How South Africa’s Energy Crisis Became an Economic Crisis
Rolling power cuts, a failing grid, widespread coal theft, and corruption could pose a political threat to the African National Congress.
Welcome to Foreign Policy’s Africa Brief.
Welcome to Foreign Policy’s Africa Brief.
The highlights this week: A Kagame critic is found dead in Rwanda, gender equality laws in Sierra Leone, and why Facebook’s missing moderators matter in Africa.
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Pretoria’s Power Problem
Rolling power cuts in South Africa are severely impacting the country’s growth and increasing the risk of recession. The economic costs associated with electricity outages—known as load-shedding—have reduced GDP by 1 to 1.3 percent annually since 2007, estimates Quinten Bertenshaw, executive director of ETM Analytics. Had load-shedding never occurred, he estimates the country’s economy could be 17 percent larger than it is today. Economists have estimated losses of between 1.5 billion rand and 4 billion rand (about $87 million to $232 million) per day.
The country’s growth outlook in 2023 isn’t “impressive,” admitted South African Finance Minister Enoch Godongwana this month, blaming electricity supply challenges for a lower-than-forecast 1.6 percent growth in 2022 and weakening investor confidence. “We can have the best policy on paper, [but] if we can’t provide electricity, it’s useless.”
In an attempt to avoid a total grid collapse, the state-owned enterprise Eskom—which supplies around 90 percent of the country’s electricity—is intensifying load-shedding, affecting businesses already struggling under inflation and high interest rates.
The utility company is dealing with an aging fleet of coal-fired plants that are continuously breaking down due to lack of maintenance, years of underinvestment, and systematic corruption. Despite South African President Cyril Ramaphosa’s pledge to root out corruption, Eskom’s size has allowed thefts to continue.
Eskom CEO André de Ruyter blames coal theft by organized criminal networks for some of the country’s energy problems. A Financial Times article described how the coal used in power plants is trucked in from hundreds of miles away but often stolen en route and replaced with bad quality coal while the good coal is exported abroad.
There were 104 confirmed cases of fraud and corruption registered with the South African Police Service over the year to March 2022, according to the energy company’s financial statements. In November 2022, Eskom announced that police arrested two subcontractors for coal and diesel theft.
Eskom is about $23.6 billion in debt, with auditors sounding the alarm on bankruptcy after a net loss of $719 million last year. Increasing its revenue means tougher choices. The National Energy Regulator of South Africa announced electricity fees would rise 18.65 percent starting April 1, which would lead to a 33.7 percent increase in the mining industry’s energy costs, according to the country’s Minerals Council. Farmers affected by the power outages have asked Ramaphosa to declare a state of disaster.
Europe and the United States have pledged $8.5 billion to help the country shift away from coal. At the same time, South Africa has drawn up a $84 billion five-year renewable energy transition plan—but that transition takes time, and Eskom’s problems are immediate.
“There has just been a systematic degradation of services,” Bertenshaw said, recommending privatization of electricity production and cuts to Eskom’s bloated staff. “The rich are able to shield themselves [and] get off the grid to some degree with inverters or generators of some sort, but it’s the poor that don’t have the means that end up suffering.”
Ramaphosa has overhauled Eskom’s board several times. In the short term, he’s also proposed that Eskom suspend the planned price increase. “I have said to Eskom it will be an injury to our people if we implement this 18 percent increase now when we are going through load-shedding,” he said. To help rescue the country, the African National Congress (ANC) is planning to buy electricity from other countries, including Turkey’s Karpowership, according to a report by Bloomberg. (The company produces electricity from ship-mounted generators.)
However, internal squabbles continue to hinder any concrete action plans. The country’s treasury has refused to fund the cost of extra diesel fuel for standby open-cycle gas turbines, to alleviate load-shedding, yet Eskom has said it has overspent on diesel and run out of money to buy more.
