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IPPs to power a new wave of economic opportunity

By Dylan Baxter

Government’s decision to allow municipalities to purchase electricity directly from independent power producers (IPP) is one of the most positive developments to come out 2020. It is not only going to help create a more stable and sustainable power supply in the country, but is already driving new skills, jobs and economic opportunity in rural areas across the country.

In addition to the supply of clean energy, the Renewable Energy Independent Power Producer Procurement (REIPPP) programme includes significant job creation, social upliftment and economic transformation targets, primarily through broader economic ownership. IPPs cannot just come into an area, put up a solar or wind farm, and reap the benefits. They have to make a real difference to the communities around their operations. There needs to be a shift from a short-term project mindset to a more permanent one. IPP installations, after all, are not short-term projects.

We are already seeing the benefits of this approach in rural communities in the Northern Cape and the Eastern Cape, where local people are providing basic services like maintenance and catering to IPPs. This will begin to move up the value chain towards more significant and strategic supply. Organisations such as REISA – the owner of the Kathu solar energy field – are investing heavily in education, including early childhood development (ECD) centres and school infrastructure, as well as social infrastructure.

The next step is to help create sustainable small businesses that can tap into the various IPP projects to supply more meaningful products and services. In fact, rural areas are literally hotbeds of enterprise and supplier development (ESD) programmes just starting to happen.

The potential is certainly there: in fact, the general level of skills in rural and peri-urban areas is surprisingly high, with a level of entrepreneurial mindset you don’t often find in bigger urban areas.

Many companies come into rural areas to carry out projects thinking they have to bring in their own skills and equipment. That is not necessarily the case. If they take the time to speak to the local community, they would find great skills and businesses that could benefit from ESD programmes – they just happen to be operating very informally. There is a huge opportunity in our rural areas for big businesses to make a difference and bring entire communities into the formal economy in the process.

Generally, what micro-enterprises in rural areas need are startup capital, bridging finance, business coaching and mentoring, and leadership development. But small businesses cannot thrive and grow in a vacuum. When companies engage in meaningful ESD, which positively addresses local business skills gaps and needs, they are empowering communities to be economically independent and take ownership of their future.

Some industries, like mining and renewable energy, have recognised this and are making real progress – both in terms of empowerment and their own ESD programmes. The challenge is to follow the lead of IPPs in powering an entire new wave of growth in South Africa.

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