The Search for Power

In the bad old days of apartheid, the people of South Africa would get together and utter a single unifying chant: AMANDLA! ("Power") It was what they dreamed of, what they desired more than anything, what they believed in with the faith of a saint: power. Stored at the forefront of their minds, was a simple, yet unshakeable vision – to possess the ability to determine their own destiny. This image of empowerment stood like an oasis in a vast, hot desert. Surely it must often have seemed to be nothing but a mirage in the midst of the struggle.

Today we know that it was not a mirage. It was a glimpse into future reality. Yet strangely these people find themselves seeking power, again. More than one million jobs have been lost over the last year. This figure would not be significant if South Africa’s job market had 50 million slots. But the country has scarcely that many people. After subtracting the children, elderly, housewives, incarcerated and previously unemployed (who were already staggeringly many by global standards) it becomes apparent just how disastrous it is. The world economy is showing signs of uptick; weak flickers of light after a dark night. But in the case of South Africa the picture that comes to mind is that of the Titanic: this great big ship, unable to change direction in time to prevent a collision with an ice berg that will rip open its belly and send it to the ocean floor for the rest of time. And the comparison is eerily similar in the build up to the collision too, what with the swagger and air of invincibility that accompanied these two juggernauts as they hurtled towards their demise. The memory is still fresh of the country achieving successive years of rapid growth almost unprecedented in its history.

The effect of the loss of jobs is multiplied many times over since reduced spending translates into reduced income, which translates back into reduced spending and so forth. Hence, this ship is every bit as inert as the Titanic and turning it around will take years. The hope now is that there is no imminent ice berg lurking below the water surface. And as for all the compound growth lost in the meantime? This will certainly never be recovered.

Ironically, it seems that power itself may be the ice berg. The current situation regarding power supply in the country is perhaps the leading cause of controversy even in the company of Athletic World Champions failing gender tests and wild youth league presidents spouting off uncontrollably like burst water pipes. Eskom, the national power utility, is in a state of disarray. Poor management has rendered it undercapitalised. The result is a creaking infrastructure that cannot always cope with the demand for electricity. Power outages have stopped for the moment due to the downturn in economic activity. However, going forward a solution has yet to be found for this problem*. To affect the repairs and expansion to its plant necessary to support any recovery, the utility claims it needs three consecutive years of 45% increases in power tariffs (or 205% in total). This is in addition to the large increases the national energy regulator has recently granted it. For decades South African businesses enjoyed cheap, reliable energy, but the survival of many is now threatened by the current fiasco.

Based on the rise in the South African stock market in 2009, investors are confident that the country is in place to ride on the back of the expected global economic recovery. One fear is that world markets will experience a “double-dip” #. However, it is possible that even should the world find itself back on the road to prosperity without further delay, the country will be left behind due to the unique economic factors that confront it. If this is the case, power, sadly, will prove to be as elusive as ever for the people of South Africa.

* Some suggest that there are meaningful steps that can be taken to improve the situation, like enforcing the production and sale of power-efficient light bulbs only or lending from the World Bank. If ideas like these would make a meaningful difference, they are yet to be embraced by the utility’s management or the country’s government.

# A “double-dip” describes the scenario where economies appear to be recovering from recession, only to slump again.

 

written by Peter

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