In this episode of the South Africa Growth Through Inclusion series, Chris Yelland, a Johannesburg based energy analyst, engineer and the founder and Managing Director of e-Business Intelligence talks with former Growth Lab Research Manager Kishan Shah. The conversation focuses on the electricity crisis and strategic issues facing electricity and energy sectors in South Africa. Chris has been an expert and a key observer of energy markets for the past several decades and is a frequent commenter and writer on the electricity crisis in the country.
The Growth Lab at Harvard Kennedy School is a research program that pushes the frontiers of economic growth development policy research. By collaborating with policymakers to design actions and sharing insights through teaching tools and publications.
Today's episode is part of our South Africa Growth through Inclusion series, which takes a deeper dive into a two year research engagement in South Africa.
If you'd like to learn more about this work or download the full report, visit our website at growthlab.hks@harvard.edu.
In 1994, South Africa ended apartheid and created a democracy. At the time, South Africa supported the 47th most complex economy in the world, far ahead of any other African nation.
There were good reasons to believe that the economy would grow rapidly and opportunities would expand to South Africans previously excluded by apartheid that soared to 2023. And South Africa has become less complex when compared to the rest of the world.
Jobs are scarce. Economic growth is slow and highly vulnerable. And inequality is the highest globally.
Though government policies have dismantled many apartheid institutions, these efforts have not created an inclusive economy for the majority. In 2021, the Growth Lab at Harvard University started a two year research project in South Africa focused on understanding the root causes of the country's economic hurdles and potential pathways towards inclusive growth.
Our final report, titled Growth Through Inclusion in South Africa, finds that the country's poor economic performance can be explained by a collapse in state capacity, especially in the electricity sector, and that its dysfunctional labor market is rooted in systemic spatial exclusion. My name is Kishan Chao and I was a research manager here at the Growth Lab.
Today, I am very excited to welcome Chris Yelland to discuss in detail the electricity crisis in South Africa. Chris is a Johannesburg based energy analyst, engineer and the founder and managing director of e-Business Intelligence, a company that focuses on important strategic issues facing electricity and energy sectors in South Africa and the region. He has been an expert and a key observer of energy markets for the past several decades and is a frequent commenter and writer on the electricity crisis in the country.
So first, Chris, thank you so much for taking the time to speak to us. We're really excited to have this conversation with you and maybe what we can start off with is, you know, in in the report, we talk about the electricity crisis as being one of the major constraints on growth in South Africa. And it might be useful if we can just start off like where South Africa is in the electricity crisis today and maybe a little bit about how we got to the point that we were at.
Well, to say where we are, we are in the middle of what we call loadshedding. Even as I speak, I am operating off a battery and the whole neighborhood is without power. And this happens for approximately at the moment between 6 to 10 hours a day. And it's been like this for days and before that for months and even last year.
So it's a very difficult time for consumers, for for business, for industry, for mining, agriculture are all feeling the pain of loss of electricity supply for extended periods of the day. And for for many months on end. And that is what we feel directly and indirectly. They are issues that are constraining the economy. In particular, the electricity grid is constrained and this is slowing down the connection of a new generation plant, primarily a renewable energy plant.
And it's not proceeding as fast as it should or could because of the lack of grid capacity or good connection points in which to connect these distributed generators, which are relatively much smaller than the large centralized power stations of the of the past. And we are also finding that our national electricity utility Eskom is suffering from a weak balance sheet and excessive debt.
And and this is putting the private sector under a lot of stress and the private sector is beginning, beginning to realize that it has to become part of the solution, that it cannot just leave this to the national electricity utility alone, but it has to actually actively engage and invest both, you know, financial investments as well as human resources and time to to help government and to help themselves.
So that's really going to where we are today and the impacts that are being felt. And, you know, Ricardo likes to joke that he started working on South Africa in 2007, 2008, and that was when the first set of loadshedding first happened. And we're sort of 1560 now, I think approaching almost 17 years from when load shedding happened.
