South Africa

Water crisis threatens South African economy

South Africa needs to manage “new and emerging” threats to the economy, such as breakdowns in parts of its national water system, with taps running dry from Mbombela in the east of the country to the south of Johannesburg, the head of a key business lobby group said. 

“Bulk water supply to large manufacturers and mining companies is an increasing concern, posing further risks to economic activity,” Business Leadership South Africa CEO Busi Mavuso said in her weekly newsletter. 

Thousands of residents in Johannesburg, the country’s economic hub, face a second week without water. The utility struggles to return supply after a blast shuttered one of its key pump stations.

Businesses are working with the government to end a national power supply crisis and the collapse of state port and rail infrastructure. 

“We cannot find ourselves in a situation where we have resolved the energy and logistics crises only to be confronted with a new crisis that ultimately means economic activity doesn’t happen,” Mavuso wrote.

“So, while tackling immediate crises head-on is important, we must maintain vigilance on what the next major constraint is.” 

The BLSA chief also singled out the looming cut-off of gas supply to industrial users.

With Sasol set to curb production of the fuel from its fields in Mozambique between 2026 and 2027 as reserves dwindle and retain more output for its own operations, as many as 400,000 jobs at firms that use gas for industrial purposes are endangered, Energy Council of South Africa CEO James Mackay said in November.

Data out last week showed South Africa’s economy expanded 0.1% in the three months through December, compared with a contraction of 0.2% in the prior quarter, escaping a technical recession but undershooting the 0.2% median estimate of 12 economists in a Bloomberg survey. 

The figure “is positive unless you consider it in terms of GDP per capita, in which case it is decidedly negative given that population growth is outpacing it,” Mavuso said.

“South Africans now earn in real terms on average what they earned in 2006. We have been trending lower since 2013, so we have now crowned a decade of negative per-capita growth.”