South Africa may now be running out of road. Without urgent action, national debt could exceed 140% of gross domestic product by the end of the decade
DCD Wind Towers should have been a South African success story.
DCD’s unrealized potential is a footnote in South Africa’s story of the last decade, one of chronic under-performance that is pushing the continent’s dominant powerhouse to the edge of economic and political disaster. Investors in South Africa are wearily familiar with policy inconsistency. The frustration of the renewables sector was a result of former President Jacob Zuma’s decision to start pursuing an ultimately unsuccessful nuclear power deal with Russia from about 2014, leaving purchase agreements with renewables companies unsigned. That ultimately brought a halt to what was one of the world’s most successful clean-energy programs.
Covid-19 is accelerating the downturn. By the time coronavirus restrictions were imposed in the country in March, South Africa was already in recession and unemployment, at 30.1%, was at a 17-year high. One of the world’s strictest lockdowns has probably left millions more jobless and slashed economic output, while the number of confirmed cases has surged to over half a million regardless.
The government is moving to act. Finance Minister Tito Mboweni’s emergency budget stressed the need to keep debt in check and last month South Africa took out a $4.3 billion loan from the International Monetary Fund, its first ever from the organization at a sovereign level. The president launched a drive in June to attract private investment in infrastructure over the next decade.Pedestrians walk past a closed liquor store in Brooklyn, Cape Town.
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