2022: Please be nice to South Africa .. or Not?
What a year 2021 has been and it flew by so quickly we hardly had enough time to digest everything. As we start a new year I’d like to pen down a few of my thoughts about some notable high and low lights for this coming year.
No other company, private or public sector holds the fate of South Africa in its hands as Eskom does. Without a steady and reliable power supply, the running of the entire country would come to a halt. Last year, we witnessed rolling blackouts during the course of the year and also unexpectedly just before the local government elections.
Could we expect better or worse this year? No one knows what the future holds however, the issue of a potential stage 8 load-shedding or at least anything worse than stage 4 load-shedding could potentially happen.
Eskom has made minimum effort to comply with minimum emission standards set by the Department of Environmental affairs and this has come back to haunt them, now they could be forced to cut down some of their generation capacity and their Medupi and Matimba plants. If Eskom does comply and eventually reduce their generating capacity, this could lead to an energy crisis that would in turn lead to ongoing stage 8 blackouts meaning businesses and households could have no electricity for about 12 hours a day. This will affect economic growth and also unemployment rate.
Employment or Unemployment
I have always been of the pessimistic view that, there are no jobs coming at least in the near future, especially if the person that tells you jobs are coming is an elected official. In a free-market economy like South Africa, job creation is largely driven by the private sector and the public sector plays more of an oversight role and should also drive policies to make job creation possible for the private sector. That being said, according to recent stats, the expanded unemployment rate is currently ~47% and the expanded youth (18–35 years) unemployment rate is ~70%. This is the highest unemployment rate South Africa has seen since the birth of its democracy.
After tanking by -6.3% in 2020, the GDP of South Africa grew by 5% in 2021 this was not enough to reverse the losses caused by the pandemic, and as such the economy is not growing fast enough to resolve the unemployment issues we are currently facing and to also absorb the fresh pool of graduates and school leavers entering the labor market. To end this on a positive note, South Africa’s tech/start-up sector is on the rise and could be an engine for job growth in the near future, currently, CapeTown has over 450 Tech firms employing over 40,000 employees. Another aspiring sector is the gig economy (Uber, MrDelivery, UberEats, Bolt, CheckersSixty60)Though I have my own reservations about these options, I won’t be going into much detail at this point. This however can be another opportunity to shield the current unemployment crisis although it is not a permanent solution, it is good enough to buy time and keep the economic machine running.
It’s easy to get carried away and focus on national issues, national policies, and politics and we forget that we are living in a global economy, the fuel price is always a constant reminder of how much of a globalized economy the world has become. Whenever the price of fuel goes up, the price of Oil and the weakness of the rand against other international currencies especially the US dollar are usually cited as some of the key contributing factors. If that then is anything to go by then it is a possibility that in 2022 we might see another record high in the fuel price as the price of oil has been steadily increasing since mid-2020 and considering the above 2 points, Eskom and unemployment, there sure is no magic solution for those in 2022 alone, as such we could expect a slightly weaker rand which then could lead to higher fuel prices in the coming year.
COVID-19 and Vaccinations
What will 2022 be in South Africa without COVID-19 and dare I say vaccinations, on a side note I kind of despise the topic of COVID-19 and vaccinations because of how divisive it is, also considering how already divided the country is. In my personal opinion, I haven’t experienced an event that caused as much mass hysteria as this pandemic did, according to Klaus Schwab “The spread of infectious diseases has a unique ability to fuel fear, anxiety and mass hysteria.” this quote calmed me as I thought the world around me was going crazy.
Just over 25% of the population in South Africa is fully Vaccinated, basically, 3 out of 4 people are not vaccinated which is quite a high number of unvaccinated people. Vaccine apathy is high, people do not trust the vaccines for whatever reasons and some are very valid reasons actually and this has led to a low uptake of vaccines, could 2022 be the year we see mandatory vaccinations in South Africa? No one knows for sure, but it could be a possibility, in my humble opinion I believe mandating jabs will be too harsh considering the fact that there hasn’t been ample proof of a positive externality by taking a COVID-19 jab, although it does reduce severe illness and death, it so far only directly benefits the person taking the jab and not everyone around them. The pandemic and Jabs are extremely complex and sensitive topics and would require a separate post on its own. I hope the above gave you at least an overview of my thoughts.
If you have made it so far, thanks for taking your time to read this. Please do share with friends and colleagues also feel free to share your thoughts on the article, wishing you an amazing 2022. Cheers!