ASSESSMENTS

How an Inefficient Power Provider Could Dim South Africa's Prosperity

Feb 19, 2019 | 10:00 GMT

Members of the Congress of South African Trade Unions demonstrate on Feb. 13, 2019, as part of a nationwide strike to protest a possible restructuring on Eskom, South Africa's state-owned electric utility.

A nationwide strike by members of the Congress of South African Trade Unions on Feb. 13, 2019, came in response to a government plan to restructure the state-owned electric utility.

(RAJESH JANTILAL/AFP/Getty Images)

Highlights

  • The massive internal problems at Eskom, South Africa's giant power utility, present a threat to the country's economy.
  • President Cyril Ramaphosa and his allies will feel the dual pressures of reforming the company while maintaining union support ahead of May 8 general elections.
  • Failure to effectively turn around Eskom will hamper the country's economy and, in turn, limit South Africa's ability to project influence beyond its borders in the years ahead.

More than a year after assuming South Africa's presidency, Cyril Ramaphosa is still trying to balance the twin pressures of populism and business as his government strives to address some of the long-term economic problems that have plagued the country for years. However, with its economy still in the doldrums and general elections approaching on May 8, the president faces a pressing dilemma: How to reform key sectors of the economy to spur a wider economic improvement while also pursuing policy choices that will appease the traditional bases of support for his ruling African National Congress party, such as labor unions....

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