South Africa’s economy at a pivotal point as outlook improves but political, energy risks remain
LONDON – South Africa’s President Cyril Ramaphosa speaks during a press conference in central London on November 24, 2022
JUSTIN TALLIS/AFP via Getty Images
South Africa’s long-awaited economic reforms have begun to improve the country’s outlook, but the age-old problems of political uncertainty and a failing power system still pose significant risks.
The Economic Reconstruction and Recovery Plan has been a key tenet of President Cyril Ramaphosa’s agenda since he succeeded Jacob Zuma as the country’s leader in 2018. But deep divisions within the ruling African National Congress (ANC) and his own cabinet have made for sluggish progress.
The suite of reforms — focused on energy security, infrastructure development, food security, job creation and the green transition — is designed to create a “sustainable, resilient and inclusive economy,” the government says.
And — some at least — appear to be working. S&P Global Ratings earlier this month affirmed its positive outlook on the country, saying that government measures to stimulate private sector activity could boost growth, and the measures had the potential to ease economic pressures.
“There is some hope in the public finances in South Africa, mainly due to the increase in government revenues as a result of higher commodity exports, and also due to the progress made in reducing debt and debt distress, and to ushering a public deficit,” Aleix Montana, Africa analyst at risk consultancy Verisk Maplecroft, told CNBC last week.
However, political frailties and persistent issues at a state-owned utility continue to pose present economic risks.
Ramaphosa faces a “perfect storm of inflation, electricity cuts and corruption accusations that will continue to deteriorate South Africa’s profile and to pose risk for investments in the country,” Montana said.
A report into an alleged corruption scandal surrounding Ramaphosa is set to be examined by the National Assembly on Dec. 6, just 10 days before the party conference of his ruling ANC (African National Congress).
Energy woes
Though Ramaphosa is expected to secure a second five-year term, Montana said he will have to improve his credibility on economic and anti-corruption reforms in order to continue pushing through his agenda. The economy also remains at risk from persistent disruptions at state-owned companies, such as power utility Eskom.
South Africans have faced rolling blackouts as Eskom — which has long been a thorn in the side of the country’s economy — contends with shortfalls in generation capacity due to equipment failures and diesel shortages.
The company has warned that power outages, known as “load-shedding,” will continue for the next six to 12 months, and recently said it had run out of funds to acquire the diesel needed to run auxiliary power plants that are deployed during periods of peak consumption or emergencies.
Montana said that in order to secure sustained economic growth, the South African government will need to prioritize energy sustainability.
“Energy will require financial assistance from international players, but they will also need to ensure that it doesn’t have a negative impact on South African society,” he said.
“Apart from financial challenges, a lot of citizens of South Africa are employed in Eskom or in the fossil fuels sector, so the government will need to ensure that in their plan, they mitigate this potential impact of transitioning from a fossil fuels-based economy to the implementation of renewables in order to sustain electricity stability.”
Asked about this issue on a recent state visit to the U.K., Ramaphosa told CNBC’s Arabile Gumede that the problems at Eskom started long before 2014, when former President Jacob Zuma appointed him to address the country’s energy problems.
“As we are generating electricity, power stations keep breaking — many of them are old — but we are trying with a new boat, the management that’s in place to address this problem,” Ramaphosa said.
“So the problems of Eskom were seeds that were planted many years ago, rather than in 2014, and because we’re dealing with huge, complicated and complex machinery, it’s not a one-day fix, it can never be as these are very complex processes.”
He added that the government was working to reduce load-shedding requirements and to “ensure that the money’s there,” noting that Eskom “used to be the best utility in the world.”
“Do I have confidence that we will solve these problems? Yes, I do. I do have enormous confidence that we will solve them,” he said.
“But I think it’s important to have an appreciation of where we’ve come from, and obviously, it is very easy to put all the blame on the president, to put all the blame on the government, and yet these problems have come way back from the past.”
‘Taming the monster’ of inflation
Along with the domestic issues unique to South Africa, the country also faces the same inflationary pressures that have plagued economies around the world over the past year.
Annual headline inflation rose to 7.6% in October, defying the South African Reserve Bank’s expectations for price pressures to ease. This prompted the bank’s Monetary Policy Committee to hike interest rates by an aggressive 75 basis points last week, taking the benchmark repo rate to 7%.
This marked the seventh consecutive meeting at which monetary policy had been tightened, and central bank Governor Lesetja Kganyago said in a press conference that it must “tame the monster of inflation.”
With prices rising much faster than the central bank’s 3-6% target, Kganyago noted that the SARB needs to see clear evidence that inflation has not just peaked, but begun to sustainably decline toward the midpoint of the range.
But further monetary tightening will place additional pressure on the economy.
“We think that inflation is unlikely to return within the target range (let alone the midpoint) in the coming months, keeping policymakers in tightening mode well into 2023,” said Virág Fórizs, emerging markets economist at Capital Economics.
She flagged that food inflation continues to increase, offsetting some of the effects of softening fuel price pressures, while core inflation is likely to remain high. Capital Economics expects inflation to hover around 7.5% annually until early 2023, before dropping markedly around the middle of the year.
Fórizs said the weakness of the economy is unlikely to prevent further rate hikes, with growth concerns playing second fiddle to inflation worries. South African GDP contracted by 0.7% in the second quarter.
“While the end of the tightening cycle is not yet in sight, we expect the pace of tightening to slow over the next MPC meetings,” she noted.
Three MPC members voted to hike rates by 75 basis points last week, while two voted for 50 basis points. It marked an apparent softening of approach by some who voted for a 100-basis-point rise at the previous meeting.