Eskom has seen off 12 chief executives in the past 12 years. The outgoing CEO, de Ruyter, resigned last month after a reported poisoning attempt that is being investigated by police. De Ruyter said he suspects coffee he drank at his office was laced with cyanide.
There is no doubt that the various problems surrounding Eskom will have an impact on upcoming elections in 2024. Political pundits widely predict that the country could be led by a coalition government for the first time in the post-apartheid era because the ANC is likely to lose its majority. In the meantime, de Ruyter announced in a virtual news briefing on Sunday that South Africans should brace for ongoing power cuts for at least two more years.
The Week Ahead
Wednesday, Jan. 25: Egypt marks the 12th anniversary of its 2011 revolution, which led to the resignation of then-President Hosni Mubarak.
Thursday, Jan. 26: Egyptian President Abdel Fattah al-Sisi attends Republic Day celebrations in New Delhi as a guest of Indian Prime Minister Narendra Modi.
Thursday, Jan. 26, to Saturday, Jan. 28: U.S. Treasury Secretary Janet Yellen visits South Africa. It’s expected Yellen will hold talks with South African Finance Minister Enoch Godongwana and South African Reserve Bank Gov. Lesetja Kganyago.
Friday, Jan. 27: The United Nations Security Council meets to discuss its mission in Mali.
Tuesday, Jan. 31, to Sunday, Feb. 5: Pope Francis is scheduled to visit the Democratic Republic of the Congo and South Sudan.
What We’re Watching
Burkina Faso-France tensions. Burkina Faso’s military government ordered hundreds of French troops to leave the country within a month, reports state broadcaster RTB. The decision follows a similar move last February by neighboring Mali.
Last week, protesters took to the streets of the capital, Ouagadougou, calling for the expulsion of the French ambassador and the closure of a French military base north of the capital. Public anger at the French has been simmering over a perception that France’s military presence has only worsened security and increased the targeting of civilians.
Last November, protesters attacked the French Embassy after setting the building on fire a month earlier when leaders of the new junta made allegations that the embassy was harboring former coup leader Lt. Col. Paul-Henri Sandaogo Damiba. The French Embassy denied those allegations.
Russia-China naval drills. Russia and China are to conduct naval drills off South Africa’s east coast from Feb. 17 until Feb. 27, underscoring the three countries’ strengthening relationship under the so-called BRICS groups of emerging economies (consisting of Brazil, Russia, India, China, and South Africa).
The South African government has staunchly defended the rights of African countries to be nonaligned in the Russia-Ukraine war, and Ramaphosa has previously said being neutral in the war could allow South Africa to play a mediator role that could end hostilities through negotiations. (It has not yet played such a role publicly.)
However, the naval drills, happening the same week as the one-year anniversary of Russia’s invasion of Ukraine, poses a reputational risk for South Africa. The impression that it is ignoring Russian belligerence has led some Western countries to question South Africa’s claims of impartiality. South Africa’s own underfunded fleet has struggled to leave port, and critics argue the drills only serve the Kremlin’s propaganda by boosting Russian military morale.
Russian Foreign Minister Sergey Lavrov was in Pretoria on Monday to meet his South African counterpart, Naledi Pandor, as Russian state-owned news agency Tass reported that a Russian warship armed with hypersonic cruise missiles will take part in naval drills.
Death of Kagame critic. Rights groups are demanding an independent investigation into the death of investigative journalist John Williams Ntwali, who was killed in a car crash last Wednesday.
Ntwali was critical of the Rwandan government, led by President Paul Kagame. During the course of his career, he had been arrested numerous times and often spoke about fearing for his life. Human Rights Watch said he “joins a long list of people who have challenged the government and died in suspicious circumstances” and that there are “many reasons to question the theory of a road accident.” Rwanda is among the governments accused of using Israeli spyware Pegasus to target dissidents.
