South Africa’s Energy And Water Problems, Comparative Assessment

Introduction

South Africa has gone through racial inequality throughout history. The apartheid is a period where black people were treated unequal. Although officially the apartheid ended in the early 1990’s, South Africa’s culture, traditions and attitudes are deeply rooted in these racial segregation attitudes and they are clearly interconnected in the social, economic and political spheres of the country.

This research paper highlights and analyzes two major sustainable development problems in South Africa that directly impact millions of its citizens. The first problem concerns Eskom, the national subsidized energy producing company that is not able to sustain their energy production levels. Besides that, Eskom requires billions of dollars from the government just to stay afloat. The second problem is in regards to the water scarcity in South Africa. Although the country has the potential of providing water for all its citizens, 18% of the population relies on communal taps and 9% of households don’t even have access to clean water, relying on springs, rivers and wetlands.

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Section 1 (Economic Profile)

Economic growth in South Africa has had positive economic growth since 1965. World Bank facts show that gross domestic product (GDP) was $348.87 billion dlls making it the 32nd largest economy and the second largest economy in Africa below Nigeria with a GDP of $375.74 billion dlls. Unemployment in South Africa is at 27.32%, these high rates have been a major problem throughout South Africa’s history. The GDP per capita in South Africa is $6,151dlls. With a population of over 55 million people.

In December 2010, South Africa becomes a member of BRICS an association with Brazil, Russia, India and China, all major emerging economies. Biggest export partners include China (9.5%), US (7.7%), Germany (7.1%), Japan (4.7%), India (4.6%), Botswana (4.3%), Namibia (4.1%). The major economic industries in relationship to the GDP include finance, real estate and business services (20.7%), government services (17.6%), wholesale, retail and motor trade, catering and accommodation (14.6%), manufacturing (13.3%), mining (10%), agriculture (2.2%)

South Africa is considered the largest producer of platinum, gold and chromium. More than one third of the country’s imports are machinery and transportation equipment. Other imports include automobiles, chemicals, manufactured goods, and petroleum.

The debt to GDP ratio is at 53%, debt is $211 billion dlls, of which, $156.3 billion is owned by foreigners.

Section 1 (Social/Demographic Profile)

The ethnicity representation in South Africa is: black African (80.9%), colored (8.8%), white (7.8%), Indian/Asian (2.5%) where colored is a term used in South Africa for a person who has mixed races ancestry. Most of the population is christian (86), other religions include ancestral, tribal, animist, or other traditional African religions (5.4%), Muslim (1.9%), other (1.5%), nothing in particular (5.2%).

Given the large unemployment rates and high levels of HIV/AIDs, South Africa has a higher dependent population compared to the average country, the total dependency ratio is (52.5%), youth dependency ratio (44.8%), elderly dependency ratio (7.7%), potential support ratio (12.9%).

The life expectancy in South Africa is 64.1 years and health expenditures as a percentage of GDP is 8.8%. Putting this in perspective, US spends 17.1% of their GDP in health expenditures.

School life expectancy in South Africa is 14 years, on top of that, unemployment within youth ages 15-24 years is 53.5%.

Section 1 (Political Profile)

South Africa is a parliamentary republic and the current president is Cyril Ramaphosa (since February 15th 2018), he stepped up after former president Jacob Zuma resigned the presidency February 14th 2018. Elections in South Africa where held May 8th 2019 and results will come out on the last week of May. This will be the 6th elections held after the apartheid in 1994.

The African National Congress (ANC) is the biggest political party in South Africa, the 3 other biggest parties include the Democratic Alliance (DA), Economic Freedom Fighters (EEF) and Inkatha Freedom Party (IFP). Each presidency term is for 5 years (eligible for a second term).