So what can you take us through the evolution of how South Africa even got to the point where this electricity has become such a crisis? Yes, look, the first loadshedding that we experienced in South Africa was at the end of 2007. And then in the early part of 2008, it really intensified. And the entire mining industry of South Africa had to shut down.
They were very well, the country was very unprepared for this load shedding. And you can imagine in deep level gold mines, they are literally, you know, there was over 100, several hundred thousand workers underground. And the the safety issues was such that they had to shut down and bring these people to the surface because, you know, if there's no electricity, the mines get flooded.
They need cold air ventilation, they need water, and they need these hoists to hoist people to the surface so that the coal mining, the gold mining industry actually shut down. And in fact, also the platinum mining industry that it was in 2008. Things then quietened down for several years and then in I would say in about 2008, it started picking up again.
And if you look at the annual graphs of the hours of loadshedding, it's got worse each year since then to where we are now and the increase has been almost exponential to the stage where we are now. This year, 2023 will be significantly higher levels of loadshedding, both in terms of hours of loadshedding as well as energy lost to the productive economy.
In other words, unserved energy as a result of loadshedding. And you know, the question you've asked is, you know, how did we get to the situation? Well, it goes back a long way. Even before 2008 and 2007, there was a lot of policy differences and uncertainty. And the policy at the time was that private sector was going to build new generation capacity.
But in the end, the market structures were not in place and government did a policy about turn and they both to make a coal project totaling approximately 10,000 megawatts, which is about a quarter of all the, you know, the generation capacity in South Africa with these two mega-projects, these two mega projects, about 5000 megawatts each ran into massive cost and time overruns, and they were supposed to be completed by 2015.
The reality was they were not even nearly complete by that stage. The costs, it was doubled. And even today, as we speak, the one of these projects, the Medupi Power station, has been commissioned and it's in commercial service, all but one of the units suffered the explosion and has been shut down. The other unit, the other power station, Cassini power station, four units were put into commercial service.
Three of them at the moment are kind of broken down and operating on a temporary basis, and the other two units are not yet in commercial service, so it's still not even finished more than 15 years after, after they started. And this has resulted in, you know, it really has crippled our national utility from a financial point of view and caused it to operate its coal fired plants really hard with high capacity factors.
And and and because of the shortages, they didn't do adequate maintenance, skipping the service intervals and pushing the plant beyond its normal capacity. And and this resulted in a declining performance of the old coal fired plants, much of which is is kind of middle aged too old. And the performance and availability of this plant has declined significantly, whilst at the same time new build capacity has not come on stream and there's been a lot of delays, especially to the renewable energy newbuild that has really accentuated the, you know, the lack of capacity, the lack of generation capacity to meet demand.
And coupled with this at the same time was endemic corruption and mismanagement at Eskom for many years. And we now find ourselves in a position where the National Electricity Utility is simply unsustainable, both from a structural, financial, operational and environmental perspective and that's where we are.
And I think when I look back over the years, I think it started off, as I say, with these mega projects that are beyond our capacity to manage and to build, and they had these costs and time overruns that caused Braun to be rammed too hard, that caused a lack of maintenance and then coupled with corruption and mismanagement, has resulted in this situation where the utility is simply no longer sustainable. And it's really is something of a dinosaur. The utility, the National Grid is something of a dinosaur in the modern age. It is structured as it was set up 100 years ago. Structurally, it hasn't changed and the world has completely changed around it, making the current structure just not fit for purpose in the world. We find ourselves today.
Yeah, maybe talk a little bit more about that. So how does the South African electricity system work and maybe how Eskom is structured and in what way is it? Is it, as you say, a dinosaur compared to what we see elsewhere? Yeah, look, it's still structured as a vertically integrated monopoly, comprising a generation, a transmission and a distribution division.
Now they are utilities around the world that are also in a similar structure. But the one of the problems I think with Eskom as a utility is that many people have grown up in this environment and see it through a kind of lens and really don't know, you know, how things are done elsewhere in the world because they've grown up in a single company and and they haven't been exposed.
