Eskom Is ‘Threat' to South Africa Investment Strategy, Nene Says

(Bloomberg) -- South Africa’s cash-strapped power utility is “a threat” to the nation’s investment strategy, Finance Minister Nhlanhla Nene said.

The government of the continent’s most-industrialized economy plans to offer incentives to lure $100 billion in investment to the country, President Cyril Ramaphosa said in April. That’s an attempt to bolster economic growth, which hasn’t exceeded 2 percent annually since 2013. Goldman Sachs Group Inc. said in September that Eskom Holdings SOC Ltd., which has more than 62 billion rand ($4.5 billion) due in principal debt payments in the next five years, was the biggest single risk to the economy.

The structure of the economy is limiting the country’s growth potential, Nene told reporters in Johannesburg Thursday. Better regional integration among Southern African Development Community nations is critical to boost investment, he said.

South Africa’s power grid was constrained after protesters blockaded roads and attacked staff after wage negotiations between Eskom and its workers broke down earlier this month. The utility said it couldn’t offer any pay increase due to poor finances. That forced Eskom to introduce rolling blackouts for the first time since 2015.

©2018 Bloomberg L.P.

Bloomberg
Stay Updated With Business News News On BloombergQuint