Section 2 Analysis of sustainable development issues

Overview of the problem

Energy in South Africa is very complicated, 95% of South Africa’s energy is produced by a company called Eskom. This is a government owned public utility established in 1923, it is the largest producer of electricity in Africa and ranks among the 7 largest utilities in the world in regards to electricity production. Today, Eskom is involved in critical problems, recently the company has had unplanned outages, energy shortages and blackouts. A lot can be attributed to the many years of not reinvesting in power infrastructure. In 2015 the government of South Africa bailed out Eskom with a sum of 1.9 billion dollars. In 2019, the bailout sum increased to 4.9 billion dollars over three years. It is clear just by observing the numbers that no matter how much money is put into Eskom, it’s just not sustainable.

The current government of Ramaphosa has seriously considered breaking Eskom into three units so that there can be better management and transparency in the energy production and capital flows. However, unions have expressed their strong disapproval to have Eskom break since this would decrease jobs for South Africans. As mentioned in the first section, unemployment in South Africa is currently at 27% and people are desperately looking for job opportunities since the job supply is not enough.

In hindsight of the presidential election on May 8th and the strong support that Ramaphosa needs from the unions to be re-elected and consolidate his control, there is a conflict of interests and it’s still unknown what the government will do in regards to this problem, adding to the messy and uncertain energy crisis.

Causal Drivers

According to transparency.org, South Africa is ranked as 73 out of 180 countries in regards to corruption. This can explain why Eskom is in the situation they are in. According to reports, there is 48,628 employees, about a third more than what they need. According to former minister of finance Trevor Manuel, in the last decade Eskom has had 12 CEOs, 6 chairpersons, 60 directors and 30 executives. Costing the company 35.8million dollars. This correlates with public opinion towards energy corruption, an international survey revealed more people associated investment in coal with corruption than they did with investment in renewable energy. This corruption link was the strongest among South Africans surveyed.

Today, almost everything we do is connected in some way to energy production, most if not all products we use and wear in our days require energy to be created or brought to where we live. Globalization is based on energy and economic development requires energy to continue its growth. This means that the lack of energy supply can have severe consequences on the social and economic sectors of a country. South Africa’s lack of constant and guaranteed energy supply impacts the economy and it’s why the government has identified energy as a key barrier to economic growth.

Tied to the necessity of constant and reliable production of energy, it’s necessary to examine that South Africa is one of the most coal dependent countries see figure 2. In 2015, 85% of the electricity generation came from coal. Not only is coal the most used energy source, South Africa still has three fourths of their coal reserves in the ground 30.1 out of 38.6 Giga Tons (1 billion tons) giving them supply for more than 100 years. Although South Africa has been working on implementing some renewable energy projects, is it possible to let go completely of the natural resource available to monetize?

Interestingly, coal generating projects are getting defunded from banks and international organizations. For example Thabametsi power station and Khanysia power station where both dropped out by Standard Bank the largest african bank. According to a media release, they stated “the substantial increase in man-made green-house gases (GHG), driven predominately by the use of coal as an energy source, is a major contributor to climate change.” According to the Department of Energy of South Africa (DoE) the country does have a plan to reduce its coal dependency. It currently produces around 46.7 GW of thermal capacity and the decommission structure plans to stop using 34.4 GW of coal based energy by 2050 see figure 3.

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Discussion of the regulatory structure and government policies/initiatives that addresses the problem

The government has their foot tied since they have three really important problems to solve. First, there is no constant electricity, this impacts people and businesses directly, second, there are high levels of unemployment and third, the main energy source is coal and the support and acceptance from investors and parties towards coal based projects is decreasing rapidly. Eskom on the other hand, needs to make changes in their organization to solve the corruption that has been going on for years and figure out how they can stabilize the energy supply.

In 2015, given the energy problems faced at the time, the government created the “Energy War Room” to craft an energy plan. This plan consisted on (i) maintaining the country’s

state-owned electricity company Eskom (with a projected financial bailout of US$1.9 billion for FY2015/16); (ii) introducing new generation capacity through coal; (iii) partnering with the private sector into co-generation contracts; (iv) introducing gas-to-power technologies; and, (v) accelerating the demand side management.

