South Africa's coal dependency at risk: billions in revenue and jobs on the line
Steam rises from the cooling towers of the Matla power station, a coal-fired power plant operated by Eskom in Mpumalanga. South Africa's reliance on coal could jeopardise billions in export revenue and thousands of jobs as global demand shifts towards carbon-free imports, warns the Net Zero Tracker.
South Africa's coal-dependent economy could lose billions in export revenue and thousands of jobs as more countries and companies seek carbon-free imports, the Net Zero Tracker watchdog said Monday.
Africa's most industrialised nation is one of the largest polluters in the world and generates about 80 percent of its electricity through coal.
This makes it "uniquely vulnerable" as companies decarbonise their supply chains and countries penalise carbon-intensive imports, according to the group, a collaboration of four non-profit organisations that tracks net zero pledges.
"78 percent of South Africa's exports, worth $135 billion (R2.57 trillion), are traded with 139 jurisdictions which have net zero targets in place. Collectively, these exports support over 1.2 million domestic jobs," the report said.
If the country fails to decarbonise its supply chains, it could lose some of that trade and related jobs, it said.
The group said South Africa could avoid this scenario by phasing out coal more rapidly and positioning itself as a "strategic supplier in low-emission value chains".
"South Africa has the tools to pivot - proven renewables potential, critical minerals, and seats at global tables," said Net Zero Tracker project lead John Lang.
The report argued that South Africa was "well-positioned to become a key supplier of low-emission goods".
One of the driving forces behind the decarbonisation push is the European Union's Carbon Border Adjustment Mechanisms (CBAMs).
Adopted in 2022, the policy imposes a carbon price on imports of goods such as steel, aluminium and cement from countries with lower environmental standards.
A test period began in October 2023 before the law's full entry into force in 2026.
The South African Reserve Bank has warned that carbon-based tariffs could reduce exports by up to 10 percent and that CBAMs alone could shrink exports to the EU by four percent by 2030.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
IOL News
31 minutes ago
- IOL News
Reserve Bank probes Nthabeleng Likotsi over alleged false information in bank application
The South African Reserve Bank has launched an investigation into Nthabeleng Likotsi and her bank, YWBN Mutual Bank. Image: IOL / Independent Newspapers The South African Reserve Bank has launched an investigation into Nthabeleng Likotsi and her bank, YWBN Mutual Bank, over claims that she may have provided false or misleading information during the bank's application process. The move follows a major fallout with investment firm AFRIBIZ Financial Services, and could lead to serious legal consequences for Likotsi. At the centre of the controversy is a failed R9 million deal between AFRIBIZ and YWBN. AFRIBIZ says it paid this amount for a 26% stake in the mutual bank. But after the bank allegedly failed to meet key regulatory requirements, the promised shares were not issued. Instead of receiving their 26% shareholding, AFRIBIZ claims it was offered just 2% as part of a "full and final settlement" — an offer the company immediately rejected. 'They sold us shares. We paid. Now we want what we paid for,' said a source close to AFRIBIZ's legal team. 'Returning the money is not good enough. That was never part of the agreement.'The Reserve Bank is now reviewing whether Likotsi or anyone at YWBN knowingly gave misleading or untrue information as part of their application to register the bank. Under the Mutual Banks Act, it is a criminal offence to do so. Legal experts say the situation is serious. Advocate Mandla Tshabalala, a corporate law specialist, explained: 'When someone pays for shares and you offer a refund instead, it sends the message that either the shares don't exist, or you never intended to follow through.'AFRIBIZ has made it clear they are not backing down. They insist that the R9 million payment was labelled as 'non-refundable' and was meant to secure actual shares, not a promise or future negotiation.'This is not just about a disagreement,' said one banking insider. 'It raises questions about trust, transparency, and whether proper processes were followed from the beginning.' This is not the first time YWBN has faced trouble. In 2021, the Companies and Intellectual Property Commission Tribunal ruled that YWBN had failed to follow rules under the Co-operatives Act and ordered the return of funds to investors. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Ad loading For Likotsi, the situation is especially damaging. Just a few years ago, she made headlines as the first black woman to start a mutual bank in South Africa — a historic and inspiring achievement. But now, that legacy is under threat.'She started on the wrong foot,' said a senior banking executive. 'This was a chance to prove that new leadership could work in the sector. But instead, we're seeing delays and avoidance.' Likotsi, however, has defended her actions. She says YWBN made the offer to AFRIBIZ in good faith, trying to resolve issues that arose after regulatory compliance problems. She insists the door remains open for future collaboration. Still, critics argue the damage has already been done. The Reserve Bank's investigation could take time, but its outcome may have lasting effects not only on Likotsi's future but on the image of mutual banking in South Africa. With AFRIBIZ considering legal action and investor trust shaken, YWBN faces an uphill battle to restore credibility. As the inquiry continues and public scrutiny intensifies, what once seemed like a bold step forward for financial inclusion now hangs in the balance.
