hypothesis about loadshedding

A Systems View Across Time and Space

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Published: 09 September 2023

The effects of loadshedding on small and medium enterprises in the Collins Chabane local municipality

Mkateko Vivian Mabunda ORCID: orcid.org/0000-0002-6128-3134 1 ,
Ricky Munyaradzi Mukonza 2 &
Lufuno Robert Mudzanani 2

Journal of Innovation and Entrepreneurship volume 12 , Article number: 57 ( 2023 ) Cite this article

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South Africa is at present experiencing electricity shortages resulting in loadshedding. Loadshedding is the action from an electricity supplier (Eskom) of rolling power cuts that intend to lessen the load on the power supply system when Eskom is not able to supply a high electricity demand. Loadshedding remains one of the country's most critical challenges and has affected day-to-day business activities leading to some small businesses closing their operations. In developing economies, small businesses play a significant role in the wellbeing of rural dwellers and are a major tool for local economic development. At present, there is limited evidence in the literature pointing out the small and medium-sized enterprises (SMEs) in Collins Chabane Local Municipality (CCLM) in terms of the effects of loadshedding but there is literature describing similar issues in other geographical areas. The exploration of the effects of loadshedding on SMEs in the Collins Chabane Local Municipality was crucial to empower small SMEs, cover scholarly gaps, contribute to policy development, and participate in academic discourse. The study uses a mixed-methods approach, adopting a triangulation research design. The sample consisted of 125 members of the target population, which included the SME owners/managers and officials from the Collins Chabane Local Municipality such as the Local Economic Development (LED) manager, Electricity manager, and a technician. The sample was selected using purposive, snowball non-probability sampling, and cluster probability sampling. A total of 100 respondents were selected for the quantitative study, while 25 participants were selected for the qualitative study. Therefore, 100 respondents completed questionnaires and 25 respondents participated in the face-to-face semi-structured interviews. The quantitative data were analysed using the statistical package for the social sciences (SPSS), while the qualitative data were analysed using the thematic method of analysis. According to the quantitative findings, loadshedding costs small and medium-sized businesses in the Collins Chabane Local Municipality an average of 61% of their total revenue. Additionally, 59% of these companies had to lay off their employees because they were unable to pay their wages. The Chi-square results demonstrate that loadshedding has been experienced uniformly by everyone, irrespective of their demographic and business demographic status. Therefore, demographics have no significant influence on the experience of loadshedding. The qualitative results reveal that the losses associated with the effects of loadshedding on SMEs’ production are untenable. There is an urgent need to alleviate the effects of loadshedding on SMEs. An alternative source of power is a requirement for small businesses in the Collins Chabane Local Municipality. It is for this reason that the South African government should grant small businesses a subsidy for the purchase of alternative sources of energy such as strong generators and solar panels to support them during periods of loadshedding. In addition, the South African government should encourage and capacitate small businesses in the Collins Chabane Local Municipality to participate in producing and supplying renewable energy by funding them, and further, foster cooperation among small businesses and companies that are successful in the production of renewable energy. This will assist in adding electricity generation capacity to the national grid and help eliminate electricity instability.

Introduction and background

Small businesses have found expression in development agendas such as the National Development Plan 2030, African Agenda 2063, and Sustainable Development Goals. The role small businesses play mainly in rural areas is directly linked to employment creation and income generation. For these reasons, small businesses located in rural economies are regarded as a sustainable avenue for local economic development (Rohini et al., 2018 ). In Limpopo province and Collins Chabane Local Municipality (CCLM), the number of small businesses initiated has increased over the past decade. According to the General Household Survey ( 2018 ), Collins Chabane Local Municipality has a considerate number of small businesses, which shows a positive economic trend in terms of the development of the municipality. Additionally, the number of small businesses operating in the tourism and agricultural sectors has increased and is highly reliant on pre-paid electricity for daily operations (Community Survey, 2016 ). Against this background, small businesses in the Collins Chabane Local Municipality depend on the electricity supply as one major utility. However, CCLM has no licence for the supply and reticulation of electricity, and therefore relies heavily on Eskom for the supply and reticulation of electricity within the area of its jurisdiction (Collins Chabane Local Municipality Integrated Development Plan, 2019 ).

