ZA Confidential has not produced much recently on Eskom, because the power crisis has been well covered elsewhere. However, when our finance minister and a major financial heavyweight like the IMF warn of the impact it is having on the economy, it really is time to break our silence. So we asked a few of our experts about the Eskom crisis, its impact on industry, whether this is widely appreciated, and how long it will persist.
This is what they had to say…..

Duane Newman of Cova Advisory:
While Eskom has tried to create some predictability with the load shedding schedules, the future growth of the economy is being restrained – as business is not sure it will get power for its growth plans. Energy security has become a huge business risk and companies are looking at ways to become less dependent on Eskom in the medium to long term. The current and future price of electricity is a big issue, but based on my discussions with business it is less important than the energy security issue. I do not believe the impact on the economy has yet been quantified properly. I believe all South Africans are aware of the Eskom problem, but are unsure as to the impact on their business – now and in the future. The impending carbon tax is also creating more uncertainty. I don’t really expect things to improve anytime soon. I believe it is every South African’s responsibility to take individual action, within their own financial constraints.

Mario Pretorius, Unconventional CEO of Telemasters:
South Africans are pragmatic and adaptable. Often we get things right, like knowing what we can change (Xenophobia) and what we cannot (Eskom). The rolling blackouts are already the new normal, and are probably a distant issue after personal safety from crime and the pervasive ideology that brought us a leadership mired in the idea focusing on short term issues. Eskom cannot be fixed. The Apartheid-era power stations are reaching their retirement ages, and not even a sudden rollout of nuclear power can take up the slack in the next 10 years. The future likelihood is limited use and irregular availability, and we will sacrifice the personal use of the grid to business-first survival. Reduce, renew, re-think usage. These will be necessary for survival. If politics can be trumped, the non-payers corralled, the utility construction optimised, and the coal supply de-cadred, we may ease through. Else Africa will be the Dark Continent again.

I had not planned to tell one of several hundred black people in a room that he was a racist arsehole. But I did.

I was attending the first day of the Black Industrialists’ Indaba, at the invitation of the dti. The speaker at the time was a timid lady, the mike was not working well, and I was finding it difficult to follow her speech.   The problem was compounded by the people sitting right behind me, who were holding an animated conversation.   After many minutes of this, I turned round and asked them to shush. To which the response was: “I don’t take orders from a white man.”   Hence my response. The odds were that they would have been black, but that was not why I sought their silence.

Did I over-react? Possibly.   There were a few dozen whites at the event and – we had been told – around 700 people in total. A good crowd, but then President Zuma was speaking, and there would be news on new funds for black businesspeople.   Although I thought some of the speakers were a bit strident, the basic theme made sense. As Zuma said, there has been political transformation in ZA, but not real economic transformation.   In giving new help to blacks, government was not being racist to whites. It was uprooting the heritage of the racist past.

As well as new funds of R1bn, existing government incentives were to be targeted more forcefully at black industrialists, with companies which have fallen behind the curve on BEE being excluded from the eligibility criteria.

Chatting to one of those closely involved in the empowerment and industrial debate (who is black and has perfect manners) we agreed that while the aim of promoting black industrialists – with at least 100 new ones being “created” in the next three years, this must not be a zero-sum game, with all the benefits being won by black industrialists coming at the expense of, mainly-white, existing firms.  He said: “We must grow the economy, not just shift things around.”

And, of course, we must remember where the money is coming from for any enhanced support of black industrialists. Zuma again gave his (highly disputed) estimate that only 3% of the JSE is in black hands.   And the whole rationale behind the new policy shift is to move the economy into more balance between black and white ownership.   But, currently, the wealth and taxes of South Africa are predominately created and paid by whites, if we accept the government’s own arguments.

So let’s not be taken in by all the hype.   The white knights in this instance are predominately white, for their taxes will foot the bill and they will be pushed further to the back of the line when seeking state incentives.  We no longer expect black people to take orders from us, but they don’t seem too reluctant to take our cash.

ZA Confidential is a subscription newsletter.   For subscription details, invitations to adult events with edible food and drinkable wine, or any other communication, please contact:   zaconfidential@gmail.com     Follow us on twitter: @zaconfidential

It is always heartwarming to know that you come from a country of achievers, that some of that magic may have also rubbed off on you. So we are rightly proud to read that Patrick Soon-Shiong, who was born in Port Elizabeth, is the world’s richest doctor and one of the US’ Top-40 billionaires.

Of course, he is not the only ZA expat to be worth a bit. Entrepreneur and inventor Elon Musk, who was born in Pretoria and now operates in North America, has also been in the headlines recently, and there are other South Africans living in Switzerland and in London and in Australia who are not short of a billion or two.

Super. Bravo. Let’s be proud of all of them.

But let us not be complacent.   While these fine men are creating jobs and employing people and spending cash, it may not be doing the ZA economy much good. They may have philanthropic activities in the land of their birth, but their impact on ZA’s GDP may not be very high.

So we need to ask why they may have felt the need to leave this country to secure their success?

We do have to acknowledge that there are pockets of excellence in ZA education and training. We produce excellent accountants and engineers, doctors and entrepreneurs.   But you go to London, or Vancouver or Perth or San Francisco, you will find clusters of super-talented South Africa-trained people who are no longer living in this country.   Meanwhile, you look around this country and you see the millions who have been let down by the education system.

What drove them away?   Was it a fear of high and violent crime which threatened them and their families?   Was it the reverse apartheid of Black Economic Empowerment, which many believe bolsters less-able black people and penalises white (and Chinese?) South Africans?   Was it the kleptocratic culture of corruption which stretches from lowly functionaries to the very top of government? Was it concern that we will soon be unable to rely on basic services such as water and electricity? Was it the collapse of standards in education?

Was it a feeling that the rainbow miracle of Nelson Mandela is being destroyed by his former comrades in arms?

Unless we understand what drives the very talented out of ZA, the drain of those with the best brains is likely to continue. And that will be a very bad thing.

Maybe not so much for them, but certainly for the rest of us.

Tweet of the Day:

Edmund Blackadder (@BlackadderTweet): “There’s an air-raid going on and I don’t want to have to write to your mother at London Zoo and tell her that her only human child is dead”

ZA Confidential is a subscription newsletter.   For subscription details, invitations to adult events with edible food and drinkable wine, or any other communication, please contact:   zaconfidential@gmail.com     Follow us on twitter: @zaconfidential