The Franchise Association of South Africa (FASA) has warned that the country’s businesses should prepare themselves for the return of load-shedding.
The group said it has learnt of a risk of power outages returning in late August or September, which will once again have a devastating effect on small businesses.
“Just two days ago one of the most well known business-to-business brands in South Africa stated that the brand lost no less than R8 million in sales pertaining to just one sector of their business due to load shedding in March this year,” said Vera Valasis, executive director of FASA.
She added that renewed load-shedding could be the proverbial ‘straw that breaks the camel’s back’.
“Further loss of economic activity due to renewed load shedding is unaffordable and may push many small franchises to the brink of bankruptcy,” she said.
“The increase in labour costs, electricity, supply of goods, rentals, petrol and many other costs have more than doubled in the last ten years. However, sales growth simply fell far short of having doubled over the same period which puts incredible pressure on profitability.”
FASA’s concerns echo those of Intellidex analyst Peter Attard Montalto, who has warned of a ‘very strong risk’ of load-shedding returning to South Africa in August or September.
Montalto said that Eskom is facing a number of operational issues which are yet to be fixed.
“There’s always this gloss that’s put on everything and that’s what we don’t need. We want transparency about asset quality, about production quality (so) that we know what the risks are.
“There is actually a very strong risk of load-shedding coming up at the end of August and into the start of September, so it will be interesting to see if they recognise that,”Attard Montalto said.
“That risk has been talked about a lot amongst large users of electricity users in South Africa, and we should remember that the operational issues have not been fixed but have been put to bed during the winter months.
“They will come back as we move towards summer,” he said.