South Africa

South Africa risks losing R2.2 trillion in trade

South Africa will be cut off from global trade if it does not follow the world in switching to renewable sources of electricity generation, resulting in a rapid deindustrialisation of the country’s economy. 

This is according to the CEO of The Energy Council of South Africa, James Mackay, who spoke to the Business Times about South Africa’s slow transition to renewable energy. 

The Energy Council of South Africa comprises public and private sector companies operating in the energy industry. 

Private sector members include Sasol, Anglo-American, Toyota, Exxaro, TotalEnergies and the National Automobile Manufacturers of South Africa (Naamsa). 

Public-sector members include Eskom, PetroSA, the Central Energy Fund and the Industrial Development Corporation (IDC).

Mackay warned that South Africa could be ejected from global trade by 2030 if the country’s industrial base is not powered by clean energy. 

According to World Bank data, South Africa’s trade with foreign countries totalled R2.2 trillion in 2022, which equates to 65% of the country’s GDP.

This trade is threatened by developed countries imposing carbon levies on imported goods, making South African exports more expensive and less competitive. 

The European Union (EU) has been the first trading bloc to implement such a tariff regime. As South Africa’s largest trading partner, roughly R26 billion of South African exports can be affected. 

Carbon levies instituted by the EU will increase the cost of South African goods exported to the bloc, making them uncompetitive. 

Mackay said South Africa is running out of time to save its export industries. 

“Right now, we cannot hold back a global shift. If we do not have a clean industrialised platform ready to go by late 2028, we will rapidly be ejected from global trade in the 2030s.”

Debates about protecting communities dependent on fossil fuels for their livelihoods are a moot point, as innovation and disruption cannot be reversed. 

“We are going to find that we are shut out of global trade. If we are not going to shift with global trends, we will deindustrialise.”


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