By John Young
President Cyril Ramaphosa remained president of South Africa after the elections of 29 May 2024, but only with the support of a coalition of 10 political parties which has been called a Government of National Unity (GNU).
Representing 70% of the voters who turned out for the election, the new government covers a wide spectrum of political standpoints and crucially contains parties that are committed to the country’s constitution and to the rule of law. In the National Assembly elections for the position of president, Ramaphosa received 86.5% of the votes of Members of Parliament.
The African National Congress (ANC), which was seen as the party of liberation and had been the governing party since the first democratic election of 1994, saw its vote share drop in 2024 to just over 40%, having garnered more than 57% in 2019. While the ANC historically has a socialist orientation, the largest other party in the coalition, the Democratic Alliance (DA), is inclined to argue for minimal government intervention in the economy. As the DA’s website states, “Government must always stand ready to help those who need it, but its primary function is to empower the people to make use of their freedoms, so that they may progress in their own lives.”
Marrying these two views on economics will present some difficulties if the government is to complete its five-year term but early signs are that the focus will be on fixing, maintaining and building infrastructure, the subject of a Special Feature in the 2025 edition of South African Business.
The spirit of cooperation which created the GNU has also been evident in the business community, where an initiative of many of the country’s chief executive officers is supporting state entities in tackling infrastructure problems.
There have been good signs of progress regarding electricity availability, port logjams being cleared and security improvements on important rail links.
Transnet Port Terminals (TPT) hired 200 additional cargo coordinators and port workers to support citrus exports in the 2024 reefer season. Citrus exports account for more than 50% of agricultural exports and contribute R43-billion to South Africa’s GDP. Volumes increased by 10% year-on-year for the first six weeks of the 2024/25 financial year, a year in which TPT will spend R3.9-billion on new equipment.
SME Launch
It is often said that the best engine for job creation is the small, medium and micro-enterprise (SMME) sector. However, the Chartered Institute for Business Accountants (CIBA) states that something like 70% of new businesses do not survive beyond two years.
In another example of diverse organisations working together for an economic goal, CIBA aims to change that metric by teaming up with the South African Chamber of Commerce and Industry (SACCI), the Companies and Intellectual Property Commission (CIPC) and the University of South Africa’s affiliate company, Inhlanyelo Hub.
The joint initiative is called SME Launch and will nurture startups, giving them advice in key areas such as compliance, market access and cash-flow management. As SACCI President Mtho Xulu says, “SME Launch is our way of adopting South Africa’s new businesses, helping them grow into sustainable, thriving contributors to the economy. This partnership ensures new businesses have the guidance they need to succeed, creating long-term value for both SMEs and the nation.”
The first offering of SME Launch was a free webinar, introducing the concept and explaining what is available on the platform.
Global stage
In 2023, South Africa hosted the BRICS Summit. As of 1 December 2024, South Africa will have the presidency of the G20, becoming the third BRICS nation in a row to hold that position after India and Brazil.
The G20 Summit to be held in 2025 will naturally give South Africa a chance to present itself to the world in the best possible light. The event will be held in Johannesburg in the province of Gauteng, the country’s most important economic hub. The city’s infrastructure will need a lot of sprucing up before 19 heads of state and the leaders of the AU and EU visit it. This presents another opportunity for government and business to cooperate for the greater good.
South Africa has burnished its reputation for hosting global events through the FIFA World Cup, the World Conference against Racism, COP17 and various other conferences that have been well run. South Africa has adopted as the theme for its G20 Presidency “Solidarity, Equality and Sustainable Development”.
As President Ramaphosa told a G20 meeting under Brazil’s presidency that with just a short time before the deadline date of the UN 2030 Agenda for Sustainable Development, it would make sense to have a tight focus on the programme of Sustainable Development Goals (SDGs) in all of the years leading up to 2030. According to Ramaphosa, just 12% of SDGs are on target and progress on 50% is “weak and insufficient”.
Energy transformation
South Africa’s energy landscape is changing very quickly. Quite apart from the giant solar farms of the Northern Cape, pictured, and the massive wind turbines going up in the Western Cape and the Eastern Cape, the process of unbundling the national utility, Eskom, has begun. The new National Transmission Company of South Africa is a working entity and wheeling (the idea that an independent power producer can sell energy to a third party while using the national grid) is booming.
An interesting new development on the landscape, literally, of the Mpumalanga Province, is the addition of what will become South Africa’s biggest wind farm. Seriti Green is developing the Ummbila Emonyeni project to supply Seriti’s mines in the area, but the fact that Mpumalanga has several coal-fired power plants that are going to be decommissioned means that there will be spare grid access for renewable producers. The coal plant closures have been pushed back in some cases, but they will close and when they do, the connections they have to the grid will be gold dust.
The conversation about the global climate crisis has seized the limelight across the world in a way that few other topics have since World War II. The debate in South Africa has its own unique contours, particularly as about 80% of the country’s electricity generation comes from coal. The fact that many people would lose their jobs if coal mines close down is an important factor in calculations, and a key reason why South Africa is at the forefront about the need for a “Just Energy Transition”.
An excellent programme exists to procure the energy that South Africa needs to expand the economy, the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP). In Round Five of the REIPPPP, the cheapest solar generation cost was 37.5c/kWh while the best wind cost was 34.4c/kWh. These represent remarkably low costs.
Following the announcement by the City of Cape Town that residents could get cash for power in late 2022, Versofy Solar received 1 500 enquiries in the month of January and has experienced a surge of orders for rooftop installations since then.
The R130-billion pledged at COP26 by the EU, the US, Germany, France and the UK to assist South Africa’s transition from oil and coal to greener technologies is not straightforward; it comes as a mixture of grants, risk-sharing instruments and concessional finance but it will allow South Africa to fund projects that will help the country to move away from fossil fuels without further stretching Eskom’s precarious finances.
Eskom made a breakthrough in December 2022 when South Korean company Hyonsung Heavy Industries broke ground, signalling the first project in Eskom’s Battery Energy Storage System (BESS) project. The 8MW facility will move to producing an additional 144MW in the second stage of the project. In 2023, a larger project at Worcester, Hex BESS, was launched. Another company that will be involved in Phase 1 of the national rollout of these projects is Chinese company Pinggao.
In Cape Town a Swedish firm has spent $30-million setting up an assembly factory for lithium batteries and Bushveld Energy, a subsidiary of Bushveld Minerals, is producing vanadium battery electrolyte at its factory in East London.
