South Africa

The tremendous costs of load-shedding

Pan-African Investments and Research Services CEO Iraj Abedian says the devastating silent economic costs of 15 years of load-shedding are unquantifiable, and any number would vastly underestimate the economic, social, and structural impact it had.

“No econometric technique can justly take care of how much the South African brand, government brand, and the country’s citizens have suffered,” he said.

Abedian’s remarks come at a time when South Africa is facing its worst year of power cuts ever, as Eskom imposes load-shedding because poorly maintained coal-fired plants keep breaking down.

Outages have plagued the country since 2008, and the bad news for South African households and businesses is that load-shedding will be even more prevalent in months to come.

Data from the CSIR showed that Eskom had cut 2,276GWh of electricity in the first six months of 2022 – more than 90% of the 2,521GWh it shed for the entire 2021.

Eskom’s latest system status report also shows that the power utility is facing a severe generation shortage for years to come.

The outlook for the next year shows that Eskom will face a shortage of 2,001MW or higher for 49 out of the 52 weeks.

Some of the silent economic costs due to prolonged load-shedding in South Africa that Abedian says will never be quantifiable include:

  • Hundreds of thousands of jobs were lost due to load-shedding and jobs that could have been created in its absence.
  • The export of capital that has been used to supplement the impacts of load-shedding.
  • The loss of confidence in the democratic government by its citizens.
  • The loss of industry talent and skilled labour to mass emigration.

Abedian said that South Africans have only two means of expressing their loss of confidence, and those are (1) who they vote for in the next elections and (2) where they look to build their future and financial wealth.

Iraj Abedian

He also noted that the national gross investment numbers across all sectors of the economy have fallen to a fraction of what they should be and what it was before 2008.

“The fall in national investment simply means the country doesn’t have enough capital to create enough jobs and investments for adequate economic growth, and the situation is critical,” said Abedian.

He added that those at the top of government don’t seem to understand or even care about the gravity of the situation.

Many have said that if the national grid breaks down, we as a country can just rebuild.

However, Abedian said that this type of logic is destructive as it implies that the current state of energy supply in South Africa is acceptable.

“We cannot allow or accept the current level of degeneration of infrastructure, be it energy, ports, or rail,” he said.

He noted that a turnaround is needed badly and right now. There should be no talk from the government, only action.

Abedian also said that the solutions are not new, there is no innovation needed, just competence.

He added that if the government don’t know what to do, it must get out of the way of those who do know what needs to be done for the sake of the country.


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