A survey of small businesses taken by technology firm Yoco, reveals how costly the most recent round of load-shedding was for SMEs in South Africa.
State power utility Eskom on Monday said it has not implemented load-shedding for 36 consecutive days, following a prolonged period of forced power cuts across the country.
The Yoco Small Business Pulse Score for the first quarter of 2019 showed a significant softening in the outlook of South Africa’s small business community.
Yoco said that the drop in the Pulse Score reflected an increasingly challenging business environment with frequent stage 4 load-shedding occurring during the quarter and the upcoming elections causing uncertainty among business owners.
On a scale from -100 to 100, with 0 being completely neutral, the Pulse Score for Q1 2019 was 27, a five point drop from the 32 of Q4 2018.
Load shedding: the facts
The Small Business Pulse revealed that load-shedding has become the number one concern for the country’s small businesses.
The impact of load-shedding has been two-fold: in the first instance, it has directly impacted revenue through inability to trade and/or manufacture; and secondly it has increased the cost of doing business, stretching further already tight margins.
Yoco highlighted some of the key findings:
- 85% of business owners state that load-shedding has reduced revenue;
- 20% say that if load-shedding continues, they will have to consider either reducing their staffing levels or closing their businesses;
- For 60%, the cost of doing business has gone up, as expenditure on generators, UPS devices, and switching to gas, for example, has been critical to “keeping the lights on”;
- A longer-term impact is predicted on increased prices to customers and reduced profitability
“Of the businesses surveyed, almost half lost 20% of their revenue or more during the period of load-shedding in March,” the group said. “When considering that the majority of our small businesses survive on a turnover of less than R1 million annually, such a knock is a significant risk to business continuity should load-shedding continue at similar levels in the future.”
Eskom’s chief operating officer Jan Oberholzer said the power utility remains fully committed to working diligently over the coming months to recover the power system through the implementation of the Generation 9-Point Plan which sets out to improve the energy availability..
Earlier in the month, Eskom and the Department of Public Enterprises (DPE) unveiled the Winter Plan aimed at avoiding load shedding or at least limiting it to Stage 1 this winter.
“As we continue to perform essential plant maintenance, while carefully balancing the country’s energy requirements with the available capacity, the risk that we may implement load shedding over the next six to 12 months remains. However, this will only be done as a last resort,” said Oberholzer.
Eskom said it has seen improvement in plant performance and the recovery of diesel tank levels at open-cycle gas turbines (OCGTs) as well as better management of dam levels at pumped-storage schemes.
It said that there has also been a recovery of supply from one of the two Cahora Bassa power lines, which is now contributing up to 900 MW to the grid.
In addition, work on the new power stations (Kusile and Medupi) continues with Kusile Unit 3 successfully synchronised to the national grid for the first time on 14 April 2019.
“It has already achieved 400 MW but it must be noted that capability tests and acceptance testing will continue on this unit for the next few months,” said Oberholzer.