The cost of load-shedding in South Africa has exceeded R1.2-trillion — before counting the losses accumulated during the current financial year.
Some of this financial burden has been shouldered by the thousands of small businesses which are the backbone of the economy.
The real cost of load-shedding, however, goes beyond just rands and cents — the energy crisis continues to have profoundly negative effects on the overall morale and productivity levels of employees.
In a recent survey by market research firm BrandMapp, 45% of employers reported a noticeable decrease in productivity due to load-shedding.
Likewise, in the Q4 2022 SME Confidence Index conducted by Business Partners Limited, more than 39% of small business owners reported productivity levels had declined as a direct result of rolling blackouts.
These findings come as no surprise, given that power cuts abruptly disrupt workflow. Furthermore, businesses are drained of the added time needed to restart operations, retrieve lost data and constantly adjust working timetables to accommodate the load-shedding schedule.
The lower productivity results in small businesses generating reduced outputs. This in turn affects not only profitability but their ability to create new jobs.
A key area to consider is employee morale. BrandMapp’s study found that worker confidence and mood have taken a dive because of increased stress, financial pressure and job insecurity. Downsizing and salary reductions are looming threats for many small businesses that simply cannot afford to absorb load-shedding-related risks and costs.
Township and rural-based businesses are affected the most acutely.
According to the Insights Report conducted by Nedbank in partnership with the Township Entrepreneurs Alliance, about 65% of small businesses in townships are forced to cease operations during power cuts. And 66% have been forced to cut jobs due to significant revenue losses.
The disproportionate effect load-shedding has had on micro-enterprises and those in the informal sector is evidence of the pressing issue of economic inequality.
Many of the corner shops, tailors, shisanyamas and local fruit and vegetable sellers that are such an important part of the SMME landscape cannot afford expensive generators, inverters and alternative energy sources.
This has placed many local business owners under immense stress and “job shedding” has become a very real fear.
The need for access to funding for alternative energy systems is one of the key factors that prompted our team to set up an Energy Fund for SMEs — a mechanism to provide small businesses with loans for off-the-grid power supplies such as generators and inverters.
Going forward, local small businesses will have to adopt an agile mindset and approach to change. These are unprecedented times for the South African socioeconomic climate, with emerging challenges that present a whole new set of threats to business continuity and, by extension, employee wellbeing.
Small businesses can’t afford not to invest in contingency plans that can help them stay afloat during the energy crisis. Load-shedding will persist into the indefinite future, and small businesses need to find creative ways to maintain their employee value proposition by offering flexibility and structured arrangements to recover lost working hours. Now is also the ideal time to invest in health and wellbeing — providing support for employees and building positive team culture should be regarded as a business imperative.
• Lang is chief investment officer at SME financier Business Partners Limited
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