On the other hand, Eskom, South Africa’s major supplier of electricity, has been battling with the imbalance between demand and supply of electricity since 2007, which compelled them to implement loadshedding for all customers; however, loadshedding has become more severe since 2019, when South Africa began to see a higher stage of loadshedding for the first time, such as stage 6 (Schoeman & Saunders, 2018 ). Since 2022, loadshedding in South Africa has been almost perpetual, with stages up to stage 8 (Businesstech, 2023a , 2023b ). However, Eskom is currently proposing up to stage 16 of loadshedding (eNCA, 2023 ). Ateba et al. ( 2019 ) argue that these imbalances are mainly caused by electricity theft (bridging), cable theft, the breakdown of power stations, and tariff cross-subsidisation. In contrast, Phiri ( 2017 ) argues that the introduction of technology into manufacturing processes has led to an insignificant increase in electricity demand. Jain and Jain ( 2017 ) and Botha ( 2019 ) reveal that the imbalance mentioned is mainly because Eskom has been trying to address the social injustices or inequalities caused by the apartheid government. This includes a deliberate effort to accelerate the provision of electricity to most black citizens who were disadvantaged because of apartheid. Nevertheless, customers, which include businesses, citizens, and academics, complain about the negative effect that loadshedding has on the country’s capacity for economic development. Even now, the Pretoria High Court has granted Eskom a loadshedding exemption order for hospitals and schools (Businesstech, 2023a , 2023b ). This is due to the role played by electricity in the mentioned sectors of the economy. It has been discovered that several businesses shut down as a result of loadshedding, including small businesses. Small businesses in CCLM are not immune to loadshedding challenges since Eskom is their main source of electricity and there are no backup options for electricity supply. The small businesses in CCLM experience production challenges because of loadshedding because electricity plays an important role in service delivery and the production processes of these small businesses. This study argues that the quality of electricity delivered influences the performance of SMEs and their contributions to municipal economic prosperity. The studies conducted by Nkwinika and Munzhedzi ( 2016 ) also support the fact that electricity is essential to business production and contributes to sustainable development in the country. A study conducted by Mbungu and Inglesi-Lotz ( 2022 ) endorses the fact that a secure and uninterrupted supply of electrical energy is essential to certain sectors of the economy. Therefore, loadshedding affects the SMEs’ potential for survival, their competitiveness, and their contributions to the municipality’s prosperity.

At present, there is limited evidence in the literature pointing out the SMEs in CCLM in terms of the effects of loadshedding but rather there is literature describing similar issues in other geographical areas. It is therefore critical to understand how loadshedding affects SMEs’ in Collins Chabane Local Municipality to empower SMEs, fill a noticeable academic gap, and contribute to the academic dialogue. The study provides strategies that SMEs can use to lessen the challenges experienced due to loadshedding. Furthermore, the results of the study are useful to the supporting structures within small business development, such as the Department of Small Business Development. More so, the results of this study are valuable for future researchers to further develop strategies for small-business development. Lastly, the study gives recommendations for further research to enrich the literature on loadshedding since it is an area of concern to policymakers. Accordingly, the effects of loadshedding on small and medium enterprises within the mentioned municipality are explained.

A mixed method was used in this study, adopting a triangulation research design to best answer the research questions. A sample of 125 was selected using non-probability purposive and snowball sampling and cluster probability sampling and a total of 100 respondents were selected for the quantitative study. The mentioned sample included 122 Small Enterprise Owners within CCLM, one electricity supply manager, one electrical technician, and one manager from the Local Economic Development section of the Municipality. Therefore, 100 respondents took part in the completion of the questionnaires and 25 respondents participated in the face-to-face semi-structured interviews. The quantitative data were analysed using SPSS, while the qualitative data were analysed using a thematic analysis. In the next segment, a summary of the literature survey, theoretical framework underpinning the study, and research methodology are presented, followed by the results and discussion of the results, conclusion, and recommendation.

