South Africa in crisis and heading for disaster — economist
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This building still exists in Johannesburg. It was already built and looking great in the mid-1980s when I came to work in Johannesburg. Someone back then told me that the floors of this building are hanging. I did not quite know what to think of it, but its design is strange and when you look at the bottom, youll see the whole building is held up by a central column. (Just like those buildings of 911).
[Dawie Roodt is an Afrikaans economist. Jan]
The only solution to solve South Africa’s electricity crisis is to put Eskom into business rescue, according to Efficient Group chief economist Dawie Roodt.
In an interview with 702, Roodt explained that gradually privatising the power utility is not the answer and that the only way to avoid disaster is with drastic government interventions.
“Our economy cannot grow faster than 1.5% if we are lucky. The population is growing at 1.5%. We have unemployment levels of nearly 50%. We have rising levels of poverty in South Africa,” he said.
“We are heading for a disaster. This is a crisis. We have to understand this, and we have to act.”
He explained that the only solution to the electricity problems in South Africa is for government to admit that there is a crisis at Eskom and put it under business rescue.
Roodt said this involves stopping “this Nersa nonsense”.
“Nersa is supposed to determine price increases under normal circumstances. This is not normal,” he said.
“We have a company that’s completely and totally bankrupt. They’ve got R400 billion of debt. They have probably around 20,000 people that are paid by Eskom but don’t necessarily work for Eskom.”
Although there are many great people still working at Eskom, Roodt said there are also many who aren’t doing anything.
Dawie Roodt, Efficient Group chief economist
“How on Earth can you give people a 7% increase when you’ve got a totally bankrupt company?” he asked.
“There are too many people at Eskom at the moment. They must be fired because Eskom simply cannot afford it.”
Roodt explained that thousands of people at Eskom will probably lose their jobs anyway — the same way that people lost their jobs at South African Airways.
Roodt said he believes Eskom will go in the same direction as the South African Post Office.
“We are in the process of privatising Eskom. Eskom is falling apart, and the private sector is simply taking over where it can,” he said.
He explained the privatisation isn’t a formal policy or ideological stance but simply the private sector offering services where the state has failed.
“[It’s] the [same] way that we have privatised South African Airways. The [same] way that we are currently privatising the Post Office.
“It is the end of the Post Office now because of this mismanagement and everything that goes with that. The same is going to happen to Eskom,” Roodt added.
He said South Africa has been forced to start privatising some of its state-owned enterprises because the state is not providing the necessary resources or doing what it should.
“Forget about Nersa for now. Put [Eskom] under business rescue. Realise that this is a crisis and see what we can do,” Roodt said.
“That will probably include, like I’ve said, firing a lot of people, selling off what you can sell off, [and] getting private sector participation.”
“That is the only solution that I can see at the moment. The alternative — what we have currently — will lead to disaster in the South African economy,” he said.
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