AfrElec: Fitch guarded over likely economic impact of energy crisis in South Africa

Fitch Ratings has warned that while South Africa’s economy still has the capacity to withstand the impact of the prevailing electricity shortage in the short term, a prolonged crisis could be damaging.

In a release on February 15, Fitch maintained a 'BB-' with a stable outlook credit rating for the continent’s most modern economy despite the energy shortage, which results in chronic, almost daily rolling blackouts, known locally as load-shedding.

Fitch anticipates the power cuts to continue into 2023, but “the further deterioration of electricity supply goes beyond our base case and presents downside risks to our forecast that economic growth will average 1.1% in 2023”.

South Africa has been experiencing an energy deficit since 2007 with demand exceeding the capacity of its long-serving coal-fired plants, which often break down. Organised gangs also regularly steal copper cables, worsening the situation. Resultantly, power cuts can be as long as 12 hours daily.

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