- South Africa’s energy crisis has shifted from reliability to affordability, with 79% of citizens now relying on prepaid electricity to manage costs.
- The government’s proposed VAT hike and the Nersa-approved electricity tariff increase have further strained households, pushing many to cut back on essentials.
South Africa’s energy crisis has shifted focus from reliability to affordability. As the country tackles load shedding, nearly 79% of citizens now rely on prepaid electricity, only loading what they can afford. This shift comes amidst escalating challenges, with many South Africans adjusting to a new reality where energy costs push household budgets to the brink.
The latest Debt Rescue survey highlights the growing struggle to meet the rising cost of electricity. According to Debt Rescue CEO Neil Roets, the findings paint a bleak picture, revealing that 86% of respondents could no longer afford electricity costs before the recent tariff increase. With many already cutting back on essentials like groceries and transport to keep the lights on, the future looks even more uncertain.
Neil Roets said, “Most households already do everything possible to minimise electricity costs, yet they still fall short. The 12.7% tariff increase that came into effect on April 1, 2025, could push many families over the edge.”
The National Energy Regulator of South Africa (Nersa) approved the tariff increase when citizens grappled with high food prices and sustained interest rates. Roets criticised the decision, arguing it shows how out of touch both Eskom and Nersa are with South Africans’ everyday realities.
This will make essentials even less affordable for the average consumer and could make the hardships of recent months feel mild by comparison,” Roets said. “With more than 80% of indigent households not listed on municipal indigent registers, the government must act quickly to protect the most vulnerable.”
Energy expert Patrick Narbel highlighted the burden on residential consumers, noting that the home power tariff’s fixed fee had risen nearly 90% while the variable fee system had been scrapped. “Residential users will now see a roughly 20% increase even if they consume 600 units or less a month,” Narbel said.
At the same time, economic instability continues to put pressure on the South African rand, with international trade tensions and fears over the potential collapse of the Government of National Unity (GNU) fuelling uncertainty.
According to the Bureau of Economic Research (BER), consumer confidence has plunged to its lowest level since 2023, putting the country’s fragile economic recovery at risk. Momentum Investments chief economist Sanisha Packirisamy linked the worsening sentiment to the government’s proposed two-point VAT hike, first outlined in the February Budget.
Despite political debate within the GNU, the National Treasury introduced the Rates and Monetary Amounts and Amendment of Revenue Laws Bill on April 4, 2025. The bill proposes raising VAT from 15% to 15.5% on May 1, 2025 and 16% on April 1, 2026.
Roets warned that the VAT increase would be catastrophic for already stretched consumers. “This could be the straw that breaks the camel’s back,” he said. “Food prices are escalating, interest rates have remained high since 2021, and electricity and water prices are fast becoming unaffordable.”
He added that the VAT hike would cause a surge in living costs, reduce disposable income, and force many households into debt. Roets urged those struggling financially to seek help from registered debt counsellors. “Debt counselling has helped thousands break free from over-indebtedness. It’s a practical lifeline for many in these tough times,” he said.