Answer to Question #204430 in Macroeconomics for nonjabulo

Question

Eskom is a well-known government-created monopoly in South Africa. briefly explain Eskom as a monopoly has impacted the South Africa economy, since 2009. ( 50 marks)

Answer 1

Solution:

Eskom as a monopoly, fully owned by the state has greatly impacted the South Africa economy in many ways since 2009. The company is the backbone of South Africa’s energy infrastructure, offering more than 90 percent of electricity to millions of consumers, including employing thousands of employees due to how vast the company is.

Since 2009, Eskom has been undergoing some serious hardships, from corruption issues, huge debts, incompetency to lack of efficiency in meeting its market demands due to lack of competition. The company has also resorted to load shedding resulting in numerous power blackouts that are affecting many businesses in the economy. The huge debts faced by the company are also affecting the economy due to budget deficits created, including throttling investment in South Africa’s failing power supplies.

The company has also been cutting jobs by sacking most of its employees in order to continue with operations, thus increasing the unemployment rate in the economy. The inability of the company to meet market demand with its low supply resulting in power shortages is affecting the production capacity of many businesses who rely on electricity to operate hence affecting their revenues and profits generation. The company resorted to increasing energy prices making electricity expensive for most consumers, forcing people to rely on other means of electricity.