The Reserve Bank has warned that if load-shedding persists for the rest of the year, SA could see almost no growth for the year and more than 100,000 job losses.

The Bank said in its monetary policy review, released on Wednesday, that this is a direct impact of state capture.

“The legacy of state capture, of which load-shedding is one system, will constrain growth for a longer period. It is becoming clear that the damage done by state capture is worse than previously understood. Capital expenditure, especially by state-owned enterprises (SOEs), has been less productive than anticipated.

“To take one highly visible example, the economy has less electricity than it had a decade ago despite massive Eskom investments in generating new capacity,” the Bank said, adding that this has blocked a stronger rebound in growth.

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SA saw the return of load-shedding in November, with the most severe set of power cuts the country has seen. There were 26 days of power cuts up to the end of March. The Bank estimates that if this persists throughout 2019, it could shave as much as 1.1 percentage points off growth for the year.

The Bank’s estimates are based on two possible shocks: an initial decline in the energy available from 70% to 65%; followed by another decline from 65% to 60%. The first shock would see growth fall by 0.4 of a percentage point, while the second would result in an additional fall of 0.7 of a percentage point.

“This would eliminate almost all growth for the year, which would be the worst output performance since 2009,” the Bank said.

Based on a possible 1.1 percentage point fall in growth, employment would be expected to drop by 125,000 jobs — with 48,000 lost in the first shock and 77,000 lost in the second.

“Job losses would be concentrated among workers with lower levels of education, given the sectors most effected (mining, manufacturing, and wholesale and retail trade), which would also exacerbate inequality,” it said.

The Bank said in March that it expects growth of just 1.3% in 2019.  “In the short term, output is suffering from load-shedding — scheduled electricity outages to reconcile demand with supply — which returned in an unexpectedly intense form in the first quarter of 2019. While measuring the full economic consequences of these power cuts is difficult, especially given uncertainty over how long they will last, they have clearly disrupted the first quarter of the year.”

While the Bank estimates that growth could disappoint, it cautions that it is difficult to gauge the exact impact of load-shedding.

“The economic effects of load-shedding are not linear,” the Bank said. “Moving from stage one to stage four is more than four times worse because it involves larger disruptions to economic activity.”​

The Bank added: “It’s unclear to what extent firms and household have now made their own plans to manage or avoid their reliance on Eskom, which could mitigate growth costs.” the Bank said.