Sierra Leone equality bill. Sierra Leone’s government passed a quota law reserving 30 percent of public and private jobs for women. Under the new Gender Equality and Women’s Empowerment Act, women are also guaranteed at least 14 weeks of maternity leave, equal access to bank credit, and training opportunities. Sierra Leone has one of the lowest levels of gender equality, ranked 121 out of 156 countries, according to the World Economic Forum’s 2021 Global Gender Gap Report. Currently, only 18 seats in the 146-seat Parliament are held by women.
This Week in Tech
Facebook’s African moderators. Around 200 staff are being laid off in Kenya’s capital, Nairobi, after Sama—a third-party contractor hired to moderate content for Facebook parent company Meta—said it would stop providing content-review services to social media platforms and blamed the “economic climate.” It plans to focus solely on artificial intelligence data annotation.
The Nairobi office was moderating some of the most graphic and harmful material shared in conflict zones, such as Ethiopia and Sudan, on Facebook. But laid-off employees said the severance package offered last Wednesday fell short of that offered to employees elsewhere. Meta announced on Nov. 9, 2022, that it would reduce its global workforce by about 11,000 employees. U.S.-based staff were offered 16 weeks of pay and an additional two weeks for every year served. Staff in Nairobi will each receive just 15 days of pay for each year they worked with Sama.
Sama’s exit follows months of bad publicity, including a lawsuit claiming inhumane treatment of African employees. In a separate $1.6 billion lawsuit, Abrham Meareg Amare is among a group of activists and nongovernmental organizations demanding reforms of Facebook’s business practices. Meareg’s father, Meareg Amare, a Tigrayan academic, was shot to death after posts on Facebook identified his location and called for his murder.
The lawsuit claims Facebook’s algorithm helped fuel ethnic violence during Ethiopia’s civil war. Security analysts argue social media companies operating across Africa do too little to prevent the spread of disinformation and hate speech, employing too few content moderators who are able to review content in local languages. The shutdown of Sama’s moderation unit means even fewer locally based experts are reviewing content shared in the region.
Chart of the Week
Sierra Leone’s new gender quota laws will apply to its Parliament and the civil service in West Africa—a region where women are significantly underrepresented in politics compared to elsewhere on the continent. Africa’s biggest economy, Nigeria, has the lowest representation, with less than 4 percent of women holding seats in the country’s House of Representatives.
FP’s Most Read This Week
• The World Economy No Longer Needs Russia by Jeffrey Sonnenfeld and Steven Tian
• Iran’s Protests Are Nowhere Near Revolutionary by Sajjad Safaei
What We’re Reading
Political influencers. An investigation by Chiagozie Nwonwu, Fauziyya Tukur, and Yemisi Oyedepo for the BBC alleges that Nigeria’s political parties are secretly paying social media influencers to spread disinformation about opponents in the run-up to elections in February.
According to two whistleblowers, influencers can earn up to 20 million naira (about $44,000) for delivering a result. The BBC names social media influencer Reno Omokri as having shared a claim without evidence that Nigerian presidential candidate Peter Obi was linked to the Indigenous People of Biafra, a separatist movement that has been labeled a terrorist organization in the country.
Omokri, who is a former aide to former Nigerian President Goodluck Jonathan of the People’s Democratic Party (PDP), told the BBC he stood by his accusations and said he was not on the PDP payroll to campaign on its behalf. The report suggests that false stories initially shared on Twitter are being carried onto other major platforms, such as WhatsApp, which is used by nearly all Nigerians.
Britain’s 42 coups. The British government has been involved in more than 40 coup attempts in 27 countries since World War II, according to Declassified U.K. Many of those documented involved the leaders of countries in Africa, Asia, and Latin America “to remove them in favour of governments promoting British and Western economic interests,” writes editor Mark Curtis. In Ghana, Britain was involved in a U.S.-backed coup overthrowing independent Ghana’s first president, Kwame Nkrumah.
Nosmot Gbadamosi is a multimedia journalist and the writer of Foreign Policy’s weekly Africa Brief. She has reported on human rights, the environment, and sustainable development from across the African continent. Twitter: @nosmotg
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