Where does the power lie?

By Isobel Frye

The last two weeks in South Africa have left millions of people in the dark, literally and figuratively.

As the costs mount, it is genuinely concerning that no one who is formally in power seems to have any control. And in all this chaos, the inequalities between the rich who can opt out and the rest are growing, with the traditional middle class seemed doomed to class genocide as costs rise, and we must what leverage the poor what’s left to defend their need for cost- related increases to their incomes.

Recent days have been replete with concerns about the impact of the last quarter’s load shedding on the economy. Rational reasons for the drastic load shedding are not forthcoming from the cabinet.

Stories of poisoning and sabotage are great obfuscations to what must be one of the greatest mismanagements of a public utility ever. Retailers have lost trading hours and had to incur diesel costs to keep the generators going. But the crisis turns structural when the production chain is affected. Levels of food and beverage, wood and paper as well as petroleum and chemical production which are the backbone of domestic manufacturing fell in November 2022 after more than a quarter’s positive growth.

KFC and other fast-food outlets reported having to close stores not because of their own load shedding, but because chicken suppliers have been affected by the constant load shedding. It is the production disturbance that is threatening the viability of retail.

Load shedding has an impact that is felt all along the value production chain.

Agri SA and Grain SA met with agricultural minister Thoko Didiza on Friday 13. They said that the current situation will affect food production for at least the next two years with sky-high food prices an inevitable outcome.

Global research has put expenditure by the poor on foods at roughly 60% of monthly spend.

Social justice watchdog, the Pietermaritzburg Economic Justice and Dignity Group monitor the impact of food pricing and household costs in poor households against available income levels such as the National Minimum Wage and social grants. (Their research should be a lodestar for policy-makers).

Food prices rose dramatically last year with the war in Ukraine a major disruptor on global food production. Due to South Africa’s global exposure, that impact was felt even in the poorest households. What stood out in their year-on-year price analysis was that while the 12-month inflation for food subject to VAT was 10.2 % to December 2022, the price inflation for zero-rated foods, in other words, those foodstuffs deemed essential, was even higher at 16.7%.

And this week Nersa approved an increase of 18.65% for electricity prices. This is well short of the 35% Eskom demanded, but it is still going to impact significantly on households across South Africa.

According to StatsSA’s most recent General Household Survey, the use of electricity as the main source of energy for cooking has risen from 58% in 2002 to 79% in 2020. Electrification brought safety and cleaner energy, but it also has now built in a dependency on electricity that in the absence of the magnificent vision of solar panels on every roof that the president shared as a solution last year, means that the financial squeeze on households of the coming electricity price increase will be vicious.

In recent decades it has been unaffordable increases to the costs of food and general living rather than ideology that have caused the overthrow of governments. The United Kingdom continues to be gripped by national strikes as public sector workers demand inflation-matching pay increases.

The government has said that it cannot afford to pay inflation-related increases, which means that the the fabric of Britain, the teachers, nurses, postal workers, train drivers and police force will be facing a future in which they will see year-on-year shrinkage of their lifestyles. It seems to be a deadlock, which many predict will lead to a change of the already rocky government.

In the UK, workers have power in strike action. Last quarter’s unemployment rate in the UK was 3,7%. In South Africa, the unemployment rate is 43.1%. (The rate is 47.6% for black South Africans and 9.5% for white South Africans.) What this means is that the poor have no bargaining power because they are unemployed, outside of the labour market, or they are the working poor - precarious workers who know that any labour dispute will see them thrown back into the huge reservoir of unemployed labour.

Effectively the only real income that the poor in South Africa have is social grant income. Grants are means tested, so in effect, they are received by workerless households. Most grants fall well short of the Food Poverty Line of R663 per person per month. The Child Support Grant received by almost 13 million children is currently R480 per month or just 72% of the Food Poverty Line. The R350 grant is 53% of the Food Poverty Line. Grants are the income source that feeds more than half (52.4%) of all households in South Africa including the R350 Social Relief of Distress Grant.

The new values of grants will be announced in the February 2023 budget.

How do the poor negotiate for inflation-related increases, with an eye to the electricity tariff increase, when the minister of finance has already declared that grants will have below-inflation increases to keep the Social Relief of Distress Grant on the books? What sources of power do the poor still have for their demands for dignity?

Load shedding and electricity price increases will shake the foundations of this nation. The struggling middle class which is meant to be the motive force for economic growth will be decimated by the power crisis. Food production is under threat, and rates of starvation for grant recipients and those unable to get grants will rise, leading to stunted children and a large increase of chronic diseases in older people. Absent a functioning circular economy, the economy will shrink even further.

Where does the power lie to intervene? Minister Thoko Didiza ended her meeting with the food production leadership by saying that she had no control over Eskom, but she would be sure to make a strong case with cabinet for managing the effect of load- shedding on farmers’ according to Agri SA.

This country has never been at a more precarious point. When will the government wake up?

*Frye is the Director of the Social Policy Initiative.