Eyewitness News
3 hours ago
- Eyewitness News
70% of SA youth struggle to find employment, notes Basic Education Minister
JOHANNESBURG - Basic Education Minister Siviwe Gwarube says the country is facing a national crisis as seven out of 10 young people in the country are unable to find jobs She says intervention needs to begin at the foundation phase as she leads a dialogue to develop a national policy to teach learners about entrepreneurship to mitigate the unemployment scourge. The European Union (EU) has partnered with the Department of Basic Education (DBE) to fund the education for employability programme. In 2011, a task team was formed to strategise on how schools can provide learners with entrepreneurial skills to ensure that those unable to further their studies can create jobs. In 2018, the Entrepreneurship, Education and Employability Initiative was launched in 73 schools and taught learners vital entrepreneurial skills. Funders like the EU are joining the DBE and other government stakeholders to formulate a national policy that will ensure that the programme reaches all schools. 'Now, with the financial support that we are getting from the European Union, what we are saying is that we need to inculcate entrepreneurial skills in schools but not only skills for the world of work today, but also looking at artificial intelligence and looking for the world of work in the years to come,' said Gwarube. This programme seeks to help grow the economy, alleviate poverty and get young people to work.
Daily Maverick
3 hours ago
- Daily Maverick
The strategic reforms that could transform South Africa's economy
The key is to break the strangleholds that Eskom and Transnet have on our electricity, ports and railways. Introducing real competition into electricity generation and the operation of ports and railways is the key to unlocking real growth in South Africa's stagnant economy. So said Deputy Finance Minister Ashor Sarupen at a seminar organised by the In Transformation Initiative last week, where Jakkie Cilliers, head of the African Futures unit at the Institute for Security Studies (ISS), presented the unit's latest report, co-written with Alize le Roux, which forecasts SA's growth trajectory to 2043. The seminar pondered why, despite the creation of a government of national unity (GNU) last June and the virtual end of load shedding, the South African economy only grew by a miserly 0.1% in the first quarter of 2025. Cilliers said South Africa was caught in a 'classic upper middle income growth trap'. From 1990 until 2025, South Africa's economy had grown by an average of 2.3% a year, and on its current path, without significant reforms, he forecast it would grow at an average 2.4% annually from now until 2043. That would expand GDP from about $402-billion in 2025 to about $628-billion in 2043, in constant 2017 US dollars. This 'slow but steady growth' would not be enough to dent poverty. It would barely keep pace with the population, which the unit forecast would expand from about 65.5 million in 2025 to about 77 million in 2043. Cilliers said annual GDP per capita would therefore rise from $12,600 in 2025 to about $14,700 in 2043 — with South Africa falling behind the rest of the world (except Africa) where he forecast average annual GDP per capita would climb from $20,300 in 2025 to $28,500 in 2043. He noted that on its current development trajectory it would take South Africa until 2037 to return to the peak GDP per capita of $13,800 that it reached in 2013. South Africa had been stagnating for years, with steady deindustrialisation, weak investment, and a growing dependence on social grants undermining growth, particularly during the Jacob Zuma presidency, Cilliers said. Cilliers noted that 740,000 South Africans entered the labour market every year, and because of slow growth and a very capital-intensive economy the number of unemployed people increased annually. In 2023, the International Labor Organization (ILO) found that South Africa had the highest unemployment rate globally after only Eswatini. Because being part of the informal sector is considered 'work' by the organisation, South Africa's relatively small informal sector contributed to this high percentage. In South Africa, only about 18% of the labour force is employed in the informal sector. Cilliers noted that about 62% of South Africans were now living below the World Bank's poverty datum line for upper middle income countries, of $6.85 per person a day. On South Africa's current economic path, that percentage would decline 'modestly' to 58% in 2043, though the absolute number of people living below that poverty datum line would increase, from some 40.9 million in 2025 to 44.4 million in 2043 (because the overall population would rise). Cilliers said South Africa should now be reaping a 'demographic dividend' because its ratio of working age population – aged 15 to 64 — to its dependent population (children and elderly) had now reached 2.1. In the African Futures calculations, the demographic dividend should kick in when the ratio of working people to dependents reached 1.7. he said, Economic growth stunted by poor human capital But South Africa was not earning this dividend largely because economic growth was being stunted by poor human capital, mainly an unhealthy population, many of whom were still afflicted by HIV/Aids and tuberculosis and low-quality education. The question, he said, was why South Africa did so poorly on social capital, education and health, given the very high levels of expenditure on those services. 