The dark shadow over South Africa’s big load shedding win

 ·17 May 2024

South Africa hit two major milestones this week, but the politicking and potential damage from one almost completely overshadowed the huge positives of the other.

According to the Bureau for Economic Research (BER), the two milestones were the signing of the National Health Insurance (NHI) Act and Eskom’s energy availability factor (EAF) finally hitting over 70% amid a 50-day load shedding suspension streak.

President Cyril Ramaphosa’s signing of the NHI into law on Wednesday (15 May) sent commentators, businesses, analysts and media into something of a frenzy, with fierce opposition to the new laws coming into conflict with proponents and defenders (mostly in government) on various platforms.

While the ANC-led government celebrated the law, which is said to have been over 80 years in the making, businesses, opposition parties, and representatives of the healthcare industry launched or are considering launching legal action against the new laws.

The BER said that the NHI and its implications have been unpacked in detail by numerous experts over the years, and there is little to add to the debate.

“As we have said before, we are not questioning the worthy goal of universal healthcare coverage, but the NHI is not implementable in its current form given funding, infrastructure, capacity and administrative constraints,” it said.

The economists said that the timing of the bill’s signing—just two weeks before the election—and the public fanfare surrounding the signing event are “telling.”

“Indeed, many political analysts have argued that the presidency is aware that the Bill will be tied up in courts for years and that there is unlikely to be any economic fallout from signing it into law now.”

However, the group said that the cost of political expedience may come further down the line.

Even though the NHI is far from implementation, the government’s actions risk harming its relationship with the business community.

This flies in the face of the work being done between the government and the business sector in other big-ticket issues in the country – such as the energy, water and infrastructure crises.

The outcry from businesses over the NHI comes in stark contrast to the “good news” item of the week: that load shedding has been kept at bay for 50 days and counting, power station EAF has improved to levels last seen three years ago, and by all accounts, real progress is being made to resolve the energy crisis.

“The lack of load-shedding is largely due to a significant decline in unplanned capacity losses relative to 2023. Lower demand for electricity from households and businesses that now have alternative (mainly solar) power sources in place must also help,” the BER said.

Meanwhile, planned outages (ie, maintenance) are trending down in line with long-term seasonal patterns. As such, the energy availability factor (EAF) increased to above 65% according to the latest official Eskom data.

Minister Kgosientsho Ramokgopa noted that EAF reached a respectable 70.8% on Monday.

“The system for sure remains fragile, and it is too early to claim victory—cynics argue load-shedding will be back with a vengeance after the election—but the absence of electricity disruptions in April and May so far should provide some bounce to GDP in Q2,” the economists said.

“The question is, of course, by how much?”

In addition to the positive impact on production, the BER said it will be interesting to see how the absence of load-shedding and anticipation of the national election in less than two weeks will impact business confidence in Q2.

Read: NHI fraud and corruption – how the law says looters will be punished

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