“All in all, we’ve penciled in 100bp of further increases in the repo rate, to 8.00%, by Q2 2023,” Fórizs said.
Massachusetts is launching a first-of-its-kind statewide vehicle-to-everything (V2X) pilot program. This two-year initiative, backed by the Massachusetts Clean Energy Center (MassCEC), aims to deploy 100 bidirectional chargers to homes, school buses, municipal, and commercial fleet participants across the state.
These bidirectional chargers will enable EVs to serve as mobile energy storage units, collectively providing an estimated 1.5 MW of new storage capacity. That means EVs won’t just be getting power – they’ll be giving it back to the grid, helping to balance demand and support renewable energy use. The program is also focused on ensuring that low-income and disadvantaged communities have access to this cutting-edge tech.
The Massachusetts pilot is one of the largest state-led V2X initiatives in the US and is designed to tackle key challenges in deploying bidirectional charging technology. By strategically placing these chargers in a variety of settings, the program aims to identify and resolve barriers to wider adoption of V2X technology.
Massachusetts EV owners and fleet operators enrolled in the program will get bidirectional chargers capable of both vehicle-to-grid (V2G) and backup power operations at no cost. Here’s what they stand to gain:
- No-cost charging infrastructure: Bidirectional charging stations and installation are fully covered for participants.
- Grid resilience: With an estimated 1.5 MW of new flexible and distributed storage assets, the program strengthens Massachusetts’ energy infrastructure.
- Clean energy integration: V2G technology allows EVs to charge when renewable energy is available and discharge stored energy when it’s not, supporting the state’s clean energy goals.
- Backup power: EV batteries can be used as backup power sources during outages.
- Revenue opportunities: Some participants can earn money by sending stored energy back to the grid.
Clean energy solutions firm Resource Innovations and vehicle-grid integration tech company The Mobility House are leading the program’s implementation. “With the charging infrastructure provided through this program, we’re eliminating financial barriers and enabling school districts, homeowners, and fleets to access reliable backup power,” said Kelly Helfrich of Resource Innovations. “We aim to create a scalable blueprint for V2X programs nationwide.”
“Bidirectional charging benefits vehicle owners by providing backup power and revenue opportunities while strengthening the grid for the entire community,” added Russell Vare of The Mobility House North America.
The program is open for enrollment now through June 2025. For more details, visit the MassCEC V2X Program webpage. A list of eligible bidirectional vehicles can be found on that page.
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Compton, California, has unveiled 25 new electric school buses – the school district’s first – and 25 Tellus 180 kW DC fast chargers.
Compton Unified School District (CUSD) in southern Los Angeles County is putting 17 Thomas Built Type A and eight Thomas Built Type C electric school buses on the road this spring. In addition to working with Thomas Built, CUSD also collaborated with electrification-as-a-service provider Highland Electric Fleet, utility Southern California Edison, and school transportation provider Durham School Services.
Environmental Protection Agency’s (EPA) Clean School Bus Program awarded funds for the vehicles in the program’s first round. EPA also awarded CUSD funds for the third round of the program and anticipates introducing an additional 25 EV school buses in the future.
“I can’t stress enough how vital grants like these are and the need for continued support from our partners in government at the state and federal level to fund additional grants for school districts and their transportation partners that are ready to deliver and operate zero-emission buses,” said Tim Wertner, CEO of Durham School Services.
CUSD, which serves Compton and parts of the cities of Carson and Los Angeles, currently serves more than 17,000 students at 36 sites. The district has a high school graduation rate of 93% and an 88% college acceptance rate. One in 11 children in Los Angeles County have asthma, which makes the need for emissions-free school transportation that much more pressing.
Read more: Thomas Built Buses debuts its next-gen electric school bus
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After cutting lease prices by $200 this month, the Rivian R1S is now surprisingly affordable. It may even be a better deal than the new Tesla Model Y.
Rivian cuts R1S lease prices by $200 per month
Rivian’s R1S is one of the hottest electric SUVs on the market. If you haven’t checked it out yet, you’re missing out.
With some of the best deals to date, now may be the time. Rivian lowered R1S lease prices earlier this month to just $599 for 36 months, with $8,493 due at signing (30,000 miles). The offer is for the new 2025 R1S Adventure Dual Standard, which starts at $75,900.
Before the price cut, the R1S was listed at $799 per month, with $8,694 due at signing. The electric SUV now has the same lease price as the R1T, despite costing $6,000 more.
The 2025 R1T Dual Motor starts at $69,900, essentially making it a free $6,000 upgrade. At that price, you may even want to consider it over the new Tesla Model Y.
Tesla’s new Model Y Launch Series arrived with lease prices of $699 for 36 months. With $4,393 due at signing, the effective rate is $821 per month, or just $13 less than the R1S at $834. However, the 2025 R1S costs nearly $15,000 more, with the Model Y Launch Series price at $59,990.
Rivian is also offering an “All-Electric Upgrade Offer” of up to $6,000 for those looking to trade-in their gas-powered car, but base models are not included.
| Starting Price | Range (EPA-est.) |
|
| 2025 Rivian R1S Dual Standard | $75,900 | 270 miles |
| 2026 Tesla Model Y Launch Series | $59,990 | 327 miles |
To take advantage of the Rivian R1S lease deal, you must order it before March 15 and take delivery on or before March 31, 2025.
The 2025 Rivian R1S Dual Standard Motor has an EPA-estimated range of up to 270 miles. Tesla’s new Model Y Launch Series gets up to 327 miles.
Which electric SUV would you choose? Rivian’s R1S or the new Tesla Model Y? If you’re ready to check them out for yourself, you can use our links below to find deals on the Rivian R1S and Tesla Model Y in your area.
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