In 2019 given the importance of having immediate energy stability, the government decided to take action and bailout Eskom again. The finance minister announced in his yearly statement that South Africa’s government, taxpayers money would go to bailing out Eskom.

Some of the initiatives from the government include the creation of opportunities for foreign groups to present renewable energy projects. The Minister of Energy of South Africa has allocated 13,225 MW for energy production from renewable energy sources. The distribution of the different renewable energy sources are displayed in Figure 4.

Independent assessment (your own view on the problem, what’s being done about it and what could be done differently)

Eskon is a nightmare for the government and for the citizens of South Africa, electricity is needed for most economic related activities, without that constant supply of electricity, there can be no steady economic growth. I am of the opinion that Eskom is too big and too difficult to operate in a country with so much corruption. Not to mention the negative environmental impact that that they are having by burning so much fossil fuels.

It is exciting to see banks not lending money to build new coal-power plants. The reason for the denial of capital being the Paris conference in 2016 with a definite approach to a world with less fossil fuels. South Africa’s government signed and agreed to participate in this Paris agreement although as seen in the war room meetings, they don’t seem to interested in decreasing their coal consumption at the fast pace that most other countries are operating. This goes back to the fact that South Africa has enough coal for 100 years an important income source for this country.

I think that cutting down on personnel that is not needed and cutting Eskom into three units for easier management are both great ideas by the current president. It’s a matter of time to see if this suggestions are really going to happen since unions have a lot of power in the elections and whoever is chosen as a president will get to say how things will be done.

Overview of the problem

The second problem analyzed in this paper is that of water scarcity and the management of it. South Africa as many other African countries have less water. It is the 30th driest country in the world and 98% of their water is already allocated, this means that there is no room for failure. Mistakes or draughts can have severe economic and social consequences. Since 2013, nearly every region in South Africa has experienced some form of drought and water shortages causing restrictions in urban areas and the agricultural sector.

According to reports from the National Integrated Water Information System (NIWIS) it’s clear that some of the biggest dams like Vaal and Lesotho in South Africa have not recuperated their normal levels compared to previous years, posing low or very low levels of water (see figure 5 & 6). Another example that illustrates the water problem is the recent, “Day Zero” where the Cape Town region experienced lack of rain for 3 years, causing the first ever no water access in a major city of the world. Although 3 years of no rain is extremely rare, it happened and South Africans could see more cases like this in the near future, hence the need to take actions to improve their situation.

The main use of freshwater is for agricultural purposes with a 60% allocation, it’s interesting to point out that agriculture only accounts for 4.5% of the gross domestic product (GDP) of which only 25% to 30% is for irrigated agriculture, in addition, employment in the agricultural sector accounts for some 11% of total national employment, but only 10 to 15% of total agricultural employment is in irrigated agriculture, where bulk of the water requirement is. Figure 8 shows that the second main use of water is urban, the third mining and bulk industrial, fourth rural, fifth afforestation and sixth power generation.

Water and electricity have a strong correlation since water purification and water transportation to individuals requires electricity and producing electricity requires vast amounts of water, particularly with coal-fired power stations. The 2012 report Burning Our Rivers: The Water Footprint of Electricity estimates that a mega-watt hour (MWh) of electricity generated by coal withdraws approximately 16,052 gallons and consumes approximately 692 gallons of water. Most other electric production strategies as shown in figure 7 require less water.

Causal Drivers

Although the geographic position of South Africa influences the weather and the lower water supply levels compared to other countries, there are other causal drivers that have allowed this water crisis to be where it is today.

There are various points of view that one can take to analyze the problem of water. Some of these perspectives include the injustice towards poor people and colored farmers, corruption, water mismanagement and the economic drive for the country.

The department of water and sanitation (DWS) in South Africa is responsible for creating policies and spending on infrastructure and overseeing the effective management of this valuable resource. In the previous years, it’s been known that the DWS overspent on its budget by $9.3 million, what’s worse is that they acknowledged that there were no funds allocated for drought relief in the 2017-2018 financial year. It is absurd that a water department responsible for millions of people, in a country with high propensity for droughts not have funds allocated to that purpose.

