South African SME’s Struggle to Bear the Load

Loadshedding in South Africa continues to significantly impact on businesses across various sectors.


Current State of Loadshedding in South Africa

Loadshedding has become a daily reality in South Africa, severely disrupting business operations. The constant power outages have forced businesses to invest in alternative power sources, such as solar panels, UPS systems, or diesel generators, to maintain standard operating levels. This has increased operational costs and made it challenging for businesses to plan and make strategic decisions.


Effects of Loadshedding on Businesses

  • Loss of Production:

Many businesses rely on electricity for machinery, technology, and lighting. Power outages disrupt operations and prevent companies from reaching their production targets.

  • Loss of Profit:

Reduced production leads to a loss of profit. Businesses also incur additional costs, such as increased employee overtime and investments in backup power solutions.

  • Theft and Burglary:

Small businesses are particularly vulnerable during loadshedding as security systems, such as alarms and CCTV systems become ineffective. This increases the risk of theft and burglary.

  • Damage to Electronics:

Power surges resulting from loadshedding can damage electronic components, adding to the financial burden of businesses.


Ways Load Shedding Impacts on Small Businesses

  • Failed Wi-Fi:

Internet connectivity, essential for modern businesses, is disrupted, affecting communication, online transactions, and access to digital tools.

  • Poor Staff Morale:

Frequent power outages lower staff morale, impacting on productivity, retention, and inter-office communication.

  • Faulty ATMs:

Retail and restaurant sectors suffer when ATMs stop working, leading to reduced sales and customer dissatisfaction.

  • Loss of Planning

Unplanned blackouts make it difficult for businesses to plan accurately, affecting staff and client management.

  • Inability to Trade:

Without electricity, many stores and restaurants are forced to close, resulting in lost sales and increased operational costs.

  • Broken Equipment:

Power surges can damage equipment, leading to costly repairs and replacements.

  • Bad Traffic:

Non-functional traffic lights cause delays and missed appointments, affecting productivity and logistics.

  • Compromised Security:

Power outages compromise security systems, increasing the risk of theft and necessitating higher insurance coverage.


Possible Solutions

Despite the challenges, there are steps businesses can take to mitigate the impact of load shedding.

  • Stay Informed:

Keeping up with loadshedding schedules helps with planning operations accordingly.

  • Invest in Alternative Energy Solutions:

UPS systems, backup generators, or solar PV systems can provide a reliable power supply during outages.

  • Backup Data:

Regularly backing up essential data ensures business continuity during power outages.

  • Diversify Energy Sources:

Combining multiple energy solutions, such as solar panels and backup generators, can offer a more sustainable power supply.


Tax Benefits of Renewable Energy

The South African government has introduced a R9 billion tax relief programme to support businesses to mitigate the impact of load shedding and transitioning to clean energy. The expanded renewable energy incentive allows businesses to claim a 125% deduction in the first year for all renewable energy projects, significantly reducing corporate income tax liability and easing the financial burden of investing in clean energy solutions.