I think, to the changes that have been occurring around the world. And so there is a need, I think, for a relook at the structure to liberalize the whole electricity supply industry of South Africa, not just Eskom, because whilst Eskom is a vertically integrated monopoly alongside Eskom, distribution are a number of municipal electricity distributors who are equally dysfunctional and if facing problems with financial sustainability, inadequate skills are in fact businesses that are really too small to be viable and a very fractured electricity distribution industry that I believe needs some consolidation.
So whilst the generation sector I believe needs some unbundling to diversify, the distribution sector needs some solidification or shall we say, a number of distributors joining together to form bigger, more viable distributors to make them viable as a business. So yeah, that's the sort of environment that we operate in a vertically integrated monopoly, covering generation transmission and then distribution shared between Eskom and about 200 electricity distributors, many of which are small and unviable and facing huge financial difficulties.
Now you mentioned that in your view, the one of the genesis of the crisis of 2007 and and the response to it. Do you think the severity of the crisis that we're in right now was foreseeable back then? You know, how much of this is things that were, you know, well-planned but just face things that we couldn't have expected versus just fundamentally a a a a bad plan?
Look, I think there has been a lack of visionary management since about the year 2000. When I say or should I say a lack of visionary leadership. There has been management, but management is not the same as leadership. And real leaders need to be able to have a vision and need to understand clearly the threats in the external environment that is facing the organization as well as the internal threats and to to to to lead this utility, you know, through these difficult waters.
And we did have, I believe, before 20 before the year 2000. I see that the last visionary leader was Dr. Ian Macrae, and he took Eskom through the political transition of 1994 with his visionary leadership that understood what was coming, understood that he had to meet with the African National Congress, the ruling coming ruling party even before it came to power, and to do a deal with them and to see Eskom through by means of a shareholder compact with the shareholder, namely government.
And and he did, he did just that. He saw Eskom through perhaps the most difficult transition political transition that it could imagine and he took the Eskom through it in good shape, in good financial shape with an excess surplus of generation capacity. I think the leadership of the CEOs that followed were complacent that Eskom was functioning properly. It wasn't in a financial crisis and this complacency set in to the extent where it really didn't respond to the further changes that were facing the utility, no longer the political changes, as you know, of the transition from the old apartheid government to the democratic country and the new management having gone through that period with the previous management of Ian McCrae were no longer, you know what they did not see the problems, the next problems that had to be dealt with.
And one of these problems, unfortunately, has been a failure. I believe in the regulatory process and in the pricing of electricity to the extent that this has seriously impacted on investment and and really slowed down the, you know, the building of new generation and transmission plant and has together with many other failures, has resulted in where we are today.
And so through all this, what has been the government and policy response over the years and especially most recently in as the crisis has become more acute over the years, I think government has been very complacent and has failed to act and recognize this growing crisis for what it is.
And of course I think governments I was not on the ball in the sense that it has many other social obligations and elite electricity was seen to be something that was working and I don't think it really sunk in that this growing dysfunctionality would lead us to where we are.
So I think the response has been very slow. And then finally, when it develops into a crisis and in 2019, the end of 2019, the real crisis started when we faced what we call stage six loadshedding.
And that meant there was a 6000 megawatt shortage between supply and demand and the bond had to be cut by 6000 megawatts, you know, for weeks on end.
And this was the crisis. And since then there's been a series of crisis management with, in my view, completely inadequate results. And the government has since been trying to micromanage this situation in a way that is beyond its capabilities and its resources. And this micro-management has failed time and time again. I give you an example. 2019 with stage six loadshedding hit.
The President was recalled from Egypt, where he was at an African Union meeting and he announced an emergency procurement known as the Risk Mitigation IPP program, which was going to procure 2000 megawatts of new generation capacity on an emergency basis. Well, it's now four years later and of that 2000 megawatts of emergency procured and only about 275 megawatts have actually been procured of the 2000.
So only 10% of what was supposed to be procured has been procured. That gives an example of how we've responded to a crisis too slow, inadequate. And I think one has to relook completely at the role of government in dealing with such crises, because a government at the moment in South Africa, you know, comes from a sort of a central management approach, a Central command and control kind of approach, as opposed to a mortgage approach where one puts out economic signals and allows the market to respond to those signals.
