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South Africa’s already limping economy suffered yet more body blows this week.
Steel producer ArcelorMittal announced that its was putting its long steel plant into care and maintenance, putting 3 500 jobs at risk.
The company said that steel consumption in Africa’s most advanced economy has fallen 20% over the past seven years, due to limited infrastructure spend and project delays.
It added that South Africa’s persistent rail logistics problems and an intensifying electricity crisis had also added costs to the business, ArcelorMittal SA.
READ: Steel sector probe welcomed
In an equally devastating and perhaps darker warning, Thomas Schäfer, the head of the VW global passenger brand, said that he was “very worried” about the company’s prospects in the country. He noted that the cost of operating in South Africa had become detrimental to its ongoing production, citing persistent load shedding, rising labour costs, logistical issues, a lack of railways and port delays as the main concerns. Schäfer said the effect of this was that South Africa was no longer an appealing location to invest in as an automotive manufacturing haven.
VWSA executives added that the Kariega Plant in the Eastern Cape needs to rent generators to offset load shedding, which ends up costing VWSA R13 million over the course of two years.
READ: Scores of small steel firms close down
It’s clear that poor logistics, load shedding and the lack of development is pushing many companies to rethink their presence in the country and their ability to operate.
The looming elections in 2024 will bring with them the inevitable noise and bluster of economic success, but the fact remains: South Africa is failing to attract the investment it needs; it is failing to inspire the confidence required to boost growth and reduce deepening poverty and inequality.
When will President Cyril Ramaphosa and his ministers wake up and smell the coffee?