Literature review

The current literature maintains that electricity has a significant impact on the living conditions of citizens, the economy, social life, sustainable development, productivity and poverty alleviation (Emovon et al., 2018 ; Gehringer et al., 2019 ). Despite this, research shows that most developing nations, particularly those in sub-Saharan Africa, including South Africa, are unable to supply sustainable electricity. This is evident from the implementation of never-ending loadshedding (Amadi, 2015 ; Boakye et al., 2016 ; Schoeman & Saunders, 2018 ).

Loadshedding as the deliberate shutdown of electricity supply to parts of the economy has been experienced in South Africa for the past decade (Ateba et al., 2019 ). The main causes of loadshedding in South Africa are linked to the breakdowns in the main power plants such as unplanned cuts of the conveyor belts, which often leads to breaking turbines (Head, 2019 ). The breakdowns result in insufficient electricity available to meet the demands of customers, leading to scheduled loadshedding. There are several effects of loadshedding on the economy, such as hindered growth of SMEs. In South Africa, SMEs operate in an open system where the demand and supply of goods are affected by market forces (Prabowo & Noegraheni, 2019 ). Concerning market forces, the supply of goods and services to SMEs has a positive impact on the production processes hence the growth of the businesses.

In light of the above-mentioned challenges, limited electricity supply has the potential to, directly or indirectly, affect the socio-economic development, production, and service delivery within industries that contribute to economic development (Boakye et al., 2016 ; Steenkamp, 2016 ; Stockholm Environment Institute Working Paper, 2017 ). Goldberg ( 2015 ) examines the impact of an unstable electricity supply on South African retailers. The results indicate that R13.72 billion rand was lost in revenue for the first 6 months of 2014, revealing the impact unstable electricity supply has on the economy. In a similar field of study to that of Goldberg ( 2015 ), Schoeman and Saunders ( 2018 ) investigate the impacts and costs of power outages on small businesses in six shopping centres located in the north-western parts of the City of Johannesburg. The results indicate that loadshedding causes them to lose customers, decreases business income, and makes it expensive to run the business since they must obtain backup systems. In another study, Botha ( 2019 ) evaluates the impact of loadshedding on restaurant productivity in Nelson Mandela Bay. The results confirm that loadshedding is a major concern since it harms productivity.

Boakye et al. ( 2016 ) explore the impact of a power outage (‘Dumsor’) on the hotel industry in Ghana. The results indicate that unreliable power causes a decrease in hotel industry production. Furthermore, the insufficient and unsustainable power supply has, therefore, been observed as a major problem in Ghana. Similarly, Bouri and Assad ( 2016 ) contribute to the political and scientific debate surrounding the economic costs entailed by the regular power cuts in Lebanon. Results indicate that electricity shortages continue to harm the economy and society as a whole.

Amadi ( 2015 ) investigates the causes of persistent power outages in Port Harcourt City. The study discovered that the main causes of persistent power outages are inadequate power generating capacity, a shortage of gas, weak and dilapidated electrical transmission and distribution network, and inadequate power infrastructure facilities. Politano ( 2019 ) further explores how consumers use social media networking sites during power outage events. This study reveals that power outages affect access to websites, and business, and affect the daily routine of residents. Haes Alhelou et al. ( 2019 ) state that the root cause of blackouts globally is faulty, aging equipment, and human error.

The above-mentioned authors, including studies conducted by Baker and Phillips ( 2019 ), Hedden and Hedden ( 2015 ), Inglesi-Lotz and Pouris ( 2016 ), Jain and Jain ( 2017 ), Jamal ( 2015 ), Lovins and Eberhard ( 2018 ), Mapane (2017), Pouris ( 2016 ), Sewchurran and Davidson ( 2016 ), Schwerhoff and Sy ( 2017 ), Taliotis et al. ( 2014 ), Valasai et al. ( 2017 ) are of the same view that electricity generation and supply play a significant role in the economy countrywide and that unreliable electricity generation has an enormous negative effect on input and output within the business sector.

