It’s sink or swim for South Africa

Anglo American CEO Duncan Wanblad warns that SA is on the edge of a precipice. From this position it can either self-destruct or rebuild.

He told the Sunday Times that it is not a basket case yet but from this position, it can either go up – and thrive – or go down and be counted as one of those countries that could have been great.

South Africans know exactly what he is talking about because crime, failed state-owned companies, deteriorating roads and electricity blackouts are their lived experience.

Yet the government of President Cyril Ramaphosa still thinks it can hide these failures or even put a PR spin on them to make investors and citizens think things are not as bad as they seem.

South Africans know that they wake up to no electricity at six in the morning and go to bed when there is no electricity at 10 o’clock at night. No amount of spin or great PR can take away the darkness and cold baths that citizens will wake up to at the height of electricity blackouts in the middle of winter.

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And this is a lesson that the president and his Cabinet need to learn and internalise very quickly.

This past week, electricity utility Eskom was operating with up to 8 000MW unavailable on the grid but still insisted on calling this stage 6 load shedding,- when their own rules clearly classify this as stage 8 load shedding, when between 7 001MW and 8 000MW is cut from the system.

Their explanation for calling it stage 6? “Basically we cut off 6 000MW and curtailed 1 353MW by reducing power to large users,” says its spokesperson, Daphne Mokwena.

Eskom and the government as a whole needs to accept what the country and the rest of the world have accepted: South Africa has an electricity availability problem right now and it has reached stage 8.

The Anglo American CEO does not say South Africa is on a precipice because the world perceives South Africa to be on precipice.

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He points out that, for example, if Kumba Iron cannot get its iron ore from the mines to the sea ports for export purposes, that is lost revenue for the company and investors – but more depressing for South African citizens is that that equals less taxes collected and less money available for government to spend on health, education and roads.

Ironically, because Transnet rail services were the most efficient way to transport mining products to the ports, it means there is an overreliance on road transport, leading to more damage to the roads and thus requiring more taxes to fix. A vicious cycle.

While Eskom can rely on a spokesperson to put a positive spin to make stage 8 look like stage 6, a factory that has to shut down for four hours during stage 6 cannot put a spin on lost production. Ten cars that a production plant does not make because an assembly line is down due to lack of electricity cannot be spun into a positive anything.

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Hearing the president say “we remain convinced that South Africa is an investment destination with significant untapped potential” sounds like listening to an alcoholic at their first Alcoholics Anonymous meeting refusing to take the first step: admitting that they have a problem.

Until such time that the president and those below and around him admit that South Africa is on a precipice, there will be no positive movement away from the edge – and the danger is that one step on the wrong side of the edge will send the country down into the abyss.