Posted on April 5, 2023

Ruinous Blackouts Threaten to End ANC Rule in South Africa

Ben Farmer and Peta Thornycroft, The Telegraph, April 2, 2023

When the power started going out daily in South Africa, the lights also went out on Lungie Klaas’s coffee shop. He and his wife had poured in £14,700 of savings to get their business off the ground, and their hard work had been rewarded with a decent trade among the morning commuters in their Cape Town suburb.

That was until relentless rolling blackouts started hitting each day at their busiest time. At a stroke, coffee machines could not work during their peak business hours and they lost three-fifths of their custom. Running a generator was too expensive, so they had to close. “That put four guys out of a job,” he recalls.

Africa’s most industrialised nation has been enduring power cuts of sometimes 10 hours each day, for month after month. A country once used to plentiful, cheap energy can no longer keep the lights on and the blackouts are likely to get worse as demand picks up in the southern hemisphere winter.

The power cuts, a form of energy rationing known as load shedding, weigh heavily on Mr Klaas’s small businessmen friends. “It’s all anyone talks about,” he says.

Their frustration is echoed in the country’s top boardrooms. Shoprite, Africa’s biggest grocer, had to spend an extra £26m on diesel in the last half of 2022 to run supermarket generators during power cuts. South Africa’s second-biggest mobile network, MTN, estimated that load shedding cost its operations £31m in extra costs in 2022 alone.

Meanwhile, ordinary South Africans find food goes off in fridges, they cannot cook their dinner, or must do their homework by lamplight.

The country is in the grip of “an unprecedented energy crisis” that will bring growth to a halt this year, the International Monetary Fund warned starkly in late March.

Real GDP growth is projected to decelerate sharply to 0.1pc in 2023 “mainly due to a significant increase in the intensity of power cuts, as well as the weaker commodity prices and external environment”, the lender said.

The power crisis leads news bulletins, and dominates angry radio phone-ins, while frustration bubbles up through social media platforms. “Does anyone else feel like they are being taken for a ride?” asked one frustrated caller on a recent phone-in. “When are people going to take to the streets?” asked another.

South Africa’s shortage of electricity may be the crisis in the headlines, but it is only one among many plaguing the country nearly 30 years after the end of Apartheid.

This polycrisis and the failure of the ruling African National Congress (ANC) to deal with it means many believe a political earthquake is coming. Next year the country votes in general elections in what are widely expected to be the most important polls since the end of white rule.

Disillusionment over the ANC’s failure to provide basics from electricity and water, to jobs, a healthy economy, public safety, healthcare or education mean it is in line to lose its three-decade-long hegemony.

Polling now suggests that while the party of Nelson Mandela will remain by far the biggest player, it may be unable to reach the crucial 50pc of the vote needed to win an overall majority. Such a result will usher in an uncertain new era of coalition politics.

If that happens, anger at load shedding will be a significant reason. Polling by Ipsos in December found two-thirds of eligible voters believed power cuts would sap ANC support. Some 45pc said they “will not consider voting in future as a result of the regular load shedding”.

South Africans sitting in darkness can recall with grim irony that at the start of the century their state energy provider, Eskom, was named by the Financial Times as the world’s best power company. Yet even before that, in the late 1990s energy analysts were warning the country needed to invest in more power capacity if it wanted to keep the lights on.

Fast forward 25 years and Eskom’s ageing fleet of coal-fired power stations, which provide the great bulk of the country’s power, have been run into the ground and frequently break down. Rolling power cuts to stop the grid collapsing were first imposed as an emergency measure in 2008. They then became routine and eventually daily, reaching their worst levels ever in the past six months.

Two coal-fired power stations due to be completed by 2015 have both had major design faults and been immersed in corruption. Neither is yet in full operation.

Neglect has been compounded by corruption. Eskom is still trying to recover from years of embezzlement after it was looted by the friends and allies of former president Jacob Zuma.

The corruption has not gone away, according to Eskom’s most recent chief executive, André de Ruyter. He recently claimed graft is firmly embedded in the company and linked to the highest political levels. When he tried to clean it up, he alleges he was poisoned with cyanide in an unsuccessful assassination. He has now left the company and fled the country.

Kgosientso Ramokgopa, the newly appointed electricity minister, recently acknowledged that blackouts were cutting GDP by around 2.1 per cent and costing £22bn a year.

A brief improvement in supply in late March was greeted with cynicism. It was widely seen as an attempt to take the sting out of a threatened national protest against electricity shortages by the Marxist Economic Freedom Fighters (EFF) opposition party.

Overturning years of neglect and corruption to end load shedding, for example by allowing private generating companies to make up the power shortfall, will take years, analysts say. After years of hollow promises, many doubt whether the ruling party is up to the task, however.

