Energy Minister Dipuo Peters said last week that there were indications South African households would install 1 million new solar water heaters "long before" the target date in five years' time.
Let's hope she's right. After all, Eskom is warning that power supply will become a serious concern again from 2011. Without interventions to reduce demand, Eskom may have to burn its expensive diesel-powered open-cycle gas turbines or, as a last resort, turn to load shedding.
Eskom's solar water heater incentive programme received a vital shot in the arm earlier this year when the power utility announced it would substantially raise the rebate offered to consumers for installing solar water heaters. There have since been anecdotal reports of ramped-up sales, following a slow start when the programme was launched in 2008.
More recently, the second industrial policy action plan (Ipap2) has given much attention to solar water heaters. A new subsidy programme has been promised (it is unclear whether this will replace the Eskom scheme), while the Department of Trade and Industry plans to make it compulsory for solar water heaters to be installed in new buildings, during home upgrades and in the replacement of existing geysers. The plan also aims to leverage financing and incentives for manufacturing and installation capacity.
Ipap2 suggests there are marketing opportunities for manufacturers in the rest of Africa, so local producers won't be forever reliant on the short-term increase in South African demand for solar water heaters.
Nevertheless, there is concern about the future of the industry once demand-side management programmes come to an end, with some players hoping the government will guarantee further funds for widening the rollout, or at least announce measures to offset the cost of solar water installation against personal income tax.
Tax credits are one of the fiscal incentives used in the US to encourage a switch to solar geysers.
But for this year at least, South Africa will continue to rely on imported solar water heaters. Significant local production is expected to kick off only next year.
Building materials
The building materials market is telling a confusing, but interesting, story about what happened in this sector in the second half of last year.
First, the fortunes of building materials retailer Cashbuild, which operates primarily at the lower end of the market, seem to have turned as it recorded a 26 percent dip in profit yesterday.
This follows the group's claims last year that its market would continue to grow as it remains supported by the government's drive to increase home ownership among the poor.
While this may be the case, the people in Cashbuild's target market are possibly feeling more vulnerable in terms of unemployment than to those at the middle to upper end of the market.
One analyst noted that the sharp decline that hit the middle residential market was over, with this market now set for recovery. The lower end of the market, on the other hand, has had to contend with the impact of retrenchments.
While the results of building materials group Iliad Africa, which caters to the middle to upper end, showed a 69.5 percent decrease in earnings, analysts believe the reason Builders Warehouse did so well in the second half of last year (revenue up 8.9 percent) was because it catered to the upper end of the market - a market thought to have been hard hit by the recession.
Then again, interest rates came down and presumably so did consumers' debt levels, which may have fuelled the desire to refurbish that old dining room.
But last week the Dawn group, which makes sanitaryware, plumbing and kitchen products, reported that its revenue declined by 16 percent toward the end of last year, and negative consumer sentiment in the renovations and residential market hurt the earnings of sanitaryware and tiling manufacturer Ceramic Industries.
Both these companies cater to the middle of the market.
Salaries and jobs
South Africans, at least those who are employed, seem to be more fortunate than their counterparts elsewhere in the world when it comes to salary increases.
According to the Grant Thornton 2010 International Business Report, privately owned businesses in South Africa recorded more positive pay hikes than their international counterparts, with 88 percent of business owners saying they would give inflation-related or even greater increases this year. Only 8 percent of the private firms surveyed said they would offer no real pay rise or cut pay. Globally 51 percent of private firms indicated they plan to increase pay by the rate of inflation or above this year and 36 percent plan to offer no pay rise or even reduce pay.
Pay rises are most certainly welcome.
But more important than salary increases is creating jobs. This is a tough task for businesses that are uncertain whether the global recession is truly behind us, but it is an important task because without more people employed social instability will persist and the effects of the recession will be felt for many years to come.
As the Budget Review says, unemployment is not just an economic problem: it is also about human development, dignity and social cohesion.
In South Africa 870 000 people lost their jobs last year, meaning that if each person has four dependants, almost 3.5 million people have been affected. And that does not include the almost 1.7 million discouraged work seekers.
So if salary increases were tempered, could more people be employed? Possibly. But it is unlikely that many people would give up on the prospect of more money in their own pocket on the chance that other people could at least put food on the table.
Edited by Peter DeIonno. With contributions by Florence de Vries, Ingi Salgado and Samantha Enslin-Payne.
Article Source: Business Report
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