We now have a better idea of how much load shedding cost the economy

As load shedding returned to South Africa in 2019, economists and experts pegged the impact on the economy at R2 billion for every day that stage 2 was implemented.

However, new data from research and analysis group, Intellidex, shows that the true impact may not be as harsh as initially thought.

According to Intellidex, the R1 billion per stage per day number was derived from Nersa and Eskom’s own figures, where they presented a base estimate impact on the economy at R75/kwh.

With several sectors now reporting in on GDP data, a more reflective picture is emerging, with the full scale of load shedding’s impact expected to be presented with Q1 GDP data at the end of the month.

“We can account for around R300 million/stage/day so far – but this is only from a small number of sectors,” Intellidex said. “Q1 GDP may say up to around R500 million/stage/day, but it is unlikely to be more.”

The lower impact on GDP from load shedding is good news for the economy, and shows that the broad narrative of businesses doing “okay” through load shedding was correct – but it could also lead to complacency, the group warned.

And while the bigger picture impact may not be as severe as first thought, the impact on individual businesses has definitely been felt.

Impact on businesses

A recent survey of small businesses taken by technology firm Yoco revealed how costly the most recent round of load-shedding was for SMEs in South Africa.

“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,” it said.

The responses revealed that load-shedding has become the number one concern for the country’s small businesses, with the impact of rolling blackouts being 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 already tight margins even further.

According to Yoco, 85% of business owners stated that load-shedding has reduced revenue, while 20% said 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” – and a longer-term impact is predicted on increased prices to customers and reduced profitability.

Load shedding 

South Africa has avoided load shedding since the start of April, with only a few days where Eskom had to warn of high risk due to constrained systems.

On 8 April, the power utility announced its winter plan to take the country through the cold weather of May and June, limiting breakdowns, and addressing maintenance backlogs.

The plan followed weeks of rolling blackouts, where households and businesses sat without power for several hours a day as stage 4 load shedding hit.

According to Intellidex, load shedding still remains a risk, and the coming months may be unpredictable, particularly as the weather gets colder.

“The system is still being run at, in effect, a zero safety margin, as can be seen from its system updates. As a result, it is luck and the weather which will determine whether the system is pushed over the edge or not,” the group said.


Read: Here’s how much money small businesses in South Africa say they lost because of load shedding

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We now have a better idea of how much load shedding cost the economy