And I think that has been part of the problem. And it's now, I think, starting to dawn in that we do need this liberalization of the electricity supply industry that this trying to manage micromanage the situation and plan your way out of it, if you like, by government is not going to work. And it really needs to harness the energy both, you know, the primary energy and the human energy of the private capital of the private sector to become part of the solution.
Yeah, I know. And when we've spoken to folks in South Africa, the one sort of bright spot has been the private sector response in both embedded generation and in the rounds of procurement that the government has been doing. You know, and I wonder if you can speak to a little bit of, you know, one one of the questions that that we always struggled with when we were looking at the electricity crisis was there seemed to be a lot of talk and activity.
So there was a removal of licensing for for embedded generation. There was the renewable energy independent power producer procurement rounds. There was the tabling of the electricity Regulation Amendment bill. Some some talk of commitment of unbundling of Eskom. And you know, in your view, the combination of those things. Now the bill has been tabled, but has it been passed?
You know, even if those things were to be successfully implemented, do you think that would be enough to solve the electricity crisis? Yeah, well first of all, let's look at the response of the private sector. And I must say that there has been I'm talking now the alliance or the arrangement between big utility Eskom and big business or what I call the energy intensive sector in South Africa, which has been the dominant part of the economy for a long time.
It is changing, but there has been this, I would say, unholy alliance between the two where, you know, the mining sector provided Eskom with low cost coal and and Eskom in turn provided low cost electricity and it was a very cozy relationship and I think the private sector, certainly the energy intensive sector has been very slow, equally slow in realizing that things have got to change.
They were very much reliant on Eskom as the get the monopoly sector and they were happy to leave things in Eskom's hands and they were too slow to realize that they have to start becoming part of the solution themselves. So I would say that the response by the private sector was to slow and it reached a stage where when they became really desperate, they started to realize what they had to do.
They had to engage themselves in self-generation and to try and facilitate wheeling of power across the grid. So the response I think, has been quite self-serving, as you would expect the private sector to be. I mean, it's not there to provide social services for the whole country, but it looks to its own interests and developing solutions that will serve its interests.
And fundamentally that, you know, when you look at the private sector and the public sector, part of the problem has been an ideological distrust between government and the private sector and mutual distrust. And it's very, very visible. You know, the private sector believes that Eskom has and government has failed it. And government is very distrustful of the motives and the profit motives, in particular the profit motives of the private sector, the self-serving nature of the private sector.
So there isn't a situation that exists in many countries where the private sector and the public sector work together with a common understanding, you know, of their mutual dependance, and that therefore the the private sector response has failed up to now. But now that they realize that they have to be part of the solution, I think the private sector is coming to the table.
And in fact, government has been reducing some of the red tape and the regulatory burdens. I'm not saying that it must be an unregulated industry, though, but there should not be any unnecessary regulation. They should only be necessary regulation. And some of the unnecessary red tape and regulation has, in fact, been removed. And this is helping now to drive to enable the private sector to respond more meaningfully.
So the response has been a VAT, and it's started off driven really by load shedding itself in the domestic or the residential, commercial and agricultural sector driven by load shedding. There's been a massive uptake of solar PV systems with battery energy storage, really dramatic and that has been the quick win and the quick response because those kind of projects can be delivered in six months to a year.
And I must say that although there's been a big uptake, it could have been much, much bigger if government had really partnered with the private sector into putting in place the necessary incentives that would really drive this. The sector. So there has been a significant private sector response, but it could have been much better had there been a partnership or partnering with government who would put out the right economic signals.
Nevertheless, it's happening.
And at the same time, there has been quite a significant uptake, a very interesting uptake of large solar PV and wind and battery storage in the mining and the industrial sector. But one has to remember that these projects take a lot longer to bring to the table, especially as there is still a lot of regulatory red tape and permitting that has to take place at developers of these projects, which are typically in the range from 75 megawatts to 200 megawatts for installation at the the time taken that needed by the developer to have a space ready project, it could be typically two years and then there's another 18 months or so to actually construct and deliver power to the grid.