'And the only answer that you can come up with is government inefficiency, the poor use of existing funds. And the question is, how do we escape the middle-income trap?' Cilliers asked. He said the African Futures team had modelled the effects of reforms in eight different sectors on South Africa's economic development. These were demographics and health; agriculture; education; manufacturing; infrastructure and 'leapfrogging' (i.e. bypassing older technologies); free trade; financial flows; and governance. They found that the largest return was from increased manufacturing, followed by freer trade and then better governance. So, for instance, all eight sectors combined would increase GDP per capita in 2043 by about 33%, from the $ 14,750 on the current path to $19,650. Of this, increased manufacturing would contribute about $930; freer trade (with the full implementation of the African Continental Free Trade Agreement) would contribute about $900; and better governance about $800. The combined impact of those eight reforms would decrease the percentage of South Africans living below the $6.85 a day poverty rate to 50% by 2043, down from 62% in 2023. This would represent 6.1 million fewer poor people than if the economy remained on its current path, though still leaving South Africa with a large poverty burden, Cilliers said. The African Futures team had compiled a laundry list of recommendations, starting with the need to strengthen governance and accountability through evidence-based policies, curtailing corruption and increasing accountability and inclusivity. Deputy Finance Minister Sarupen, of the DA, said much of Cilliers' analysis resonated with assessments by the Treasury's own economic policy team and the work being done by the government's Operation Vulindlela and by various parties in the GNU. He agreed that merely 60% growth in the size of the economy over the next two decades 'will not get us out of the trap that we're in' and that South Africa was in danger of falling from upper middle to lower middle income status. Structural constraints The low growth was driven by structural constraints, weak productivity, low investment in capital, higher inequality and an underperforming formal labour market. The Treasury was 'acutely aware of this'. But he said the government had to prioritise its reforms to tackle the problem because of the many competing demands of a massive amount of social ills and a very strong active civil society. He noted that South Africa had a system of fairly autonomous government ministries that made it harder to pursue coherent policies. Cilliers had identified manufacturing and freer trade as South Africa's best paths forward. Sarupen noted that cheap reliable energy with stability of pricing and supply underpinned manufacturing and industrialisation . 'And one of the drivers of our de-industrialisation has been excessive pricing and inefficiency of supply that really hurts manufacturing in South Africa,' he said. He noted that while prices in the rest of the economy had risen 196% since 2009, Eskom's prices had increased by 403%. So Eskom was driving inflation and deterring investment. Sarupen added that part of the reason GDP growth had been so low over the past year, despite an end to load shedding, was because companies had sunk so much money into load-shedding-proof themselves over the past few years that they had not spent enough on actual business expansion and employment. Sarupen also noted that free trade — another key reform advocated by Cilliers — 'requires you to be able to actually move goods and services cheaply and easily around, so the logistics reforms need a lot of depth and need to maximise competition. 'And so in the reform process that we're undergoing we need to be careful to not just bring the private sector into Transnet's monopoly structure. But rather how do we create competition, across multiple ports for example.' Likewise, South Africa had to maximise competition in railway freight lines. He agreed with Cilliers that crime had to be tackled much better as it was discouraging investment as well as acting as a deterrent to economic activity inside South Africa because, for example, citizens were fearful of using public transport to go to work. Rule of law He said the rule of law was the foundation of all other economic reforms, followed by macroeconomic stability, and then better education and health, and only after that global competitiveness and industrial masterplans. Sarupen did note though that South Africa's foundation of macroeconomic stability was 'probably one of our saving graces'. He also said that the government had to reduce debt. He noted that about 90% of South Africa's debt was denominated in rands, and about 75% of that was purchased by domestic markets. Rand debt was generally better than debt in foreign currency but the scale of government borrowing, about R300 to R400-billion a year, was crowding out the amount of capital that could be invested in business ventures and therefore growth. He added that the relatively high premium of about 11% on a 10-year South African Government Bond was discouraging businesses from investing in riskier ventures. He noted that many of the investments in this year's controversial national Budget were important — such as in public transport. He said, for example, that while a lower income worker in Vietnam earned a similar wage to a lower income worker in South Africa, the Vietnamese worker spent about 10% of his or her income on transport, the South African workers spent around 50%. 'People are going to work to earn money to be able to go to work,' he said. And this was diverting money away from workers buying goods and services, which was essential for economic growth. DM