Noticeably, most energy studies have been conducted in Nigeria and Zimbabwe. Paris et al., ( 2016 : 07) highlight that more South African research is needed in the field of electricity. Furthermore, the majority of these studies are conducted in the field of business management, therefore, there is a need for this subject matter to be conducted in the field of public administration. Moreover, no study seeks to investigate the effect of loadshedding on the small and medium enterprises within Collins Chabane Municipality. As a result, this study aims to determine the effect of loadshedding on these enterprises in the selected municipality.

Conceptual framework of the study

Figure 1 illustrates the conceptual framework of this study.

Conceptual framework. Author (2020)

As illustrated in Fig. 1 , the loadshedding conceptual framework of this study is grounded mainly on four factors: small business measures, disrupted communication, operational costs, and low productivity. The framework follows that electricity shortages are mainly caused by loadshedding, which in turn affects small-scale business productivity. Electricity is an important factor of production and is needed in any business for quality products and services, considering that all other factors are normal. Therefore, loadshedding as outlined in the literature and captured in the conceptual framework leads to disrupted communication between businesses and their stakeholders. As an example, online transactions are usually disrupted and productivity is lowered affecting sales volumes. The given example negatively affects the customer’s perception of the business while the business suffers damage to its brand, resulting in poor customer retention.

Furthermore, security systems may be interrupted affecting their normal flow and paving the way for possible security breaches to occur. As a result, small businesses are reasonably exposed to potential threats that could affect the productivity of the business such as fire, theft, and poor stock management. Consider a fresh meat supplier who relies heavily on constant electricity for quality products to be delivered: due to power cuts, the supplier is forced to opt for alternate sources of power or rather cope with an intensive meat quality reduction. Due to measures implemented by small businesses to manage power cuts, operational costs are likely to fluctuate, which affects effective cost management and collectively limits small business development and growth. Hence, this study was conducted within the perimeters of the conceptual framework to develop an intervention plan founded on practical strategies that SMEs may use to survive the unstable source of power the targeted municipal area experiences.

Theoretical framework

Various models and theories for comprehending small business structures have been developed and applied throughout the world (Maziriri & Chinomona, 2016 ). Nevertheless, this study uses complexity and resource-based view theory to comprehend the extent to which small businesses in the Collins Chabane local municipality have been affected by the loadshedding. Therefore, complexity theory was useful in understanding how small businesses interact and how their interaction is affected by loadshedding. Resources-based theory, on the other hand, was used to determine the resources available to SMEs to keep them competitive and alive, as well as how loadshedding affects their resources and limits their competitive advantages.

Complexity theory

This theory holds that organisations are made up of interconnected and well-structured parts and the decision or action of one component affects the other (Park & Jo, 2017 ). Thus, a goal of complexity theory is to understand how parts of the system interact, how they change over time, emphasises how systems tend to evolve in a nonlinear fashion and how feedback loops affect the evolution system (Rosenhead et al., 2019 ). The literature reveals that both internal and external factors can be forecast using this theory (Cairney & Geyer, 2017 ). Therefore, it was useful in understanding how small businesses interact and how their interaction was affected by the loadshedding.

This study supports this theory by confirming that organisations operate in a complex internal and external system. According to the results of this study, small businesses operate within internal systems consisting of input, transformation, and output. In addition, they operate within an external system consisting of the government, which includes the national, provincial, and local government (municipalities), suppliers, Eskom, customers, and the community at large. Small businesses interact with the mentioned organisations to be competitive, survive and contribute to local economic development.

The findings show that the national and provincial governments provide policies and financial support and establish institutions to support small businesses with the aim of improving the economy. Municipalities interact with small businesses by giving them rules and regulations on how they should operate, supplying them with services such as water, sewage, and waste removal, and issuing permits for them to operate. In turn, SMEs should pay for such services. As a result of their payments to municipalities, small businesses become an essential component of municipalities’ development. Small businesses interact with suppliers of raw materials to purchase what they need to use in the manufacturing process. Small businesses turn to Eskom for electricity to run their manufacturing machines, which in turn leads to innovation and technology adoption, and Eskom, in turn, receives money from small businesses. The business interacts with the community, which is also its customer; the community purchases the small business’s output, which helps the business survive financially; in turn, the small business provides employment opportunities to the community. This results in the reduction of poverty and the local economic development of the area.

