South Africa Faces Worst Power Outages on Record


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The most developed economy in Africa is expected to see the worst power outages on record this year, which will have an effect on businesses in an already struggling economy due to rising interest rates.

As investors began to factor in the potential effects of longer-term power outages on the economy, the rand lost value relative to the dollar, and stocks dropped on Tuesday.

President Cyril Ramaphosa stated that due to malfunctions and necessary repairs, South Africa has returned to protracted power outages after a two-month relief.

Eskom, the state utility, stated on Monday that “Stage 6” power cuts would resume for the first time since July. This means that there will be daily power outages that last almost ten hours.

The primary workers’ union for Eskom requested in a statement that the company devise a quantifiable plan to address the power outages, citing the fact that the nation’s economy cannot afford to endure the adverse effects caused by the unreliable electricity supply.

While the economy grew by 0.6% in the second quarter of 2023 as opposed to 0.4% in the first, economists attributed this mainly to the easing of power outages. The growing frequency of power disruptions, they cautioned, will probably harm chances for future growth.

According to a communication addressed to clients by the Nedbank Group Economic Unit, the forecast for the remainder of the year appears to be mainly bleak. The occurrence of load-shedding has resurfaced with heightened intensity as Eskom has recommenced its routine maintenance activities.

“Electricity generation declined by -7.0% y/y in the second quarter and remains a significant impediment to the country’s growth potential,” Investec Bank stated in a note in response to the GDP numbers.

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