Eskom woes drain juice from small businesses
If there is a constituency that has the most cause to toyi-toyi over service delivery in SA, it has to be the small business sector. In addition to suffering the hardships of a weak economy and stringent regulations, the sector has had a tough start to the year because of Eskom.
Research published this week indicates that very little is necessary to drive small businesses to the edge, with some of them reporting a 20% drop in revenue during load-shedding.
Earlier this year we joked about the many candle-lit dinners households had to endure. Social media was awash with memes mocking the power utility as Eskom restricted power supply across the country to cope with electricity-generation problems, and the country was hit by unprecedented and prolonged power cuts.
But, on the ground, the consequences of load-shedding were distressing for small businesses, as the Yoco Small Business Pulse survey for the first quarter of 2019 revealed this week.
Load-shedding is the primary obstacle to growth facing small-business owners, according to the quarterly gauge of confidence.
This is followed by the state of the economy and political uncertainty, especially ahead of SA’s general elections on Wednesday.
About 20% of the 3,984 business owners surveyed indicated they would consider cutting staff or throwing in the towel if future load-shedding was as severe as in the first quarter of this year.
These enterprises are mainly in the food, drink and hospitality, health, beauty and fitness, retail and professional services sectors.
The collapse of businesses in these sectors, where many semi- to medium-skilled workers can gain seasonal or temporary employment and in some cases permanent work, would be disastrous for the country’s paltry jobcreation scorecard.
And this in turn would be crippling for households that are already living on the breadline as they battle rising food, fuel and electricity prices.
Widespread failure of small businesses would signal a monumental failure of the government’s stated ambition to grow the smallbusiness sector, which it regards as the engine of the economy and a critical cog in SA’s longerterm growth and employment outlook.
So serious is the ANC (apparently) about improving the business climate for small enterprises that, in its election manifesto, it dedicates 19 points to the issue on a wish list of policies and practices it hopes to implement.
The interventions include dedicating direct procurement spending to small businesses. But none of the 19 points addresses the fundamental need to secure electricity.
In April the Reserve Bank forecast almost no growth in 2019 and more than 100,000 job losses if load-shedding persists this year.
Should this gloomy scenario materialise, the ANC’s election promise of boosting employment by 275,000 new jobs a year will become yet another broken promise.
About 20% said they might throw in the towel if load-shedding is as severe again