South Africa's misery Economic performance ultimately comes down to one key factor: power scarcity. Professor Ricardo Hausmann of Harvard University says:
Hausman, who has advised the South African government and researched the country for two decades, said nearly two decades of blackouts, made worse by the government's decision-making incompetence and adherence to hidden ideologies, have destroyed the once-promising economy. He said that it had become hollow.
Deindustrialization is a global phenomenon, but “the speed at which this is happening in South Africa is orders of magnitude worse than anywhere else since the 2008 global financial crisis,” he said in an interview with the Johannesburg-based Center for Development and Enterprise. he said. , a transcript of which was published on Monday. “We found very strong evidence that this decline is strongly associated with the collapse of electricity supply.”
Hausman, director of the Growth Institute at Harvard University, paints a picture of a country facing a self-inflicted problem of gradual impoverishment of its people. He said the government has not been punished for slow decision-making because one party has a majority and the collapse of state services has little political impact.
He added that the ideological idea that the state should lead the economy also hinders realism.
“No matter which economic indicator you pick, South Africa's performance has been abysmal,” Hausmann said. His observations are supported by the government's own data. For the past decade, economic growth has been less than 2% annually, and unemployment has remained at around 32%.
Eskom
The country has been plagued by rolling blackouts since 2008 because state-owned Eskom has not properly maintained its power plants and has not invested enough in new generation. While Chile and Colombia emerged relatively quickly from their power crises, it took until 2022 for South Africa to allow private investment in power generation and allow local governments to purchase electricity directly.
Hausmann cited a number of other obstacles to economic growth, including poor commuter transportation, corruption and an aversion to importing foreign skills.
Read: Eskom is in trouble
“South Africa cannot prevent the exodus of talent, but it is preventing talent from coming in from other parts of the world, and this is at great cost,” he said. , added that they had been raising this concern for a long time. 2004. “It was impossible to change.” — (c) 2024 Bloomberg LP