A better appreciation of the disaster we face would see the unemployment crisis dealt with right away

The 2021 curtain falls on an undesirable note for the South African economy, hit by high unemployment, power cuts and travel bans.

According to Stats SA, total unemployment has reached 46.6% (the official rate is 34.9%). It might not be the peak unless we tackle the underlying causes urgently.

Eskom’s messages about “vulnerability of the system ” points to a bleak 2022 for jobs, while travel bans prolong the woes of our tourism industry tha has been crippled since the outbreak of Covid in 2020. Britain has lifted its latest ban but the US, France, Germany and Singapore maintain theirs.

The underlying cause of unemployment, in my view, is the lack of appreciation among SA’s decision-makers that it is the single biggest threat to political stability and it is, therefore, an emergency. Were there a better appreciation of the disaster we face, problems standing in the way of creating jobs would be resolved without delay. Unfortunately, dithering, the one thing that we are good at, has once again defined 2021. Power cuts, as we can all see and the authorities admit, will stay for the foreseeable future. Instead of investing in more reliable power generation, we touch here and there, hoping for some magic.

Here is the unpalatable solution: SA needs at least two efficiently built, environmentally compliant and reliable coal-fired power stations in four years. But Eskom doesn’t have the money and, in any event, has announced plans to invest in renewable energy. Moreover, the well-documented state capture problems at Kusile and Medupi are likely to make anyone cringe at the possibility of allocating Eskom the task of building another power station. It’s better to license private companies that are prepared to invest their own capital. Only by having reliable energy will we buy the space and time to invest properly for the long-term decarbonised future. We have to use the unwanted fuel to transition to the greener future.

President Cyril Ramaphosa has said we need 11,800MW of power from renewable energy, natural gas, battery storage and coal in line with the Integrated Resource Plan. Only additional coal capacity can bring reliability and baseload while the other long-term projects are undertaken.

Events of 2021 have shown that planning for a just transition to sustainable energy is haphazard and the financial resources haven’t been budgeted for or quantified. Recently licensed renewable projects are designed to be variable additions, not baseload replacement for coal. It will take time to build gas infrastructure and battery storage to make up for the losses of decommissioned coal plants.

The ongoing debates in our country can fool you into believing we have the luxury to talk and not act on the unemployed, most of whom are young and restless. What they will do with that restless energy is anyone’s guess. We should be terrified, but we aren’t. To restate the painful point: forget jobs if you can’t provide reliable power.

While we dither, China has found the sweet spot of the energy mix by improving its coal-plant capacities, importing our coal and manufacturing renewable energy equipment. (I haven’t heard of a project to insist that manufacturers of renewable equipment should build their factories in SA. Why not?)

Thanks in part to China’s demand, coal has fetched relatively good prices over the past 18 months. China needs reliable energy and we are the net importer of its manufactured products. The market has been good, not only for coal but other mineral resources including platinum group metals.

The biggest problem for bulk commodities in 2021 was producers’ inability to take advantage of the upswing in prices, thanks to Transnet’s problems, and secure jobs. One coal miner ended up retrenching workers because it was sitting on a stockpile that it couldn ’t move to ports. It was not just mining: industrial group Sappi reported an unprecedented R600m of products in stockpile.

Transnet’s problems are well known — from brazen theft of infrastructure to contract disputes with suppliers — yet no solutions are forthcoming. The government should nationalise the scrap-metal trade and establish an ethically sound elite police unit to enforce it. The reaction to the problem suggests we have the luxury of time as if our stolen rail infrastructure will suddenly reappear.

While Transnet is awash with customers, it reported an R8bn loss. Hopefully, the mooted public-private partnerships, a highlight for 2021, will come in handy for CEO Portia Derby as she tries to change the company’s fortunes. Like Eskom, Transnet’s viability is a key to saving and creating jobs. But, pending a solution to the rail bottlenecks, another problem has been created: the increasing number of long-haul heavy-duty vehicles on our roads. The consequences are that roads wear and tear more quickly. The freight economy becomes less efficient and some truck drivers feel so powerful that they block our roads. We have also been slow reacting to this economic sabotage.

Notwithstanding the logistics challenges, many mining companies are willing to invest in expansion and new projects. But this investment appetite is being put to the test by slow approvals for licensing. Ramaphosa ’s message to government officials to speed up licence and regulatory approvals is seemingly ignored. At the beginning of the year, he said: “In the water sector, we are working through Operation Vulindlela to ensure that water-licence applications are finalized within the revised time frame of 90 days.” The delays also apply to environmental authorisation where, in some cases, regulators defer to anti-mining organisations who aren’t interested in solving unemployment. It would be great for the president’s monitoring and evaluation team to conduct a practical evaluation of his directives and provide feedback for the 2022 state of the nation address.

And then there is the muddled policymaking by the department of mineral resources & energy. While the latest Mining Charter contained some positive contribution regarding transformation, it has been set aside by the courts on technicalities. This leaves the mining sector unclear about future requirements for socio-economic transformation. Hopefully, there will be clarity soon.

Indeed, 2022 must be the year when we do away with inertia and confront our problems head-on —especially for the 46.6% of unemployed people.

This opinion piece was published in Sunday Times: https://www.timeslive.co.za/sunday-times/opinion-and-analysis/opinion/2021-12-24-sa-can-forget-about-job-creation-if-it-cant-provide-reliable-power/