Johannesburg - While Eskom dismissed reports it had announced permanent stage 2 and 3 load shedding in South Africa, it is of little comfort for many in small businesses.
Reports emanating from a media briefing on the current system challenges faced by Eskom suggested South Africans would have to resign themselves to living with stage 2 load shedding for the next two years.
Speaking to BUSINESSTECH, Eskom spokesperson Sikonathi Mantshantsha said the media reports were “inaccurate”.
“Eskom has considered implementing permanent Stage 2 and 3 load shedding to give more predictability to the public. As (chief executive) Andrè de Ruyter stated during the session, this is not possible as it would not guarantee that load shedding would remain at the lower levels.
“(Headlines implying) there will be permanent stage 2 and 3 load shedding (are) inaccurate,” he said.
While this may been an attempt to allay fears, it should be noted that in 2023 the country has experienced load shedding every day so far. Stages have changed and adjusted by the breakdown of generating units.
According to SME South Africa, it’s estimated load-shedding costs South Africa over R4bn a day. This is devastating for small businesses.
There are various ways in which load shedding affects small businesses. It is inconsequential what the primary function of the business is or the industry in which it operates, load shedding almost certainly has an effect on the day-to-day running of the business.
Here are some of the ways that load shedding affects small businesses and ultimately leads to the failure of businesses.
Loss of productivity
An obvious result of how load shedding affects all businesses is their inability to produce products and render services. Lack of electricity brings productivity to a grinding halt, particularly for those businesses that do not have backup power systems.
Mohato Mokoka owns Mito & Ice, a business that supplies ice to various businesses in Soweto and the greater Johannesburg metro. Due to the persistent power cuts, Mokoka has been unable to keep up with his production targets and his business now faces ruin.
“In 2017, when we were starting out, we utilised a 450kg ice maker, which gives us 110 3kg ice packs in a period of 24 hours. In 2020, with stage 1 and stage 2, we were able to produce about 90 bags.”
“Stage 6 means that we have about 10 hours of production, which puts us at 40% capacity. So what that means is that what I would normally produce in one day now takes me a week to do. So what that translates to is 10 bags of ice a day,” said Mokoka.
His inability to meet his supply demands has resulted in the business losing out on deals and some agreements being cancelled.
Increased costs due to alternative power supplies
Many small businesses resort to using alternative power supplies to help them mitigate the effects of load shedding. This includes equipment like generators, power banks and solar panels. These extra power sources can be expensive as installation and the maintenance thereof is an additional cost to the business affecting profitability.
Security issues
The security risk of businesses is increased during power outages. Security alarms and security cameras won’t work if they are not connected to a backup power source.
Insurer Dialdirect said it had compared the number of burglary incidents and the number of vehicle accidents ,when there was no load shedding to when there were power outages from July 2019 to May 2022, and found that during the week load shedding resulted in a 3.2% increase in burglaries.
Damage to electronics
When the power consciously goes on and off throughout the day it results in power surges. These can cause major damage to businesses' electrical and manufacturing equipment, and computers. Damaged electronics can result in the business not being able to operate. Businesses are therefore forced to take out additional insurance to ensure that they are sufficiently covered in the event of damage to their electronics.
Load shedding or blackouts are not an insurable risk under an insurance contract, however, insurers do offer cover for damage to sensitive electronic items caused by power surges.
Insurer Santam reported a significant increase of about 60% in claims for damage to sensitive electronic items due to power surges across their insurance and commercial insurance portfolios, in its interim results released on 1 September 2022.
Small businesses face a bleak future if the status quo remains. Load shedding has resulted in the closing of many businesses and many more are likely to close down if there isn’t a drastic change in the reliability of the power supply in the coming months.
vusi.adonis@inl.co.za
IOL Business