Fingers point to Eskom as South African economy takes huge knock
The spotlight shines on embattled Eskom as the South African economy takes one of the biggest knocks of the decade. The power behemoth is one of the main culprits behind the slump, with an unprecedented grip on the nation's economy.
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Yesterday news broke that South Africa's economy contracted with 3.2% in the first quarter of 2019.
A person does not have to look too hard to find the main culprit behind one of the biggest nosedives this decade: Eskom.
Kevin Lings, chief economist for a Joburg based firm, commented on the situation, saying that:
"Eskom has a grip on the South African economy that is unlikely to be seen anywhere else in the world. Eskom powers all tiers of the economy right down to the households, and so when it cannot supply electricity, all sectors suffer. It is unlikely to change because there is currently no well-articulated plan to cure its problems."
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READ ALSO: Explainer: SA economy takes a dive, but what caused the slump?
With the state-owned entity buckling under growing debt, days of load-shedding and poor maintenance at power plants, the nation has suffered for the mismanagement of its power source.
According to Fin24, the outlook seems to be improving for the second quarter, with power cuts subsiding and authorities assuring that the available supply will last the winter.
Nevertheless, the economy's poor performance highlights the need for swift action at Eskom. A program to allow for alternative suppliers is in limbo and no visible progress has been made in the proposed unbundling.
GDP predictions for the rest of 2019 reflect the bleak prospects of a quick fix, with only 1% growth anticipated for the rest of the year.
With President Cyril Ramaphosa hoping for 3%, the leader has his work cut out for him as he attempts to attract investment in South Africa and tackle unemployment.
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Source: Briefly News
