Picture: SUNDAY TIMES
Picture: SUNDAY TIMES

Stats SA recently released official unemployment figures covering the period when national lockdown hit SA, leading to a 16.4% contraction of the economy.

Concerns over the impact of Covid-19 on employment were confirmed with the disheartening reality that the unemployment rate had climbed to a record 32.5%, from 28.9% in 2019. Youth unemployment has reached a seemingly insurmountable 61.3%, and discouraged work-seekers are up 9.1%. A focus on immediate, quickly implemented successes, such as investments in the renewable energy sector, could revitalise the economy.

The reality of SA’s unemployment crisis is shocking, yet the country has recorded a marked decline in infrastructure investment for the third consecutive year. To achieve an equitable turnaround of the economy, the government needs to prioritise absorption of the youth into the workforce by scaling up infrastructure projects that create employment in urban areas. The renewable energy sector is the no-brainer solution.

The barriers to a renewable energy future can seem insurmountable. Public infrastructure investment has been falling short of what is necessary for economic recovery since 2016, declining from R251bn in 2018 to R231bn in 2019. SA’s capital expenditure to GDP ratio has fallen to 13%, which compares with Nigeria and Angola’s 25.4% and 21.5% respectively.

A survey conducted by the Organisation of Economic Co-operation and Development shows the decline in public sector investment has contributed to a decrease in private investment. Improved product market regulation policies and increased competition could therefore improve SA’s overall growth.

Demand for Eskom’s electricity has fallen 0.4% annually for the past decade due to increased uptake of renewable energy by domestic users seeking independence from an unreliable state utility. Eskom is desperate to recoup this loss in income by imposing tariffs on these households. SA has yet to exhaust its renewable energy potential, yet public actors such as the department of mineral resources & energy and Eskom continue to stifle growth of renewables by creating regulatory hurdles such as electricity generation licences, which allow Eskom’s monopoly to thrive.

Outdated model

Investment in the renewables sector could create decent jobs, with relatively immediate remedial effects on the ailing economy.

Eskom has infamously delayed necessary maintenance and upgrades for more than two decades, compounded by its continued reliance on an outdated coal combustion-driven business model that has contributed to the energy crisis. Renewable energy has proved to be resilient amid the Covid-19 pandemic, with a growing market share.

Eskom was responsible for a R15bn reduction in capital expenditure due to budget constraints. The government has positioned job creation at the centre of its economic recovery plan, committing to creating 800,000 jobs, and endeavours to do this by removing environmental regulatory mechanisms, which are perceived as barriers to economic growth, and by procuring infrastructure projects.

Among the 50 strategic integrated projects and 12 special projects identified by the public works & infrastructure ministry, the proposed development of energy, water & sanitation, human settlements, agriculture and transportation valued at R340bn have immediate job creation potential, while simultaneously providing socioeconomic benefits to South Africans, especially if these projects use emerging technology geared towards climate action.

Economic revival

Despite the overwhelming odds SA can still write a new story for recovery. The government should focus on projects that offer immediate contributions to economic recovery, such as building capacity across the renewable energy value chain and removing barriers to the procurement of renewable energy. SA’s existing concentrated solar thermal power capacity is 300MW, and expansion in this regard is doubtful as the 2019 Integrated Energy Plan (IEP) does not allocate capacity for this technology before 2030.

Prioritising distributed renewable energy access has proven to be a significant employer in emerging economies and has far-reaching impacts on social, environmental and economic conditions. Investment in minigrid start-ups globally has more than doubled to an astounding $113bn. Distributed renewable energy access has accounted for about 95,000 formal jobs in India, and 10,000 in Kenya.

The cumulative impact of these small projects could contribute to the economic revival SA requires. In the absence of these initiatives to bolster investor confidence the government’s ambitions to attract R1.2-trillion in investment by 2023 will remain unattainable.

There has been progress on the legislative front with the National Energy Regulator of SA’s concurrence with the ministerial determination, allowing municipalities to procure additional electricity capacity. This long-awaited decision will facilitate private investment and spur the creation of more employment opportunities.

An emerging renewable energy sector is likely to provide higher returns, increase investment and could provide decent employment for a youth desperate to join the workforce.

• Chinyavanhu is climate and energy campaigner for Greenpeace Africa.

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