Africa’s second biggest economy is experiencing an energy shortage that is affecting consumers and businesses across the country. Eskom, the state-owned electrical provider, has informed customers that the company cannot keep up with the increasing demand for electricity, and has asked everyone to reduce the amount of energy they use. Recently, these measures have not been enough, forcing Eskom to implement managed electrical blackouts, impacting the 95% of South Africans that rely on Eskom’s service.
These blackouts are having large effects on the business community in the country, which has had to reduce production levels since March when the blackouts started. The lost production hits companies very hard, especially those competing internationally. The lost revenues from the blackouts will certainly hurt South Africa’s economy, but the bigger problem could result in loss of any future growth. Until Eskom can ensure a reliable energy supply to all South Africans, businesses will be wary of any further investment in the country.
The main reason for the blackouts is the state of Eskom’s facilities and infrastructure, which is old and in need of upgrades. The country has known since 2008, when a nationwide blackout occurred for five days, that the infrastructure is inadequate, but delays and labor issues have led to little progress. Now, in face of shortages that could continue for the next five years, serious plans are being laid to improve the country’s energy facilities, including an agreement with a Russian company to build nuclear plants across South Africa.
The infrastructure issues that are impacting Eskom and South Africans are relevant for countries and businesses around the globe. Infrastructure upgrades and maintenance are constantly needed to stay ahead, and major problems arrive when these tasks are delayed or not met. Aging facilities and insufficient infrastructure can have large impacts on emerging economies, as countries with solid infrastructure foundations push ahead while those with poor systems struggle. As South Africa has shown us, issues with a country’s infrastructure can become the biggest impediment to an economies future growth, demonstrating the importance of early investment and constant improvement in a country’s facilities.