SA, largely thanks to Eskom, is ‘facing an unprecedented crisis’, says Busa
Business Unity SA president says the Eskom crisis should not be used as a ‘political football’ and that a ratings downgrade is to be avoided at all costs
SA is “facing an unprecedented crisis”, especially with the country’s ongoing electricity supply problems and the government’s fiscal challenges, Business Unity SA (Busa), president Sipho Pityana said on Tuesday.
In his opening address to its second Business Economic Indaba, Pityana called on the state to implement “far reaching structural economic reforms that focus on sustainable inclusive growth and a fiscal policy aimed at reducing public debt while simultaneously reducing public spending”.
Pityana also warned against the increasing politicisation of the crisis at stricken power utility Eskom. Its failure to prevent power cuts over the festive season saw its chair Jabu Mabuza resign on Friday, and mounting calls for the axing of public enterprises minister Pravin Gordhan.
The deepening crisis around Eskom — and the attacks on Gordhan, who is seen as a linchpin in President Cyril Ramaphosa’s efforts to address corruption — is becoming a growing focal point in ANC factional battles.
“We take no comfort from the resignation of the chair of Eskom,” Pityana said in his address, expressing “deep concern” over suggestions that leadership appointment considerations might be “caught up in ANC factional battles that have nothing to do with national interests”.
“We must also guard against using a critical matter such as the Eskom crisis as a political football, as evidenced by the attack on minister Gordhan and the newfound passion in some quarters for moving Eskom out of the public enterprises portfolio,” Pityana said.
Despite the attacks, Pityana emphasised big business’s support for Ramaphosa’s leadership saying that “credibility and good standing is one of the greatest assets whose squander we can ill afford”. But he cautioned against an overemphasis on “leadership by consensus”, which would slow down reforms or risk “being vetoed by an unaccountable lot”, said Pityana.
The president, who is attending the memorial service for business icon Richard Maponya, is expected to speak at the conference later in the day.
The current power crisis, which has seen Eskom maintain its load-shedding cycle into 2020, was the most critical issue for business along with the need for the government to return its finances to a sustainable path.
Thanks to ongoing public spending, largely to support flagging state-owned entities (SOEs) such as Eskom, the government debt levels are expected to hit 71.3% by 2022/2023, while the deficit is expected to average 6.2% of GDP over the next three years.
Eskom, the state’s tenuous finances and poor growth prospects, are the main risks to a cut of SA’s final investment grade credit rating by Moody’s Investors Service.
“We must do all we can to stave off a sovereign ratings downgrade,” said Pityana, adding that a failure to do so would risk further economic contraction and socio-political instability.
The conference comes as big business grows increasingly worried about the country’s deepening economic plight.
“Investor and business confidence is declining to levels not seen for many decades,” Minerals Council CEO Roger Baxter said in a statement ahead of the event.
“While the situation the country faces today is a consequence of the decade of mismanagement and corruption of a previous government, today’s political leadership needs to act with great urgency to turn the economy and our society around.”