A saddening message from a small local enterprise offers a stark reminder that many small businesses simply cannot cope with higher stages of loadshedding.
A few days ago, the Sourloaf Bakery in Knysna, which was started in a residential kitchen in Brenton-on-Sea during the Covid-19 lockdown, posted this notice to its clients:
Good Morning Sourdough Friends. The Sourloaf Bakery had to stop our wholesale decision due to this impossible load-shedding levels on the mass number of loaves we produce. We need 24/7 power to run a controlled sourdough fermentation process. Two hours loss here and there doesnt effect too much but the current level of down time is spoiling our batches. We lost so many batches over the last two weeks that it became a big problem for our general finances and our mental health. We can keep smaller numbers of loaves cold but for our own supply but cannot commit to quality and high quantity until load-shedding levels drop to lower than level 3-4 again at least. Until then the only place our fresh loaves are available will be at our own bakery/sandwich shop at Shop 1, 11 Gray Street, Knysna Central.
I will have a chat with V**** when we are ready to supply to Shop on Sea again. We are sad and frustrated. Thank you for our understanding. Sorry for the disappointment. 😔
That said we werent even able to open our own shop today. There were only two hours of power between 12 last night and 8am this morning. We had to close our shop today also 🙈 (sic)
It is easy to overlook the struggles of small and micro-businesses while large firms carry on as usual in factories and shopping malls supplied by generators.
Even large companies face tremendous costs to stay in business when the power goes out, which is one reason for rising prices in South Africa.
How much harder it is for small businesses, however.
Unaffordable
Most startup businesses are not exactly cash flush in their first few years. Entrepreneurs invest everything they have into the business, and struggle for years before the business turns sustainably profitable.
The cost for a generator to keep a typical small business afloat could be anywhere between R100 000 and R500 000, plus a few thousand rand per day in diesel. Solar installations aren’t any cheaper and are hard or impossible to justify in rented premises.
For micro-enterprises, the costs might be a little lower, but then, their turnover is also much smaller. What looks affordable to a small or medium-sized business can still be a major obstacle for a micro-enterprise that measures turnover in a few tens of thousands of rands per month, or even less.
Challenges with power outages rise exponentially with the stage of load-shedding. Many systems can cope with the occasional two-hour outage, but to provision for multiple four-hour outages per day becomes extremely expensive.
As a result, computers, payment systems, automatic teller machines, mobile network towers, alarm and CCTV systems, temperature control systems and all manner of machinery become less reliable or entirely unusable for long periods, which has a direct impact on the amount of business that can be done.
Power outages also cause damage to electronics, the replacement of which are unplanned capital expenses that many small businesses simply cannot afford.
Small businesses
Restaurants and small-scale food retailers have to cope with refrigerators that go out not just for two hours at a time, but sometimes eight hours in a ten-hour period. This can lead to massive stock spoilage, which is a dead loss.
Imagine hairdressers without the means to drive clippers and hairdryers.
In small-scale sewing outfits, the volume of work they can produce is directly related to the number of hours of electricity they have in a working day.
With cleaning services, they cannot run vacuum cleaners, floor polishers or carpet shampooers without electricity.
Music venues cannot drive sound systems without hefty and expensive backup generators when the power goes out.
In hospitality, booking systems become unavailable if the computer cannot be kept powered whenever guests choose to interact with the business.
Graphic design businesses might have many high-end computers and power-hungry printers that they cannot afford to keep powered with generators or inverters during an outage. The same is true for small software development shops.
Small factories have to shut down power-hungry machines for the duration of power outages, which not only causes production losses in direct proportion to the length of blackouts, but also causes additional delays while interrupted production runs are set up again. Sometimes, such interruptions can ruin a production batch entirely.
Auto repair workshops, or workshops of any other kind, likewise have to put down their power tools for the duration of load-shedding.
Hostile environment
I know someone who is helping one micro-enterprise solicit charitable donations from Europe to fund an inverter to power their machines. The cost will probably equal a full month’s turnover for the business, so there is simply no way they could afford it without help. Business failure in this case would put multiple jobs at risk and condemn an entire family to penury.
Very few small businesses have access to such benefactors to save them.
There doesn’t seem to be a lot of good data on the number of small businesses in South Africa. Some estimate that there are many millions, and others say there are well under a million.
What most do seem to agree on is that South Africa has far fewer formal small businesses than its OECD peers, where micro-, small and medium-sized businesses account for two thirds of all employment, 60% of GDP and 95% of all enterprises.
The business environment in South Africa has always been hostile to startups and small businesses, burdening them with mountains of red tape, licensing requirements and challenging labour laws.
Load-shedding is now killing off even the few that otherwise would have succeeded.
While people like Gwede Mantashe pass the buck for having failed to heed decades worth of warnings that new electricity generation capacity was urgently needed in South Africa, small businesses like the Sourloaf Bakery are the silent victims.
Theirs is a tragedy played out in slow motion in every town and city across South Africa, every day. It is a national disaster brought upon us by the deliberate policies, grand corruption and gross maladministration of the ANC government.
It is hard to be festive at times like these.
The views of the writer are not necessarily the views of the Daily Friend or the IRR
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