FTI insight: South African economy sees losses after years of power shortfalls
South Africa has recently seen fewer episodes of scheduled power outages, known as load-shedding. But while the country navigated the high-demand winter months without major blackouts, experts warn that this stability remains fragile.
Analysis from FTI Consulting, a leading global management consulting firm, highlights that while the national power system entered 2026 in a more stable state, the economic damage from previous years continues to hinder long-term growth. In fact, it has directly impacted the national economy.
Various studies have attempted to find the real impact load-shedding has had on the South African economy. One study found that the outages could be shedding up to 4% of real GDP growth and that the 2022 growth rate of 1.91% could have been as high as 6% without the ongoing problem of load-shedding.
The multifaceted impact of outages
The insight from FTI Consulting indicates that power instability has functioned as a primary driver of economic stagnation by limiting the productivity of both workers and firms. This constraint fueled a cycle of slowing activity, which in turn reduced employment, tax revenue, and critical investment.
Although South Africa made it through the recent winter period without significant blackouts, experts caution that the system’s stability remains a matter of high attention. The recent lack of outages is largely due to expensive emergency measures and a massive increase in private solar power adoption.
Relying on electricity imports and burning costly diesel fuels is considered an unsustainable long-term strategy for the country. FTI Consulting’s findings suggest that without these energy constraints, the economy could have expanded significantly more than the actual recorded figures.
Beyond the visible impact on growth, load-shedding imposes heavy hidden costs that disproportionately affect small businesses and poorer communities. These groups often lack the resources to invest in backup power, leaving them vulnerable to safety risks and the loss of perishable goods.
Such disruptions also lead to lost teaching time in schools and compromised medical services, deepening social inequalities. Protecting against a return to these crisis levels is viewed as an essential economic imperative for the nation’s future.
Renewables and diversified sources
To achieve genuine energy security, the nation requires urgent and sustained investment in new and diversified power generation. Moving away from a precarious reliance on temporary fixes is necessary to support inclusive socio-economic growth.
For investors and businesses, FTI Consulting suggests that evaluating energy risk is now a critical part of strategic planning. Diversifying energy sources and supporting the transition to reliable capacity can help mitigate exposure to any future supply disruptions.
“While South Africa has avoided load-shedding during the winter of 2025, real energy security remains elusive,” said Albertus van Niekerk, senior director at FTI Consulting. “Diversifying energy sources and supporting the transition to renewable generation capacity, whether through direct investment or operational adaptation, can help mitigate exposure to future supply disruptions while contributing to a more stable economic environment.”
