our focus must be on providing the critical support that is needed to bring the country back from the brink, I write in Business Day. The good news is that there is still an environment in which progress is possible. There are areas in which SA is becoming more conducive to development. Business is providing support to Operation Vulindlela whose work encompasses the energy, water, telecommunications, transport and tourism sectors. This is not the time for business to renounce its responsibility. The future of South Africa depends on it.

BLSA is a business organisation that believes in South Africa’s future and shares the values set out in the Constitution. In 2017, BLSA signed a contract with South Africa, committing business 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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