IIG News

Is the Energy Crisis going to Hamper Employment in the Financial Services Sector?

With the last few weeks left in winter, we push ahead with our IIG Insights sessions during this first week in August. A warm welcome was facilitated by IIG Council member within the Education Portfolio, Linroy Peters.


We were then introduced to our loyal and supportive partner and GIFS moderator, Dr. Kershen Pillay. Dr. Pillay certainly needs no introduction, but to those new on the scene, he is the CEO of the Graduate Institute of Financial Sciences (GIFS).

Dr. Kershen Pillaywas the TYI Top 100 Young African Innovator of 2018, National Business Finalist in 2017 and Finalist in the Entrepreneur of the Year and Young Achiever categories.

Kershen reminded everyone that we are about 123 days into loadshedding and the end of June this year, we would have reached a nearly permanent loadshedding status since September 2022. The impact of our energy crisis has far reaching consequences for example, people have developed gastrointestinal issues due to eating rotten food as a result of compromised cold chains and farmers cry over hundreds of litres of spoiled milk. It is very evident that the energy crisis is impacting on various levels and physically making us sick. However, the crucial question to be asked: is your job at risk? The energy crisis in South Africa has been a significant concern and it is essential to understand how it impacts the political sector.

The first speaker, Prof. Bheki Mngomezulu was then introduced. Prof. Mngomezulu is a Full Professor of Political Science at the University of the Western Cape where he is also the Deputy Dean of Research in the Economic and Management Sciences Faculty. He holds seven academic degrees and a Senior Secondary Teachers Diploma. Five of his degrees were obtained at three South African universities while his third Master’s and a PhD were obtained at Rice University in Texas, USA. He has published six books, several book chapters and many journal articles. Prof. Mngomezulu has also presented over 100 academic papers nationally and internationally and has been a Visiting Professor in Romania and Sweden. His research interests cut across various academic disciplines and has supervised over fifty postgraduate students across disciplines and serves as external examiner for over ten (10) universities. He is a regular political analyst for various TV stations, radio, and newspapers.

Thereafter, the 2nd member of the panel, Andy Searle was introduced.

Andy is the CEO of the industry body, BPESA, for the Global Business Services in South Africa. A not-for-profit organisation mandated to market the country and sector to target global source markets, attract investment, grow export revenues, facilitate a skills ecosystem conducive to growth at scale and one that develops 4IR skills and workplace skills for the future, create youth jobs, champion impact sourcing as a practice, and to drive social and economic transformation at a sector level.

So, how has the energy crisis impacted the work of organisations? Surprisingly, the outsourcing portion of employment has grown in double-digit figures well over 6 billion USD. Unfortunately, the domestic portion in SA is not growing as its linked to the value chain of the local market. Export centres have been growing quite rapidly showing a growth of 23% since 2018. SA has been a top global outsourcing market for the United States and Australia. There is a potential of creating almost 400K jobs in the future. One of the greatest obstacles is hyper scaling that sector and reaching young people who can be trained. That’s when loadshedding is becoming an issue as it’s hindering growth. Employment opportunities are coming to the correct areas. SA and Africa have a large youth population, but the energy crisis is placing a ceiling on that growth.

What are SA’s key selling points? 27% of that export market is made up of financial services. SA has a track record of world class delivery, there is an abundance of young people with proven potential, they can perform an entry level job with excellence and take ownership of services they’re fulfilling. We should take pride that South Africans can perform at the top end of service delivery. Our education system is still highly functional despite areas of improvement. We have also demonstrated operational resilience during Covid while other countries failed in that area. There is also a slicker investment environment. The quality of our services matched with 60-70% of the cost saving. Resilience seems to be part of South Africa’s DNA.

Prof. Bheki agreed with Andy’s points before continuing with his insights. He emphasized that although Apartheid was a terrible system, it was a well-oiled machine. It trained everyone to be resilient, and people learnt to survive under very controversial circumstances. SA is also very patient, we don’t have civil wars, we seem to be very tolerant which allows for managing the hardships.

Andy then added that the financial services sector seems to be showing remarkable resilience. What is the forecast for the sector if there is no long-term solution in place?

  • Combination of high growth in selected sectors – export market
  • Insurance stimulus people wanting to secure their assets/health.
  • Electricity supply is the most stunting factor.

Prof. Bheki then asked how do we stimulate the economy and job creation. We have a lack of honesty from the government and Eskom management. Suggesting that the coal is wet is an insult to the nation and is a bizarre reason. There is no viable reason for the energy crisis apart from greed. We need a government that is prepared to listen and not an institute that appoints Ministers without clear cut roles. We need to draw lessons from success stories and look towards other countries and consider adopting a meritocracy when appointing people. We should follow the example of Singapore which went from a 3rd class to a 1st class country.

What have we learned from ordinary citizens who show growing concerns about the size of our cabinet. We should trim the government and use the monies saved to address the energy crisis. Prof. Bheki also strongly advocated the removal of non-performing ministers. People are trying hard to meet the government halfway. The government in turn should subsidize people who buy generators, diesel, solar etc. Municipalities still owe Eskom large sums of monies. Ministerial hand-outs need to be addressed as they are out of touch with the problem. More corporate involvement is required. We must save the country without destroying the infrastructure.

Andy then raised the point that many South Africans who can seem to be emigrating. How is it that 1st world countries still look to SA to import expertise? The financial services sector plays a crucial role in restricting and developing the economy to stimulate business growth. The Financial sector is robust and sets a good std of quality of service and conduct. Access to finance is key to unlocking the potential of country. Business leadership in SA must rally together unlock the talent potential of Africa. There needs to be access to affordable financial products for micro businesses.

The question was raised as to whether pricing is the biggest factor to outsource in SA, is it just access to cheap labour? This is a resounding No, as there are other countries that are cheaper. South Africa is unparalleled in human connectedness compared to other delivery destinations, plus the service is top quality. We need to be smarter as to how we future-proof South Africa. Inspite of the energy crisis, there are growth possibilities.

Prof. Bheki also concluded with a view from a political lens and when asked if there is hope for SA and can it be a global leader? The answer was a resounding “…Absolutely it can.” There are many political parties with new up and coming leaders so it’s inevitable that things will change. If people continuously don’t deliver, they will lose their positions.

Dr. Kershen then in conclusion emphasized that, we be cognizant that the energy crisis in South Africa poses significant challenges to the financial services sector. We are poised to lead the SA GDP and must implement proactive strategies.

He then thanked the IIG and the respective speakers and closed the session.

Article written by: Asiya Swaleh