Lessons from the South African electricity crisis

The ongoing electricity crisis in South Africa is having serious consequences on the economy. Electricity supply is predicted to constrain growth for at least the next five years. How could this have occurred when until recently South Africa had a surplus of cheap electricity?

An electricity restructuring and privatisation programme started in the early 1990s has been beset by problems - it's been protracted, reforms have been difficult to implement and the private sector has failed to respond. Meanwhile, public investment has stalled; this is the main cause of the current crisis. The crisis demonstrates that the widespread efforts across developing countries to encourage private sector investment in the electricity industry are unlikely to succeed. So the government and state utility must continue to scale up public investment in order to maintain and expand electricity capacity.