So you're talking about a three, four and a half, you know, four and a half year process. So whilst there is a good pipeline of projects, you know, in this size in the Imani industrial sector, they still have to be brought to the grid. Most of them, very few of them are actually delivering to the grid, although there is a good pipeline that has developed and I do think is going to start delivering significantly, you know, in the next the next three years for sure.
And so you, you know, you talked about the private sector response currently. Is that what we see in the pipeline? Is that enough to to solve the crisis over the long run? What is the solution to the crisis? Long run, yeah, I really think that if we put our minds to this, there are indeed solutions in this in the medium and long term, and there are short term opportunities.
As I've talked about solar PV and battery storage in the residential, commercial and agricultural sector. And there are medium term opportunities like the mining and industrial sector with, you know, medium with fairly large size renewable energy and battery energy storage installations. And then there is the public sector procurements which are very slow and bureaucratic. And at the moment what is holding them back the most is grid access and the need to put significant investment into the transmission grid.
The is grid capacity not throughout the country, but there is significant available grid capacity, not perhaps in the best renewables areas of South Africa, but in good areas by all international standards. So I don't think we can make that our excuse. And as I say, there's is the public sector procurement, there's also the municipal sector. Many municipalities, especially the larger metros, are very interested in own generation or in contract ing power from independent power producers wheeled through the Eskom grid and the municipal grid to customers embedded in the in the municipal sector.
And if you look at all of this together, so let us start this. You know, the quick wins there is the the industrial coal and mining sector, there is the municipal sector, there are imports, possible possibilities for import of electricity. And and of course there's improving the performance of Eskom itself. And if you combine all of these, there is no doubt in my mind whatsoever that if we do the right thing and we keep it up, this problem can be dealt with.
There is no reason why a country like South Africa should be experiencing stage six load shedding for months and months on end. I mean, if you look at the world, there's probably a handful of countries in the world and they are basket cases that experience, you know, six, seven, 8 hours of loadshedding every day. And South Africa should not be one of them.
We have abundant natural resources, natural resources in the form of primary energy, coal, wind, solar, PV and uranium. And we have a young population with enormous potential that has not yet been realized. So we've got human energy, we've got natural energy. Other countries with far less resources than South Africa have dealt with this and do not have 8 hours of loadshedding a day.
And I'm ashamed that we're a country that has this. So we need to deal with the problem. Other countries have shown that they can do it with far less resources than Eskom. There's no reason why we shouldn't be able to do it as well. So then what is holding South Africa and society back from solving this crisis? Yeah, so look, we've talked about some of the short medium term activities that need to be happen and in a way and they are happening, they are happening.
They could happen faster with the right kind of signaling. I believe government should stand back from its efforts to micromanage this problem and focus on efforts to put out economic signals that enable the private sector, you know, to respond. And ultimately, we need to move away from this old monopoly electricity distribution, the electricity supply and distribution industry into a more market orientated and liberalized approach.
So I think we need to, whilst we are busy trying to improve Eskom's performance, its fleet of power station performance, and whilst we try and bring on new generation capacity both in the short, medium and longer term, we need to create the right environment and that involves developing a firstly, a competitive and diversified generation sector. At the moment we have one generation company reading Eskom and we have one major primary energy source that is coal.
80% of all electricity in South Africa comes from coal. So we need to diversify to a to a competitive generation sector diversification not only in terms of generators but also in terms of primary energy. We don't need more coal in the mix. We need less coal in the mix and more of the other energy sources only. So that looks at the generation sector.
And on the transmission side, we need a and we are moving towards a national grid company that is independent of these diversified competitive generators. We need an independent system operator, transmission system operator, we need an independent market operator. We need to facilitate. And it is starting wheeling and trading of electricity across the grid. We need an electricity market and of course we need all the transitional arrangements that are necessary to put this in place because it cannot just happen overnight in one movement.
So one has to deal with all the transitionary arrangements and in doing so, one also has to deal with some of the legacy issues, the existing contracts that are in place with independent power producers. As we moved from the monopoly to what we call the single buyer model in which Eskom not only generated electricity itself, but also procured electricity from IPPs.
