London: Is there no end to President Cyril Ramaphosa’s absenteeism from the world stage?
His transformation in a space of two years from being the “preferred choice” African leader the West can do business with, to a “deferred choice” partner is as revealing as it is remarkable.
Fresh from his conspicuous absence at the 2022 US-Africa Leaders Summit in Washington DC in mid-December –the most important annual gathering for African leaders at the nexus of global political, economic and security power – the president has done it again.
This time, it is a humiliating volte face regarding his participation in the World Economic Forum (WEF) – the annual beauty parade at the Swiss luxury ski resort of Davos, of the “great and good”, the “blingerati” and the billionaires.
There, the ideas of do-gooding and sorting out the economic, financial, trade and development travails of the world piously dominate the public platforms during the day, while nefarious deals, powered by an endless flow of cocktails, are conjured in private by bankers, businessmen and their cohorts at night.
On January 16, the Presidency abruptly announced that Ramaphosa had cancelled his trip to Davos and would not be participating in the forum because of the entrenched energy crisis at home where South Africans have been subject to repeated outages and power cuts.
To add insult to the public’s and business’s simmering anger and frustration, the beleaguered electricity utility, Eskom, said it would implement its worst-yet outages until further notice.
Ramaphosa was complicit in the instruction. Presidential spokesperson Vincent Magwenya, in his weekly media briefing four days earlier, confirmed that “President Ramaphosa deeply regrets the current energy situation which has placed the country into Stage 6 load shedding.
The president acknowledges the frustration of households, parents and learners who have commenced the school calendar year facing power shortages.
The devastation to small businesses and the adverse impact on the economy remains severe for South Africa’s recovering economy”.
And yet, on the same day, Magwenya was trumpeting the importance and prestige of the president’s attendance at the WEF and that he was accompanied by a bevy of ministers, led by Finance Minister Enoch Godongwana and captains of industry, to fly the flag for South Africa as an investment destination of choice.
Gone was the opportunity to hobnob with fellow leaders, investors and even thinkers, and to participate in the Annual Breakfast Meeting of the African Heads of State/Government on the progress of the Africa Continental Free Trade Area, and the annual meeting on Investing on Infrastructure for Resilience.
In Washington, it was the stigma of the impeachment motion against Ramaphosa, aka the $5 million cash-in-the-sofa scandal at his private farm in Phala Phala, and the spectre of him being ousted as the president of the governing ANC.
It was the party that prevailed by defeating the motion and re-electing Ramaphosa, but at what cost to the integrity of the South African state, people and psyche?
The amorality of Davos aside, the optics of a president summarily forced to quit a global event because of a self-inflicted energy crisis at home, and a presidency, nay government, defined by incompetence, inertia, insensitivity to the needs of the constituents it professes to represent, and scapegoating others for the blame, is threatening to turn what is widely perceived as Africa’s most industrialised economy into a governance laughing stock.
The marginalisation of championing South Africa’s national interest at the top table, whether in the US capital or in Davos, at a time when the country is faced with entrenched structural socio-economic challenges in a global environment of multiple uncertainties, is turning out to be a step too far.
The economic costs of South Africa’s energy crisis have been festering for years, with the debt at a record R400 billion.
Eskom was a disaster waiting to happen. The Zuma era saw it as the cash cow of state capture. Radical ANC apparatchiks see it as the sacred cow of the state. In between, an indecisive Ramaphosa got lost in translation.
But there is another power player in South Africa’s energy mix – Mineral Resources and Energy Minister Gwede Mantashe.
He was narrowly re-elected party chairperson, and is a signed-up member of the fossil fuel and nuclear energy supporters club, because his support base is in a coal mining constituency.
Is Ramaphosa’s ill-advised decision to retain him as energy minister coming home to roost? Mantashe’s support for coal is a threat to South Africa’s much-applauded policy of a just transition to clean energy, away from coal.
He has led the chorus against Eskom CEO Andre de Ruyter, accusing the utility of seeking the overthrow of the government, and failing to secure sufficient power for the country.
As if load shedding merely materialised under his watch. De Ruyter resigned, effective March 1, 2023, because of the lack of political will on the part of the government to sort out the utility.
Many senior ANC officials appear unwilling to accept responsibility for their failures relating to Eskom and other state-owned entities.
But cometh the brink, cometh the president.
“Currently the president is convening a meeting with leaders of political parties represented in Parliament, Neccom (National Energy Crisis Committee) and the Eskom board,” declared Magwenya.
To what extent Western Cape Premier Alan Winde’s “threat” to pursue an intergovernmental dispute; requesting the national government to take the energy crisis seriously; and lawyers, leaders, and major groups issuing a letter of demand to De Ruyter and Public Enterprises Minister Pravin Gordhan over the Stage 6 load shedding precipitated the president into “action”, is a moot point.
It is just as well. The self-styled gatekeepers of the global economy and credit opinions are watching South Africa like a hawk.
“The most important point for our near-term analysis of South Africa,” says Jan Friederich, the head of EMEA Sovereign Ratings, at Fitch Ratings, “will be the evolution of the electricity sector and the scale of load shedding. We do not assume a significant improvement this year, but it is still unclear how the crisis is affecting growth in the short and medium term. There are still downside risks that power supply will worsen further, although upside surprises offering fewer unscheduled outages, and faster delivery of new supply are also possible.”
For a utility under the administration of the Ministry of Mineral Resources and Energy, with load shedding increasing to beyond crisis point, public bailout widening and the army engaged to protect key Eskom assets, is Eskom salvageable?
“The most immediate impact of Eskom’s troubles,” says Fitch’s Friederich, “comes via load shedding and the impact on the economy.
The effect of load shedding is non-linear – higher levels of outages have much greater economic impact than lower levels.
However, the drain on public resources also remains important. We already factor a debt transfer of R50 billion per year over the next four years into our ratings, but additional support needs are possible.”
The energy crisis could also affect South Africa’s rating outlook, which if it worsens, could precipitate a downward revision which, in turn, would push up the cost of finance in the domestic and international markets, adding further pressure to the burgeoning debt service ratio.
Fitch’s South Africa rating, of “BB-”with a Stable Outlook, incorporates substantial over-performance on fiscal revenues and the government’s strong efforts to control expenditure.
But as Friederich warns: “It only takes as an upside risk the possibility that the government is successful in stabilising debt in FY22/23 (excluding Eskom debt transfers) while we still expect debt to continue rising.
The rating and outlook also incorporate continued political risk and socio-economic pressures that could have negative repercussions on public finances and broader economic performance.
Notably it does not assume a near-term amelioration of the electricity crisis.”
Parker is an economist and writer in London
Cape Times