One diplomat observes a sense of continuous drift among the government. “It doesn’t feel like a government which has either the authority or bandwidth to address the issues,” the diplomat says.

President Cyril Ramaphosa, who many hoped would steady the ship and root out graft after the rampant corruption under his predecessor, Zuma, has disappointed many.

Amanda Gouws, professor of political science at Stellenbosch University, says the party appears unable to give people hope and Mr Ramaphosa had failed to grip the mounting problems.

She says: “I think the ANC is in a mess. It’s a deeply divided party and we have an absent president who just doesn’t take decisions unless he is forced to. She went on: “It’s really a powder keg at the moment and the ANC does not know how to steer this. They do not know what to do to give people hope.

“They are so self-interested and invested in their own political fiefdoms that they have no idea.”

South Africa’s voters are not the only ones disaffected. The sight of Pretoria, welcoming China and Russia with open arms and conducting joint military manoeuvres together has exasperated Pretoria’s Western allies.

If load-shedding is one symptom of the ANC’s mismanagement, then it is only part of the painful wider state of the economy. After surging in the early years of democracy, growth has been weak since the financial crisis. Covid lockdowns were severe and economically painful. The numbers sleeping rough in the cities grew sharply. Unemployment is at around 33pc.

Mining, once the driving force of the South African economy, is in the doldrums, despite employing more than 450,000 people, contributing more than 7pc to GDP and earning £3.7bn last year.

The rail freight network that once kept the industry running is falling apart. Transnet, the state-run rail and logistics firm, is in just as precarious a condition as Eskom.

South Africa has the only electrified rail system in Africa, which operates at a minimal level these days as much of it has been stripped by thieves. Trains on many of these links are now forced to use diesel. In 1950, before there were cross country highways for road transport, South Africa ran 135 trains a day between Johannesburg and port city Durban. Now there are only three a day along that same line.

With its enormous coal reserves, South Africa should have been able to take advantage of the spike in the price caused by the Ukraine war.

“South Africa squandered what could have been a dramatic windfall, because we haven’t been able to use our existing capacity, as Transnet’s freight rail systems have almost collapsed because of poor management,” says Paul Miller, director of the mining consultancy, AmaranthCX. Thungela Resources, a coal mining company, revealed a huge spike in profits this week because of the increase in coal prices, but says it had also lost three million tonnes in export “as a direct result of the poor Transnet Freight Rail performance”.

Elsewhere, South Africa’s 150-year-old mining sector has shrunk, not least because exploration is virtually paralysed. The country took 5pc of annual global mining exploration budgets in 2003. Now it attracts 0.8pc, according to a survey by S&P Capital IQ. By comparison, Australia accounts for nearly 18pc and Canada nearly 21pc.

It can take about 20 years from discovery to production and most of South Africa’s present mines will be exhausted in 15 to 20 years. “The long-term sustainability of the industry is threatened by low exploration levels, unreliable electricity and rail networks, as well as crime, corruption and violence,” says Terence Creamer, editor of South Africa’s Engineering News and Mining Weekly.

Electricity outages have also hit mining hard, with companies reporting increased operating costs of nearly 25pc to fund generators according to a survey by the Steel and Engineering Industries Federation of Southern Africa.

“The crisis has been particularly damaging to the metals and engineering sector…the backbone of industrialisation and to which electricity, particularly base-load electricity, is fundamental to its survival,” says the federation’s chief operating officer, Tafadzwa Chibanguza. “The long term implications of this energy crisis to the future prospects of the sector are devastating.”

Business leaders complain the ANC is ideologically opposed to the private sector investment needed to turn around struggling sectors.

The ANC government is also struggling to deliver on the other foundations of South Africa’s governance, from healthcare, to education, to public safety.

The murder rate has hit 74 killings per day in 2022 and ruthless organised crime gangs, often politically connected, have many business sectors in their grip. In the latest killing to cast the country as a mafia state, a fortnight ago, a high-profile business liquidator was shot dead alongside his son.

Cloete Murray, 57, and Thomas, 28, were gunned down after being forced off a major highway connecting Johannesburg to the capital, Pretoria. Thomas Cloete was on his first assignment with his father and they were officially investigating corruption closely connected with key ANC supporters and funders. The killers remain at large.

Health and education are also weak.

Doctors at one hospital in Eastern Cape province were this week reported to have resorted to handing patients letters explaining they do not have the materials to fix their broken bones. The letter instead lists local health complaint numbers and the Presidential complaint hotline.

South Africa’s chief justice, Raymond Zondo, underlined the frustration of many South Africans at a memorial speech for former ANC president Oliver Tambo last week.

Tambo, who died in 1993, a year before the ANC came to power, “would be shocked…disappointed…” at South Africa today, he says.

Judge Zondo, who chaired a lengthy judicial probe into corruption and state looting under Zuma, told the audience that most of South Africa’s 250 municipalities were “dysfunctional, or on the point of collapse”.

