The impact of load shedding on the economic growth of South Africa

Abstract

Load shedding is a process whereby the demand for electricity exceeds its supply which is experienced by power cuts or black outs. With an increasing demand for electricity consumption, supply seems to be limited, the study therefore seeks to identify the cause of load shedding and its impact towards economic growth. Eskom being the sole provider of electricity in South Africa is in most cases required to interrupt the supply of electricity in selected areas in order to undertake maintenance. The study analyses and identifies the significance of load shedding towards the economic growth of South Africa for the period of 1984 to 2014 with respect to the consumption of electricity. Using Engle Granger Cointegration test, the study aims to determine the relationship between economic growth and electricity consumption, Granger Causality test is performed to identify if one time series can be used to explain each other in the long run. The study finds electricity consumption to be significant towards economic growth, which indicates that load shedding has a negative impact towards economic growth.