Businesses in South Africa warn of riots, looting and collapse

 ·24 Jan 2023

Small businesses in South Africa say they are taking a severe beating from load shedding, sitting with no support from the government.

They are also warning that tensions in the retail sector are high, with sporadic incidents of rioting and looting that are threatening to escalate nationally.

This is being felt across several sectors covered by the Franchise Association of South Africa (FASA), but especially in the retail sector, the group said.

“The retail sector has borne the brunt of the crisis in South Africa, in particular with the aftermath brought about by the (2021) riots and floods,” FASA said.

“The sector has yet to see any significant steps taken by the government to assist those who have had to rebuild and restart from scratch with no assistance, and reports from members in the sector indicate that, if steps are not taken immediately and urgently, rioting and looting is going to resume and escalate nationally.

They are already seeing this happening sporadically,” it said.

FASA said that the franchise sector, which is made up of small businesses and entrepreneurs alongside larger groups, is suffering debilitating losses as a result of the load-shedding crisis.

“Franchising, which contributes around 14% to the country’s GDP, represents businesses across fourteen different sectors, and FASA has done everything to ensure that its members comply with the government’s guidelines and continue to contribute to keeping the economy going,” it said.

“The inadequacy of the response from the authorities in providing the very basic services that can enable businesses to operate and thrive is untenable and FASA calls on the government to act with the urgency it requires to solve the energy crisis and prevent further anarchy and the collapse of the economy.”

The association echoed warnings from the agricultural sector that food security is coming under threat in the country, which is putting pressure on manufacturers, food growers and meat/poultry suppliers who are reporting massive wastage as produce goes bad due to incessant load-shedding.

“This disruption in the value chain is critical to feeding the nation and cannot be ignored. The knock-on effect of producers not being able to get produce to market, coupled with retailers forced to close operations during load-shedding or simply not being able to afford the cost of alternate power, will impact all communities across the country,” FASA said.

The destruction, not only to retailers and property but to the very infrastructure and basic services – from the collapse of essential services, and inadequate policing to water security – is cause for alarm, it said.

Franchises in the fast food/restaurant sector – which already took severe strain during the pandemic – are being dealt another devastating blow with up to 10 hours a day of load shedding that is further debilitating the sector.

“Even with generators, restaurants remain unable to generate enough income during the hours of load shedding and end up with no customers and expensive wastages. But it is also not as simple as flipping a switch to diesel or petrol power – those that have generators often lose thousands of rands as they have to spend more on extra supplementary expenses like fuel, labour and maintenance with each load shedding. Equipment also gets damaged because of the power surges – all impacting the bottom line,” FASA said.

For the broader franchise sectors – from Automotive Products & Services, Building Office & Home Services, Business to Business, Health & Beauty, Education & Training to Real Estate – the bottom line is that the load shedding and power crisis in South Africa is going to constrain economic growth and increase costs across the board.

FASA said that the government has barely acknowledged the extent of the problem and has failed to put any realistic and timeous solutions into action, leaving the sector facing irreversible collapse.

“We don’t believe proposed cabinet and minister reshuffles will solve the electricity woes, and Eskom is starting to feel beyond hope, with no tangible solutions to bring enough independent power supply to the national grid,” it said.

“It is imperative that government tackle this problem immediately, to prevent further loss of business and employment.”

Read: Expect near-permanent load shedding for the next 2 years: Eskom

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