Drought has plunged millions of Zambians and Zimbabweans into darkness as hydro-power dams drain, and their governments\u2019 debt is making matters worse.<\/p>\n
Rolling electricity blackouts lasting 18 hours a day have choked the two economies. Ballooning debt has left them unable to afford to import enough power to help cushion shortages. Even if they could, the region\u2019s biggest supplier, Eskom Holdings SOC Ltd., doesn\u2019t have enough capacity to keep the lights on in its home market, South Africa.<\/p>\n
The power crises in the three countries has exacerbated economic strain. Zimbabwe\u2019s gross domestic product is expected to shrink this year, Zambia is on course for the slowest expansion in more than two decades and South Africa is staring down a second recession in as many years.<\/p>\n
The downward spiral has been years in the making, as cash-strapped electricity utilities failed to replace aging plants and build new ones fast enough to keep up with demand, according to Kay Walsh, managing director at Nova Economics Ltd. in Stellenbosch, near Cape Town. The drought has only magnified the problem, she said.<\/p>\n
\u201cEverything has come to a head at a very unfortunate time, but the problems had been brewing,\u201d Walsh said. \u201cThey can\u2019t actually afford to replace their capacity. It\u2019s either a sharp increase in tariffs or it\u2019s got to be funded by the taxpayer.\u201d<\/p>\n
Shut Kariba<\/strong><\/p>\n Turbines at Kariba, the world\u2019s biggest man-made reservoir, could be forced to shut completely after water levels dropped to the lowest level in 23 years, and continue to fall. A disastrous scenario for both economies.<\/p>\n Electricity prices will need to rise, Walsh said. That would add to inflation woes — Zimbabwe\u2019s consumer prices surged an estimated 481% last month, and in Zambia price growth is at a three-year high.<\/p>\n Historically, the two countries have relied on cheap electricity from Kariba. As populations have grown and more people are connected to the grid, governments didn\u2019t raise tariffs enough to afford to build new production capacity.<\/p>\n Borrowing more to pay for plants will be difficult. Zambia\u2019s sovereign debt will reach 96% of gross domestic product next year, while Zimbabwe can\u2019t take on more debt until it settles its arrears with international lenders.<\/p>\n Zimbabwe more than tripled power tariffs in October and will need to act again, while Zambia has warned that an announcement on prices is imminent.<\/p>\n Only Option<\/strong><\/p>\n That Zambia \u201cis in a debt-induced crisis implies that very few external, and some domestic, suppliers of electricity are willing to guarantee additional supply without onerous demands which Zambia is unlikely to satisfy,\u201d said Grieve Chelwa, a senior economics lecturer at the University of Cape Town. \u201cSo the sum total of this has made the situation worse now than before.<\/p>\n People including Brown Liamba, a 30-year-old who owns a printing shop in Lusaka, Zambia\u2019s capital, would rather pay higher prices for electricity if it meant more reliable supply. It will still cost less than the fuel he has to buy to run a generator.<\/p>\n \u201cIf that\u2019s the only option to sort out the load-shedding, and me running my business, I\u2019d rather pay double,\u201d he said, using a regional term for rolling blackouts.<\/p>\n Even with higher prices, the power deficits in Zambia and Zimbabwe won\u2019t disappear overnight. It will take at least a couple of years for hydro-power dams to recover. And small businesses like Liamba\u2019s that account for the bulk of economic activity in the two nations will continue to struggle.<\/p>\n \u201cThe impact is going to be substantial,\u201d Chelwa said. \u201cElectricity, is the lifeblood of any economy.\u201d<\/p>\n
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