In my previous piece, I made mention of how global factors, particularly the war between Russia and Ukraine, is impacting the South African economy. However, if we were earnestly introspective, the state of the South African economy has sadly been brought about by our own actions and inaction. In the same piece, I make brief reference to loadshedding and how beyond the inconvenience it causes, it impacts our economy. 

How though is South Africa’s economy impacted, what is the real impact?

As a starting point for understanding the impact of loadshedding on the South African economy, we need to define loadshedding and understand how it is implemented. The website for the City of Johannesburg, provides the following definition of loadshedding: “When the demand for electricity exceeds the available supply, planned supply interruptions may have to be carried out. This is called load shedding. It is a controlled way of rotating the available electricity between all Eskom customers.”

In essence, loadshedding is implemented when demand for electricity outstrips what the national grid can provide. Depending on the severity of the demand, loadshedding is then rolled out in stages. In an online article by The Citizen, written by Cheryl Kahla, published on the 12^th June 2021, it is explained that: “If load shedding isn’t implemented, the power grid could suffer catastrophic failure. If that occurs, it would result in a nationwide blackout for days. Load shedding is therefore implemented to ensure fair rotation to all customers.” 

The same article then outlines how the stages work:

“Stage 1

Stage 1 allows for up to 1 000 MW of the national load to be shed… Outages will be implemented three times over a four-day period for two hours at a time, or three times over an eight day period for four hours at a time.

Stage 2

Stage 2 allows for up to 2 000 MW of the national load to be shed, and doubles the frequency of stage 1. Outages will be implemented six times over a four-day period for two hours at a time, or six times over an eight-day period for four hours at a time

Stage 3

Stage 3 allows for up to 3 000 MW of the national load to be shed. This stage increases the frequency of stage 2 by 50%, so outages will be implemented nine times over a four day period for two hours at a time, or nine times over an eight day period for four hours at a time.

Stage 4

Stage 4 allows for up to 4 000 MW of the national load to be shed. Outages will be implemented 12 times over a four day period for two hours at a time, or 12 times over an eight day period for four hours at a time.

Stage 6 and 7

Stage 6 is the highest we’ve ever been shed, the dark and dreary month of December 2019. At stage 6 and 7, Eskom sheds 6 000MW and 7 000MW respectively, which means power cuts will be scheduled over a four-day period for four hours at a time.

Stage 8

The dreaded stage 8 doubles the frequency of stage 4, meaning Eskom will shed 8 000MW and residents will be in the dark up to six times a day, or 12 hours depending on the schedule…”

Unfortunately, our most recent encounter with stage 6 loadshedding was but less than a month ago, “Following the tripping of a generation unit each at Kusile and Kriel power stations, Stage 6 loadshedding was implemented effective 04:16,” the power utility announced on Sunday, 18 September 2022.” as confirmed by a 19^th September 2022, News24 article. This stage of loadshedding led to up to ten hours of no electricity. 

A Businesstech article dated 3^rd October 2022 shows that this year has been most severely impacted by loadshedding: “According to [a popular app used for tracking loadshedding], as of the start of this week (3 October), the country has experienced 1,949 hours (81 days) of national load shedding in 2022. This is significantly higher than the 1,153 hours over 48 days in 2021 and the 844 hours over 35 days in 2020.”

What is the impact on the economy in the wake of such erratic power supply?

Another Businesstech article dated the 1^st July 2022,  provides a stark glimpse into what the financial impact of stage 6 loadshedding is: “Alexforbes chief economist Isaah Mhlanga says Eskom’s prolonged stage 6 load shedding has already caused significant damage to the country’s economy, with over R4 billion wiped from the GDP for each day it continues.”

On the 21^st of September, the same online publication expounded on what the sum total impact of loadshedding is on the South African economy, in an article titled, How load shedding is tearing through South Africa’s economy: “Earlier this month (6 September), Stats SA reported that the country’s gross domestic product decreased by 0.7% in the second quarter of 2022 – much of this decline was attributed to rolling blackouts which hobbled economic output… 

Large-scale network providers are also being hit in all directions by severe load shedding and related battery theft – threatening their reliability and elevating costs. Speaking to ENCA, Stuart Perry, a science and technology engineering specialist, said that mobile towers need roughly 12 hours to recharge their batteries, but load shedding is making it more difficult for them to keep up connectivity…

CEO at Pan-African Investments and Research Services, Dr Iraj Abedian told 702 that load shedding also carried a host of ‘silent’ costs to the economy. There is no way to quantify the damage done by load shedding, he said, because the numbers and models simply cannot estimate what could have been, had load shedding not existed or had been dealt with expeditiously. 

Some of these ‘silent’ costs to the economy include:

• Tens of thousands of jobs are lost as a direct result of load shedding;
• Hundreds of thousands of jobs could have been created had load shedding not happened;
• South Africa’s reputation globally;
• A loss of confidence by the citizens in the government;
• The loss of skills and expertise due to emigration.”

Loadshedding is a national concern and requires all hands on deck! In as much as Eskom is a State-owned entity, the fact is that the electricity shortage in South Africa is no longer only a government issue. It impacts business, communities and the overwhelming majority of South Africans who cannot afford alternative household-based sources of energy, which in itself is prohibitively expensive and equally as expensive to use. 

Our current energy crisis needs all political parties, businesses and civil society to join mental, financial and practical resources to solve this ever-worsening issue, immediately!