Corruption is a symptom that seems to be part of the South African culture, many unlicensed and unsupervised mining operations pollute water courses. It’s also known that in previous political regimes, the water law framework benefitted white riparian farmers, impacting the majority of South Africans from access to water. Today, there are poor farmers who want to irrigate their lands and can’t get a licence because the water is “all allocated”.

Injustice in South Africa plays a role in the water sector, although there are enough resources for everyone to have access to clean water, 18% of south africans rely on communal taps and 9% don’t even have access to clean water, being forced to rely on springs, rivers or wetland.

It is regular practice in places where dams are low, to cut the water supply two or three times per week. Patricia Gxothelwa a 34 year old unemployed resident of Imizamo Yethy, a township that is about 12 miles from Cape Town, has to walk far distances to gather water whenever the water supply is cut, for her “Water is one our biggest problems”

A major cause of this water problem is the economic drive. More and more people are moving to bigger cities to find better lifestyle opportunities and employment. Cape town for example has doubled its population within the last decade, the lack of planning and preparation for greater water demands in bigger cities is considered a causal driver. Economically driven, mining firms will settle in places where there is not much water, making it harder to supply them this resource. Mining industry is the third largest water user, it represents 10% of GDP and 3% of the employment in South Africa.

Discussion of the regulatory structure and government policies/initiatives (or lack thereof) that addresses the problem

The government is always involved when the problems have to do with natural resources. Water in South Africa is very controlled and it’s considered a very valuable good given the scarcity. One of the major policies the government implemented regarding water, was the 1998 National Water Act. The main purposes of this act are: (a) meeting the basic human needs of present and future generations; (b) promoting equitable access to water; (c) redressing the results of past racial and gender discrimination; (d) promoting the efficient, sustainable and beneficial use of water in the public interest; (e) facilitating social and economic development; (f) providing for growing demand for water use; (g) protecting aquatic and associated ecosystems and their biological diversity; (h) reducing and preventing pollution and degradation of water resources; (i) meeting international obligations; (j) promoting dam safety; (k) managing floods and droughts, and for achieving this purpose, to establish suitable institutions and to ensure that they have appropriate community, racial and gender representation.

Even though the purposes of the act are clearly intended towards a more fair treatment to all south africans, the current situation reflects something different. Author on the topic Karen Piper says that although apartheid segregation ended in 1994, the so called water apartheid has gotten worse since private companies like Suez have been cutting off water to black people. Citizens state “the lesson here is that you can’t trust the government to provide water for you.” People in certain parts of South Africa, especially where the situation is the worse, have had to rely on their own hands to find water instead of relying on the government.

Independent assessment (your own view on the problem, what’s being done about it and what could be done differently)

The water problem in South Africa has had impacts in the citizens of this country, increasing temperatures add to the problem of no rain and regular draughts in South Africa. Unfortunately every country has its own challenges and some of them are hard to solve. Not enough water is one of the most pressing challenges that South Africa has to deal with. Although there is certain level of organization and interest in solving this problem, in my opinion, there are other agendas that override the health and equality in the country.

Corruption, inequalities and a focus in economic growth seem to be on the front of the agendas. The World Bank surveyed 154 countries and results show that South Africa had the world’s highest Gini coefficient, a measure for inequality. It’s hard to accept, but more than 90% of the wealth is owned by 10% of the population. The wealthy people also have to figure out solutions to the water problem, however, with money it’s easier to hire companies to dig holes and build wells or buy trucks loaded with water or buy machines to desalinate groundwater. The pressure is clearly on the poor and the government has not proven to be reliable in solving problems.

Comparative Assessment

Different than the energy sector, there is not one single water company like Eskom that controls every process water goes through. The Department of Water and Sanitation is in charge of writing policy and spending on infrastructure, however different private companies are in charge of water treatments and purification.

