Centre for Risk Analysis - For the six months ended March 31, Astral, the country’s largest poultry producer, incurred R741 million in load-shedding-related costs. This was revealed in the company’s interim results for the period. Operating profit declined 88%, down to R98m. In terms of trying to adapt to the constant challenge of inadequate electricity supply, Astral now needs to reallocate at least R400m of capital expenditure for backup solutions and alternatives.
Astral’s struggles serve to show that not even the country’s biggest companies are free from the devastation that is being caused by the failures of Eskom. And many small-medium-sized businesses and entrepreneurs will simply not be able to deal with these additional costs and either need to relocate or close down completely. That the country’s unemployment rate continues to hug the 50% mark, on the expanded definition, is therefore little surprise.
South African citizens and businesses will be forced to deal with load-shedding for the foreseeable future. Eskom’s latest system updates indicate the entity is aiming to keep unplanned losses below the 15 000MW mark, but should losses exceed that limit and reach the 18 000MW, Stage 8 load-shedding will become a reality over the coming months. Therefore, wherever businesses, communities, and individuals are able, alternative plans and arrangements need to be put in place (if they are not busy with these processes already).
In a statement released on May 22, the CEO of Astral, Chris Schutte, said: “The dramatic demise of Eskom in the generation and distribution of electricity, of Water Affairs and the failing water supply networks, together with the disastrous state of Transnet, has destroyed the capacity of the agricultural sector to function efficiently, which is fast becoming globally cost uncompetitive.”
He added: “It is time for the government to respond to the concerns raised by the business community and hardships reflected in the livelihoods of all citizens, instead of sitting asleep at the wheel, floundering around decisions and not implementing real solutions while the country implodes.” Mr Schutte’s voice is the latest in a line of very prominent businesspeople expressing their frustrations with the current state of the country, and warning that it could reach the point of ‘failed state’ sooner rather than later. Business is right to express rising concerns, but an argument can be made that bigger businesses should focus at least some energy and resources on plans and solutions that are more grassroots-focused, and engage directly with communities around them instead of working through the traditional centres of state power.
Events may well be proceeding at such a pace that government, while trying to remain in control and have things unfold on its terms, is becoming more and more emasculated. New laws that extend the control of the state – see the amended Employment Equity Act as the latest example of this trend – might simply be ignored by businesses and citizens trying their best to work, grow undertakings, and create job opportunities. The burden of proof lies on government to show that it is serious about implementing real reforms and opening meaningful space for private solutions to the myriad problems that afflict the country.