The theory states further that a decision made in one component affects the whole system (Lai & Lin 2017 ; Rosenhead et al., 2019 ). The study agrees with the theory by pointing out that Eskom’s loadshedding, which disrupts small businesses’ manufacturing processes, has made the whole system dysfunctional. As a result of loadshedding, raw materials are not supplied on time by suppliers, which causes a delay in SME manufacturing, which leads to a lack of trust and a decline in customer loyalty. As a result, small businesses are no longer able to play an effective role in addressing socio-economic challenges such as unemployment, poverty eradication, and inequality, and preventing government policies from achieving their goals of economic development.

The theory also points out that this system consists of feedback loops in which the system's components receive inputs from the environment, convert them into outputs, and then return the outputs to the environment in a continuous feedback loop (Lai & Lin, 2017 ). Whether the data generated are positive or negative, it provides benchmarks to measure and improve SMEs’ performance (Esu & Ufot, 2017 ). As predicted by the theory, the results demonstrate that the outcome of the process has feedback, whether positive or negative. It has been found that their performance feedback manifests in more referrals, customers, sponsors, and job opportunities, as well as advancements in technology and innovation. In cases where they are not performing well, customers decline, job opportunities disappear, poverty increases, and the use of technology becomes slow. Given that loadshedding is still occurring, SMEs in the Collins Chabane Local Municipality are unable to respond to criticisms or feedback. Unless an alternative source of power is arranged for them or subsidies are provided for them to purchase backups as the study suggests, they will not able to do their best.

Resource-based view

Resource-based view (RBV) theory urges that the possession of strategic resources provides an organisation with a golden opportunity to develop a competitive advantage over its rivals (Idowu et al., 2020 ). This theory was used to determine the resources available to SMEs in the Collins Chabane Local Municipality to keep them competitive and alive, as well as how loadshedding affects their resources and limits their competitive advantages. The results of this study support the theory by asserting that businesses use unique resources to remain competitive. It was discovered that small businesses in CCLM use unique technology equipment for production and marketing strategies, as well as human resources with varying skills and levels of innovative thinking, to be productive and remain competitive. However, loadshedding has made it difficult for them to remain competitive because they have had to let go of some of their valuable resources. The results reveal that 59% of small businesses in the CCLM retrenched their employees due to inability to pay their salaries, and production machines were damaged. According to this study, the provision of sustainable electricity can end the loadshedding-related disturbances of small enterprises. Although the provision of sustainable electricity is not achievable at this point, the recommendations made in this paper can help minimise the effects of loadshedding on small businesses.

Research methodology

A mixed-method approach was used, adopting the triangulation research design to best answer the research objectives of the study. This approach assisted the researcher with different but complementary data on the same topic to best understand the research problem. The sample of this study was selected from the target population. The ideal target population is defined as the population that incorporates the total collection of all units of analysis about which the researcher wishes to make specific conclusions (Asiamah et al., 2017 ). The Collins Chabane Local Municipality consists of a population of approximately 347,975 people (Collins Chabane Local Municipality Integrated Development Plan, 2021– 2022 ). The population was then reduced to meet the study criteria. Study subjects were only small businesses of any kind that are autonomous, affected by loadshedding, and run by individuals or entities that are not branches of larger corporations with less than 200 employees. Small business owners, regardless of race or nationality, in the Collins Chabane neighbourhood were considered. Moreover, Collins Chabane Local Municipality officials with experience facilitating local economic development and delivering electricity were considered. As a result, 125 samples were chosen from the population who satisfied the aforementioned requirements.

A sample size of 100 out of 125 was drawn to participate in the quantitative study through the guidance of the Raosoft sampling size calculator, and the samples used in previous studies conducted on similar issues were also considered. Therefore, this study consisted of 76 owners and 24 managers of small businesses who participated in the completion of questionnaires. The types of small businesses consulted are illustrated in Fig. 2 .

