On Thursday former Reserve Bank Governor Tito Mboweni warned that South Africa is heading for a deep recession, if we don’t sort out our electricity supply constraints.
with a GDP of +- 300bn dollars,how do we function & grow? I see a recession, deep one in the horizon. Let us avoid it. Bring back da power!— Tito Mboweni (@tito_mboweni) February 5, 2015
“Our economy is growing slowly and only because consumers are still shopping and, for now, they still have jobs,” says Chief Economist at Stanlib Asset Management Kevin Lings. “Fixed investment, however, is already in recession and it’ll get worse due to the lack of electricity.”
Will electricity outages cause a new round of job losses?
Lings says that a lot of small businesses, especially, are struggling under current circumstances. “If they start going under, or start scaling back, we’ll go into recession.
“A couple of weeks or months from now, if this uncertainty persists, companies will start cutting back.”
How to avoid our economy form grinding to a halt
Lings agrees that we should bite the bullet and accept daily load shedding – even in times of low demand – so the necessary maintenance can take place.
“But we must be certain about when when there’ll be outages. We must get assurances that maintenance is actually taking place and that it’s done well, and in the time that the schedule suggests.
“We need leadership,” says Lings. “We need certainty and we need a lot more openness regarding the true state of existing electricity production in South Africa. We need a plan to work to and we need honesty as to how long we’ll have to endure this."
Listen to the audio for more detail.
This article first appeared on 702 : South Africa heading for a deep recession - Tito Mboweni