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Monday, September 9, 2013

I won't make a decision because I don't want to make a mistake. South African Government Officials. 2012-08-31

South Africa has lost 350,000 jobs and trillions of rands of economic turnover in the past decades.

Jacob Zuma accurately sums up the problem: exports of raw materials, especially coal and other commodities, and imports of finished goods. Why is this? The report concludes: cheap Chinese imports. As usual South Africa and its consultants blame external factors.

The real underlying problem in South Africa is a severe shortage of electricity which is rated as being between 5 GW and 30 GW and within 10 years might be closer to 40 to 50 GW. This lack of electricity means that a resource and labour rich country such as South Africa cannot turn its own raw materials into finished products, and rather has to export them, use other countries labour and electricity, and then import finished goods. What a waste!

There are 1000's of applications from industry, builders, entrepreneurs, shopping centre owners, etc, for electricity provision and these are being denied by Eskom and the Cities in South Africa. And South Africa cries out for housing. But how can our government build houses if it can't supply them with electricity?

At the same time as this renewable energy, especially solar photovoltaic and wind energy are growing at close to 40% compound annual growth rate. The reason for this: they are cheaper than "normal" coal and nuclear power.

Economically the reason for fast growth of a sector is because it reduces costs and/or increases productivity and profits. This is exactly where China is now. It will add more wind power this year than South Africa's entire electrical capacity. Germany with 40% of South Africa's sun hours will continue to install the majority of Photovoltaic panels. If they can do it, why can't we do it at 40% of the cost?

Meanwhile Eskom, the ANC, the DA, the Cities and others, sit back and prevent private homeowners, SMMEs, Industry and Miners from producing their own electricity. The reasons are many, but the main one I hear from government is "I don't want to make a mistake, so I am waiting to see what mistakes other countries make." In the meantime, Africa is losing out because of its myopia in terms of questions such as: how much local content can there be? Who cares, in the short term? The reason I say this: electricity is an enabler. It gets the economy going. The cost of unserved energy in South Africa costs the economy R75 per kWh. And whilst our governments, both DA and ANC, languish in their myopia, with a view to how much money they can make from electricity sales, and how many jobs they can create building power stations, they miss the bigger picture, of how much damage they are doing to the South African economy, which sits on a huge resource base and a huge labour pool to turn these resources into finished goods for Africa and the world.

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