Type of business consulted

A total of 25 participants were selected to participate in the qualitative study through face-to-face, semi-structured interviews, and saturation was reached. Out of that number, there were 22 small enterprise owners within CCLM, one electricity supply manager, one electrical technician, and one manager from the local economic development section of the municipality. This study was dominated by small businesses, which constituted 122. The sample size was arrived at considering issues of improving data trustworthiness, credibility, transferability, and the general rule of thumb for phenomenological studies as is the case for this study (Creswell, 2015 ). The respondents who participated in the quantitative study were selected using probability cluster sampling and non-probability snowball sampling. The participants who took part in the interviews were selected using purposive non-probability sampling, since it focused on well-informed participants to provide detailed experiences and rich information on this subject.

The data collected through questionnaires were analysed using the Statistical Package for the Social Sciences (SPSS). Accordingly, descriptive statistics such as frequency counts, percentages, and mean were used to analyse the data, and inferential statistics such as Chi-square and linear regression were used to test the associations between the variables. The data collected by interview were analysed using inductive thematic analysis. Moreover, before undertaking this research, approval was granted both by the participants and the municipality to conduct the research, and ethical clearance approval was also obtained from the Tshwane University of Technology ethical committee. None of the research participants were exposed to human practices. Furthermore, confidentiality was preserved by ensuring that no data was linked to any name via data coding. Lastly, consent forms were signed by participants and respondents.

Study limitations

Given the fact that loadshedding is a national issue, this study was limited to the electricity crisis or loadshedding in South Africa, focusing strictly on the effect of loadshedding on SMEs in the Collins Chabane Local Municipality. Data were collected through mixed-methods research techniques to obtain the views of SME owners and managers and the relevant respondents within CCLM in the Limpopo Province of South Africa. Due to financial, transportation, and time constraints, the study sampled only 125 participants. The findings are not generalised to all municipalities in South Africa within the context of small business development. However, the findings can be transferred to other small businesses in municipalities that portray similar economic environments while facing similar loadshedding challenges, thereby contributing to the effectiveness of addressing this problem.

Qualitative results

The effects of loadshedding on small and medium-sized businesses.

The empirical evidence reveals that loadshedding interrupts production machines, business plans, financial flows, communication, and information flows. Further, loadshedding has implications for business income, service delivery, personnel, and operating resources, including security systems and the use of technologies. The implications of these are further discussed below.

Interruption of the production machines

Small and medium-sized businesses were asked whether loadshedding had an effect on their operations. Most small businesses in Collins Chabane Local Municipality run on electricity-powered machinery and technology. For example, brick yards use concrete block machines to make bricks; breadmaker machines are used by bakeries; granulator machines are used by mechanics for panelbeating; electricity-powered chargers and welding machines are used for cell phone repair, hairclippers and hair dryers are used in saloons; incubators are used for poultry businesses; and machines to cut meat and fridges to cool meat are used in butcheries, etc. Many of these businesses do not have backups, such as generators, due to a lack of financial resources. Because the equipment used requires an uninterrupted electricity supply for efficient production, this puts a halt to production and connectivity. As a result, the business is forced to close during loadshedding and reopens when it comes back. One respondent said:

It affects our daily operation. The stock gets rotten, fridges get damaged, and as I’m speaking, it has damaged the microwave and kettle. I have sent them to be fixed, which is an extra cost to the business is. When the electricity goes off while I’m done preparing potatoes to be fried, they end up getting rotten without being fried, so we had to throw them in a bin. It also results in pay cuts for employees since we are running at a loss. We don’t have generators, and we were once using a gas stove, but we stopped using it since it is dangerous at this place. There are many schoolchildren who are passing by.

Participants also emphasise the loss of profits and customers resulting from businesses closing due to loadshedding. Fast-food manufacturers or restaurants, for example, require electricity for every process of cooking meals. Because the processes demand an uninterrupted electrical supply for successful output, loadshedding causes poor output.

Another person said:

I have the electricity-powered chargers and the welding machine for cell phone repair. They shut off or cease to function during loadshedding. I can leave work during loadshedding without ever making a cent because the customer arrives and chooses to leave before the electricity is restored. I did not make any money that day, but I still have to pay rent, provide for my family, and pay the staff at the end of the month.

