What Happened: South Africa is experiencing ongoing and unplanned power cuts amid reports that several generating units by state utility monopoly Eskom have broken down, Reuters reported Oct. 16.
Why It Matters: The unexpected power cuts underscore the severe weaknesses of South Africa's power grid and will limit access to reliable electricity supplies for households and businesses, curbing growth prospects. The structural deficiencies will likely affect the country's upcoming credit assessment by Moody's Investors Service on Nov. 1 and potentially trigger a downgrade to "junk" status.
Background: Years of economic mismanagement and corruption have taken a toll on Eskom, which remains responsible for more than 90 percent of South Africa's electricity supply. Efforts to salvage the company have already cost the government more than $9 billion, further exacerbating financial woes.
- South Africa Faces a Downward Spiral (Sept. 26, 2019)
- Can Ramaphosa Halt South Africa's Rot? (July 22, 2019)
- South Africa: An Economic Policy Squabble Goes Public (June 5, 2019)