Both sectors, electricity and water have shown to have a culture of mismanagement and corruption. Part of the problem in the water sector is that the DWS has gone above their budget by an estimate of 9 million dollars and has not dedicated funds to solve cases of drought in the country, it’s a huge mistake. Eskom on the other hand has not re-invested in their facilities and is constantly having problems supplying the electricity. The electricity company of South Africa has been bailed out many times by the government with more than 4 billion dollars.

The reality is that who ends up paying for this mistakes are the people of South Africa. I can’t imagine the experience of the people living in this country. Constantly having to worry about not having access to water or electricity. What’s worse is that people’s hard and money earned that goes into taxes is being used to pay public companies and departments that are simply not delivering on their basic responsibilities.

It’s clear that South Africa still has an inequality problem, as mentioned at the beginning of this paper, apartheid ended in 1994 and it’s only been 25 years. To this day, lower classes, minorities and the poor have less of an access to basic services. I believe this doesn’t only happen in South Africa but it’s a common problem that our society faces as a whole. Laws are created to serve the ones on power and the ones that control the resources. It is very easy for Eskom to buy the permits of water and for other multi-million dollar company to build their own dam to supply water to themselves or talk politicians into doing something in their benefit with bribes or lobbyists. But what happens with the farmers that need to water their crops and can’t get any permit because water has already been distributed.

In South Africa, unemployment is ridiculously high, there should not be that kind of unemployment, especially for so many years in a row. In my opinion, unemployment contributes to the culture of corruption since not having a steady income to sustain a household creates the necessity of survival. Unions are concerned of unemployment going up if Eskom is split into three units. It’s a cycle where unemployment and corruption go hand by hand. In the case of Eskom, certain South African groups especially those benefiting, fight for Eskom staying as one unit although a third of employees are not needed. This is the self destructive spiral that South Africans are involved in. Ramaphosa as the president is trying his best to put things in order but its hard when there are so many cultural, economic and environmental problems affecting the country at the same time.

There will always be a tradeoff between economic development and environmental impact. We live in a world where most natural resources are finite. As our needs continue to grow, consumption increases. The problem is that consumption drives the intense use of natural resources. In the beginning, humans were hunter gatherers and their immediate necessities were food, water and shelter. As we developed as a specie and the industrial revolution happened, our needs started expanding, we no longer only need the minimum for living, now we need more things. Today the consumption mentality reflects that the more stuff we have the better.

Market liberals accept that the process of globalization and economic growth affect environmental conditions, however, in the long term the country will be better off especially when the society becomes wealthy. If South Africa wants to continue expanding following the market liberals path, they will have to figure a way to have more water for its cities and have a steady flow of electricity.

I believe there needs to be a serious re-thinking of where we want to go as a human species, because if we continue the way we are going, our planet won’t be able to sustain us. As bio-environmentalists say, the earth has a carrying capacity and passing it would show all of us extreme adversity.

It would be interesting to analyze the amount of food produced in South Africa from the agriculture industry and see what is the comparative advantage of agriculture in other countries. There could be a better way to utilize water and have a higher return, allowing South Africa to focus on other industries that are more efficient with the limited resources they have.

If I could offer solutions, I would suggest that cities should manage their own resources and create their own ecosystem that work for them. The main focus for these cities should be, to be as sustainable as possible. Everyone should have access to basic needs and everyone should be educated in the problems that we are living today as a society. Everyone must understand the crisis we are living and the need to cooperate in a daily basis with every activity we engage in. I understand that it’s hard to think on solving big problems when South Africans care about saving their own lives. The role of governments should be to create jobs that forward the environmental agenda, educating its citizens.

I would like to end this paper by looking at at how ants work, they all help one another to gather food and they bring it to their nests as a team. Ants build their tunnels and homes by helping one another rather than everyone having different intentions and agendas. Nature has good models for sustainability, the water cycle and the animal chain are sustainable cycles, the human ambition for power and limitless economic development unfortunately is not sustainable.

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