Another said:

I'm a motor mechanic who works to service motor vehicles, which includes overriding, changing of breaks, clutches, gearboxes, and diff, and I depend on electricity to do most of the things, like drilling and grinding. I have four employees. When there’s no electricity, we sit and do nothing, which delays us from doing our job. Loadshedding always has the potential to tarnish our business because we don’t deliver as promised. It has cost my company between R400 000 and R600 000 financially.

Interrupted business plan

The results show that small businesses, such as fast-food restaurants, often follow a set schedule regarding delivery and preparation of food. The incidence of loadshedding, however, prevents perishable goods from being delivered and delays the delivery of food. This results in both suppliers and SMEs losing money. Another owner said:

Most of the time we are unable to serve our customers since when they go for lunch you will find that we are not yet done preparing food due to loadshedding, so they end up going to other shops like Shoprite, and in that way, we lose customers.

Plans for poultry company delivery were disrupted since some stocked chickens perished because of loadshedding, which resulted in the delivery of less than what was agreed upon to the customers. Additionally, businesses that provide goods and services face frequent interruptions, leading to missed deadlines.

Interrupted financial, communication, and information flows

The results reveal that the machines that handle money or payments for small businesses, such as speed points, tills, and ATMs, require electricity for them to run. Therefore, if small businesses without backup electricity are unable to conduct online transactions due to loadshedding, the business has to send the customers back home without receiving any service. Other owners stated:

It has a financial impact on the business because we have to pay the rent at the end of the month and the landlord does not cut the price. Whether there is loadshedding or not, the costs remain the same.

Furthermore, loadshedding results in network issues, preventing businesses from accessing their emails and digital devices. In this way, their suppliers are unable to communicate or exchange information via email, cell phones, and other online platforms. As a result, SMEs are affected by loadshedding since they cannot transact or send information on time.

The following are the implications of loadshedding on business income, service delivery, personnel, and operating resources

In the event of loadshedding, financial performance declines because of a drop in customers. Businesses receive significantly less than they spend; they spend more money and get less profit. As a result of loadshedding, goods expire when they are not sold in time. Furthermore, food and stock rot when they are not kept chilled, and equipment is damaged and needs to be replaced. Other owners said:

I am running a fruit and vegetable business. Fruits do not last four to seven days unless they are refrigerated. So when there is loadshedding, fruits decay because we don’t have a place to store them, and I have to throw them away because we can’t sell a rotten stock, and if health officials discover that we are selling rotten stock, they can shut down our business. I used to have six employees, but I now only have four since it is tough to pay them.

Furthermore, rental businesses are suffering because loadshedding causes sewage systems to become blocked, which necessitates the expenditure of extra funds to unblock them. This further causes customer inconvenience, leading rental businesses to lose customers.

Interruption to security systems

Some small businesses use an alarm system to safeguard their assets. When there is loadshedding, many security systems are affected since they are powered by electricity. As a result, SMEs’ security is jeopardised because their systems are not performing at their best. Therefore, loadshedding exposes SMEs to theft, poor stock management and other forms of criminal activity. Another owner said:

…When loadshedding occurs regularly, it can quickly deplete backup batteries in alarm systems and other devices, such as electronic gates. This poses risks to the business because the failure of security systems allows theft to occur. Also, loadshedding damages electronics when one forgets to turn it off because when the electricity comes back, it comes with power with such force, electronics can be irreparably damaged.

Interruption on the use of technologies

IT businesses are unable to provide online services, assist schoolchildren with research, print, scan, or perform any other internet-required activities. This is because the IT and technology infrastructure are heavily reliant on electricity. This discourages the use of technological devices in the Collins Chabane Local Municipality.

Quantitative results

The quantitative results demonstrate the level of dependence on electricity by small businesses and the impact the loadshedding has on small companies in the Collins Chabane Local Municipality.

The question was posed to determine the level of dependence on electricity by small businesses in the Collins Chabane Local Municipality. The results in Table 1 show that 100% of the small businesses in the Collins Chabane Local Municipality rely on electricity to operate.

