Eskom and ZESA’s power woes will hurt Zimbabwe’s economy

The extensive power cuts being experienced in Zimbabwe and South Africa will seriously hurt the Zimbabwean economy several experts have confirmed. They have urged the Zimbabwean government to urgently address the current depressed power generation in the country before it takes a toll in the economy. Although the government has claimed that power cuts are a result of increased economic activity in the aftermath of COVID-19 lockdowns most businesses have reported lost productivity as a result of load-shedding. This means that even businesses are not being spared from power cuts.

Over the years Zimbabwe’s government has focused on rural electrification as it is an easy way to please their political base but power generation has been neglected resulting in the shortfall between what the country requires and what it actually produces. Zimbabwe now needs about 2 400 MW of electricity at peak demand but the country only produces about 1 400 MW on a good day. To cover the shortfall the country has relied on imports mainly from South Africa and Mozambique as well as aggressive power cuts dubbed load shedding.

The problem is that South Africa now has a crippling power deficit of its own. That is likely to affect Zimbabwe and its economy in a number of ways:

• Zimbabwe is likely to find it difficult to get power imports from South Africa, especially during peak periods. Zimbabwe gets about 400MW of precious power from South Africa. With Eskom struggling to meet local demand they are likely to curtail what they export
• There will be a general rise in the cost of electricity in the region as demand rises. South Africa might look to import from say Mozambique raising demand. Electricity is a key input cost which will raise the cost of production which will hurt the competitiveness of Zimbabwe’s goods which are already too expensive.
• The Zimbabwean informal sector relies on South African industry but it too is facing rising costs. That means we might start seeing price hikes due to rising production costs in South Africa.

As clearly shown the power woes in the region are likely going to have a negative toll on Zimbabwe’s already battered economy.