All but 44 failed their audit, he says, and 21 of those that passed were in the opposition-controlled Western Cape province.

“It is likely those 21 municipalities are not controlled by the ruling party,” he said.

“There was a time,” Judge Zondo said, when bankrupt “South African Airways was a well-respected airline, when the post office was at least functional.” He then listed several other state-owned corporations which were on their knees.

“Hundreds of thousands of children attend schools made of mud… children fall into pit toilets… and some children have to walk 10km a day to attend school,” he said.

Lord Hain, the veteran anti-Apartheid campaigner and Northern Ireland Secretary under Tony Blair, believes the country is moving towards becoming a failed state. Unless corrupt politicians and incompetent officials are removed, the downhill slide will continue.

All that separates South Africa from countries like Zimbabwe are an independent opposition, judiciary and media which investigate, despite enormous intimidation and threats, he says.

“Unfortunately the African National Congress, ANC, which I am associated with historically for half a century in the anti-Apartheid struggle, has betrayed the legacy of Nelson Mandela, Oliver Tambo, and their colleagues.”

It is against this backdrop of blighted service delivery, crime and economic malaise that the country will next year head to the polls. The ANC for years appeared unassailable. That is no longer the case. As South Africa’s dreams have soured, both the ANC’s vote and the turnout have fallen.

The party won nearly 70pc of the vote in 2004, but by 2019 that had fallen to nearly 58pc. By municipal elections in 2021, the party’s share of the vote fell below 50pc for the first time. It has also lost control of municipalities it once considered strongholds.

Frustration with the ANC is turning into frustration with politics in general and turnout has fallen steadily over the same period. The young in particular are not voting, as they question the point of it and whether there is any alternative to ANC rule. The frustration is across racial groups. Many Black voters feel they have not benefited from the past 30 years of ANC rule.

How will that affect elections next year? Analysts predict next year’s polls will be the first where the ANC cannot win outright. A poll this week by the Social Research Foundation put ANC support at 46pc, though if adjusted for expected turnout, that could still rise to scrape above the 50pc threshold. Other polls in recent months have put the ANC lower.

John Matisonn, a political analyst and journalist who has written several books on the ANC, predicts voters will punish the party for fostering the corruption that has hit their pockets and lifestyles.

“Daily electricity blackouts that peaked at around nine hours in a day earlier this year, steep electricity price rises, and damage to the economy from blackouts as well as failed rail and other government services have left people poorer.”

If the ANC does indeed not make the required 50pc, what happens next depends on how short of the target they come. If it is only a few percentage points they may be able to cobble together a coalition with electoral minnows. But if further below, they will have to turn to one of the larger opposition parties.

The Democratic Alliance, which held around 21pc of the vote in 2019, is again likely to come in second. Yet though it has a reputation for competence running Western Cape province, for many it is framed as a white party which has struggled to keep its top black leaders.

At the other end of the political spectrum, the Marxist EFF, a splinter group from the ANC which won 11pc of the vote in 2019, describes itself as “a radical and militant economic emancipation movement”. Led by the firebrand Julius Malema, the party appeals to many young black voters who feel they have not benefited from the end of Apartheid. The party is frequently accused of anti-white rhetoric, which it denies, and stands on a platform of expropriating land and nationalising mines and banks.

Malema tried to demonstrate the EFF’s street power a fortnight ago by trying to bring the country to a standstill with protests against load shedding. His national shutdown was a damp squib however.

The EFF, with its roots in the ANC, may appear a more natural fit as a coalition partner, but both parties have their disadvantages, says Matisonn.

“Joining with the biggest opposition party, the DA, is anathema to one faction of the ANC because it is considered conservative and too white,” he says. “While joining the third biggest party, the Economic Freeform Fighters, would alienate more sober elements in the party.”

Any EFF demands for nationalisation or farm confiscations as part of a coalition would spread panic among businesses, investors and markets.

The country has probably already seen a glimpse of what coalition-building will look like with the horse-trading in municipalities. As the ANC has lost power in city halls, opportunistic coalitions have sprung up, but they have often been consumed by factional fighting and turf wars at the expense of service delivery. Power-sharing has often been brief, unedifying and chaotic.

At the back of many minds is the question of whether such instability will result in violence. The country is still in shock from 10 days of frenzied looting and arson in July 2021, when at least 350 people were killed in the worst civil unrest since the end of Apartheid. That politically mobilised anarchy was set off by the arrest of Zuma, but highlighted the potential for political violence in the country.

South Africa has long been subject to doom-mongering and has managed to defy predictions of its imminent collapse, or at least somehow muddle through. Yet while many will be glad to see the back of ANC dominion after 30 years, the political upheaval on the horizon could be profound.