And then we need to facilitate wheeling and trading and the markets. So there are a number of legacy issues that has to be taken into account in the transition. We arrangements towards an end state that I tried to describe and I'd be curious to know, do you feel like the current electricity Regulation amendment bill, along with at least been has been put out, announced on unbundling of Eskom, move South Africa enough in that direction of creating a market?
Or do you think that there are there still gaps? They are still gaps, but remember, legislation like the amendment to the Electricity Regulation Act, which is currently a bill that is going Parliament, is intended to sort out the high level issues. It's really the legal and regulatory framework. And in an act of Parliament it does not need to go into fine detail that can be dealt with later, you know, through regulations and codes of practice that follow from this national legislation.
The problem at the moment is, and I think the bill is before Parliament, but it is highly contested ideologically, not only, you know, between the ruling party and the opposition parties, but even within the ruling party itself, they are deep ideological differences that we can see articulated every day almost by the one side, a group that believes that this energy transition, which we all, I think acknowledges inevitable.
But there's one group that believes that it should happen as slow as possible, and that is mainly, you can say, articulated by our minister of Mineral Resources and Energy, who happens to be the chairman of the ANC, a very, very powerful political figure in charge of minerals and energy in South Africa. And he is, in my view, backward looking.
He is what many people say, a coal fundamentalist. He was a coal miner himself in the coal mining industry in the Witbank area of South Africa before he became a leader in the in the labor movement in the mining industry and a political figure that's risen to the highest levels. But his heart is with coal and he's backward looking in his view.
In my opinion. And then there is another part of government, of the same government, of the same ruling party, which is perhaps best articulated by the Presidential Climate Commission, which sits in the presidency of South Africa, that has a much more forward looking view about the energy transition and believes that it should happen as fast as possible. I mean, nobody believes that this is an overnight transition, but, you know, this the IPCC, the Presidential Climate Commission, people need to believe that this transition should happen as fast as for many reasons, both economic, environmental and structural.
So so whilst this bill is before parliament, it was supposed to go through Parliament this year, but there is absolutely no chance of that. And in fact it is very unlikely that it will be through Parliament by the end of next year because in the year towards the middle of next year there is a general election and nothing happens.
Prior to the general election. Really decisions are deferred because of the uncertainty of the next administration. And then when the new administration comes in, there's a lot of work to be done before people finally get down to, you know, the might do the minutia of parliament. And in the end, we are still facing a bill where there are serious ideological differences within the ruling party itself, let alone, you know, with the opposition.
So I don't think it's going to be an easy ride through parliament and it may take time. And whilst I think it will eventually go through, there is a possibility that it might not go through as envisaged at the moment and that presents some risks. Serious issues for the electricity supply industry in my view. And if it were to happen, what does that mean or the or the resolution of the crisis?
You know, what what sort of the timeframe that we're looking at in terms of and severity of of load shedding, especially if some of those reforms are not able to be put through? Yeah. Look, I don't want to be alarmist and I don't want to say that it's a high probability that the electricity regulation bill, the the the amendment to the Electricity Regulation Act will go through.
I think the is a a small chance that it will not go through. I believe it will go through maybe not as quickly as we would like, but if it does not go through and I must tell you, there was a similar bill some years ago called the it's mobile independent transmission system and market operate, a bill that went before parliament and failed to go through and was withdrawn.
And it resulted in a delay of several years before this new bill, you know, was presented to Parliament, the new amendments to the Electricity Regulation Act. So it was I don't think the probability is high. It has happened before and it could happen again and it would be a huge setback to the liberalization of the electricity supply industry.
And we've seen these kind of policy about terms in the past. I mentioned to you how in about 2007 there was a fundamental 180 degree about turn in government policy that resulted in the country proceeding Eskom proceeding with these two mega coal projects which have over time crippled Eskom and resulted in us being in the situation we find ourselves today at least a significant part of the reason why we are where we are today.
