John Lawson CEO of the Cape Chamber of Commerce and Industry
Shock findings of a water and electricity tariff study illustrates why South Africa needs more privatisation, both to reduce the cost of doing business and to bring relief to financially-stressed households
The study by PowerOptimal found that water tariffs have increased 2100% since 1996, with electricity tariffs only slightly behind at 1710 %.
If we strip out the effect inflation it means the average household bill for water and electricity has increased by more than R2 000 over that period, with average household electricity spend now sitting at around R2 900, the study found.
That’s a spectacular and deeply concerning increase, made worse by the fact of declining service delivery during that same period. In effect South Africans are paying much more for less, even as we’re told to prepare for more increases.
It’s hard to overstate the impact of this disaster. The money spent on these basic services is money that could have been spent in other areas of the economy, generating economic growth. In the case of small business it is money that could have been reinvested in business operations to create jobs. Instead precious resources are ploughed into state-owned service delivery that appears ill-equipped to meet demand.
Of particular concern is that electricity and water prices have risen much faster than inflation – almost six times faster in the case of water and five times for electricity, the PowerOptimal study found.
In a context of rising inflation and mass unemployment, these spiraling costs are sabotaging hopes of economic revival. They also undermine the success of public-private efforts to implement government’s Energy Action Plan that have seen load shedding almost disappear from public discourse over the past six months.
As Cape Chamber we are committed to doing what we can to encourage meaningful reform to address these systemic challenges. Reducing the input costs of water and electricity would provide an immediate tonic for small business, and bring relief to long-suffering consumers.
