The finance minister Enoch Godongwana says that South Africa remains open for investment from the world, load shedding and all.
Speaking to business figureheads at a pre-World Economic Forum (WEF) engagement, the minister said that the country has encouraging examples of concrete reforms to improve the country’s overall business environment and expand international business partnerships.
The World Economic Forum (WEF) is a Swiss non-profit foundation based in Geneva. It is best known for its Annual Meeting held in Davos, Switzerland, bringing together top business leaders, international political leaders, economists and other experts to discuss the world’s most pressing issues.
Godongwana, in partnership with the private sector, now has the tricky job of convincing the globe that South Africa remains a hub for investment.
Despite stating that the government is fast-tracking reforms to achieve energy security, amongst other things, load shedding persists as a blight on the country’s balance sheet.
Economic outlooks for the country have remained low alongside business confidence and investment, with continuous and intensifying rolling blackouts disrupting economic activity across the board.
According to Momentum Investment’s latest market outlook for January this year, growth outputs remain at risk from persistent disruptions at malfunctioning state-owned enterprises.
Electricity outages have ramped up in intensity, with a third of offline generating capacity arising from unplanned outages, said Momentum.
The financial services firm expects growth in 2023 to moderate from the year before at 1.1%, down 2.4% year-on-year.
“An unstable electricity supply remains one of the biggest barriers to economic growth, and it disturbs the lives of all South Africans,” said the finance minister. “Ending blackouts and solving the energy crisis remains among the government’s top priorities.”
He said that the government is committed to aggressively implementing new and existing measures to reduce the frequency and severity of load-shedding and ultimately end it.
Godongwana said that despite challenges such as load shedding, real GDP increased in Q3 2022 by 1.6% – well above market expectations.
He noted that the economy is now back to pre-pandemic levels, with real GDP 1.2% higher than pre-pandemic levels.
“The National Treasury projects that real GDP growth will average 1.7% between 2022 and 2025, which is downwardly revised from 1.8% in the 2022 Budget,” said the minister.
“Despite this out sobering outlook…with the right level of investment…it can be turned into an opportunity for all.”
Rolling blackouts
Energy insecurity in the country is expected to worsen, slowing economic growth. BNP Paribas predicts an increase in power outages to 200 days in 2023, mostly at higher stages than in previous years.
According to Intellidex analyst Peter Attard Montalto, load shedding may reach stage 7 – or even higher – by the middle of the year.
Montalto, on The Money Show, emphasized that power outages pose a greater threat to South Africa in the coming year than a potential global recession and political turmoil.
Read: Nersa approves massive electricity price hike for 2023
Artmotion S.Africa