So I believe that if we fail again with the liberalization of the electricity supply industry, which has been part of government policy in the electricity white paper policy paper of of 1998, it's been officially this restructuring and unbundling of the electricity supply industry has been in government policy for the last 25 years. And the fact that it has not happened is part of the reason why we are where we are.
So if we again do it about turn and and not allow the liberalization to occur, I think we will be in for a strong headwind, a lot of trouble and know throughout the conversation you've mentioned quite a bit about ideological challenges, implementation challenges, management and leadership challenges. And in the report, besides electricity, you know, electricity is probably the most acute and in-your-face example of of these public services in South Africa deteriorating or failing or collapsing completely.
But we we've seen similar, if not almost exactly the same dynamics showing themselves in other critical services like ports, freight rail, passenger rail, water crime, municipal government governance. And we talk about there that that really what this shows is is not just an electricity specific problem, but a broader problem of falling state capacity. Be curious to know about your thoughts on that and as well as, you know, how do you solve that fundamental issue to really make sure that this didn't happen again?
Yeah, look, I'd like to say that I agree fully with this analysis in your report. In fact, I must just add, at this point that I think your report contains extremely valuable analysis and data and graph graphs and information that I know that I personally am going to use time and time again as a reference. So it's an extremely valuable piece of work in my view.
And I agree with the analysis that electricity is just part of the bigger picture of failing electricity, water, sanitation, ports, roads, rail, air and more. I mean, one could talk about crime and security and housing and and education and health care and all of these things. And there has been a failure of government capacity. I don't know what is the solutions?
Are they I'm more focused on the electricity sector itself and the the energy sector. And as I say, that is just part of a bigger problem. So I don't have all the answers. But overall, if I look at certain countries in the world that have been successful, there is a common understanding that is developed between business and the private sector on the one hand and government on the sector on the other hand.
And there is a degree, I think, of trust, mutual trust and a feeling of mutual interdependence. And I think the ideological past where business and industry and the private sector is dominated by white interests, they call it South Africa white monopoly capital. And on the other hand, the government at the moment is it is dominated by black political interests and the history of the apartheid era between black and white has caused a level of mistrust in between black and white, which now reflects itself in the mistrust between the private sector and government and between business and government.
So somehow we've got to overcome those issues. And one of the positive aspects that has been developing, I think, is being black economic empowerment and where with this empowerment comes a stronger and black business that de-politicize the racialised is the divide and hopefully strengthens the relationship between the private sector and business and government. And I hope that that will continue.
And it's dependent on a, you know, significant black economic empowerment, which I'm very supportive of. But in doing this one's got to be careful to do it in a way that is sustainable. And there are people who believe, and I'm one of them, that if you do black economic empowerment in a way that is not sustainable and you're actually you can actually deny the benefits of black economic empowerment.
So it just needs to be done in a way that can sustain itself. So if it's done so rapidly as to be such that, you know, the wrong people are deployed to positions of, for example, technical decision making, where they if they or if they don't have the necessary qualification experience, it can really impact negatively on, you know, on the performance of these businesses.
And we see this in Eskom, we see it in the municipal sector, we see it in many state owned enterprises that have had the wrong people appointed to various positions. And I think that has done enormous damage to South Africa. So I think, you know, perhaps a reassess statement of the way we do black economic empowerment. And I'm not suggesting for one minute that it shouldn't happen.
In fact, I'm suggesting just the opposite, that it should happen. It's part of the solution. It's part of getting government and the business to trust one another and de-radicalize it. So I think it should and must happen. But perhaps we need to reassess how we do it and how we deploy people and to ensure that the right people are deployed.
If you're going to deploy people at all. I think with that we can we can we can end the conversation. But Chris, this is fantastic. And thank you so much. I think your your thoughts and insights and I mean, your experience with electricity is really valuable as just being able to talk about the crisis and the different challenges and solutions.
I mean, we I think in writing the report, I certainly and the atrocity part came away at first a little pessimistic about the future. But I but I think your point around, you know, there is so much capability within society and it's really about unleashing that to solve the challenges.
And if that's possible to do, then South African can certainly get out of the crisis.
I believe so. I certainly do.