The study also used a questionnaire to examine whether loadshedding has an impact on small businesses in the Collins Chabane Local Municipality. The results in Table 2 show that all participants (100%) experienced loadshedding in the Collins Chabane Local Municipality.

Further, the test of association was performed by Chi-square to determine whether the experience of loadshedding is influenced by gender, age group, race group, educational level, marital status, respondents’ status, years in business, business area, type of business, employee numbers, working hours, additional income, the status of business premises, and the status of dependency on electricity. The findings demonstrate that loadshedding has been experienced uniformly by everyone, irrespective of their demographic and business demographic status. Therefore, none of the demographic factors mentioned had a significant influence on the experience of loadshedding.

The inquiry was made to see whether the small enterprises in the Collins Chabane Local Municipality had a backup power supply that they utilise when loadshedding occurs. Figure 3 shows that 95% of these businesses do not have an alternative source of power, whereas 5% of the businesses do.

The Collins Chabane local municipality's small enterprises were also asked about how frequently loadshedding occurs.

Alternative source of power

The result in Fig. 4 shows that most of these businesses (62%) experience loadshedding daily, followed by those that experience it weekly, which constitutes 32%. The remaining 5% very occasionally experience it, whereas the lowest percentage (1%) always did. Based on these results, it is that loadshedding severely affects SMEs in the Collins Chabane Local Municipality because the majority experience it daily.

The descriptive statistics were performed on the average working hours of loadshedding in a day, average turnover in a day with loadshedding, turnover when there is no loadshedding, and estimated loss due to a power outage to determine to what extent the small businesses in the Collins Chabane Local Municipality have been impacted by loadshedding. The results are shown in Table 3 .

How often loadshedding is experienced

Table 2 shows that on a day of loadshedding, the average working hours were five hours, the maximum number of hours was 11, and some did not work at all. The average turnover in a day with no loadshedding was 99%, the maximum was 100% and the minimum was 80%. On a day with loadshedding, the average turnover was 39%, but there was one with a maximum turnover of 100%, probably with an alternative source of power, and a minimum turnover of 0%, likely those without one. A power outage results in an average loss of 61%, which is significant because it is a large amount.

It was also determined whether the business had lost employees due to loadshedding. Figure 5 shows that the majority (59%) of small businesses lost their employees due to loadshedding, compared to the 41% that did not lose their employees. Considering that the number of businesses that lost employees is high, it can be concluded that loadshedding results in employee layoffs in the Collins Chabane Local Municipality and that loadshedding has impacted employment growth in South Africa at large.

Loss of employees due to loadshedding

Discussion of the results

The qualitative evidence reveals that electricity is a critical input to the production process of small businesses in the CCLM. This is supported by quantitative results, which show that 100% of small businesses in the Collins Chabane Local Municipality rely on electricity to operate and produce. These results also confirm that electricity is a vital part of industrial operations in both small and large businesses (Baker & Phillips, 2019 ). Studies by Phiri ( 2017 ), Chishimba (2017) and Nyoni ( 2019 ) endorse the importance of electricity by revealing that it drives economic growth in developing countries and that modern society is largely reliant upon it for daily routine. The study conducted by Schoeman and Saunders ( 2018 ) on the impact of loadshedding on small businesses in the City of Johannesburg also discovered that the majority of SMEs (90.7%) rely on electricity for the operation of their businesses. Thus, it may be said that power is essential for small enterprises to succeed.

The small businesses in the Collins Chabane Local Municipality suffer from loadshedding. Quantitative results in Table 2 confirm that 100% of small businesses in the CCLM experience loadshedding, with the majority experiencing it daily (62%). The findings also reveal that loadshedding interrupts production machines, business plans, financial flows, communication, and information flows. Further, loadshedding has implications for business income, service delivery, personnel, and operating resources, including security systems and the use of technology. As a result of the disruption to the production process, the majority (59%) of small businesses are forced to lay off their employees because they can no longer afford to pay them given that they were no longer making enough profit and operating costs had increased. This finding is shown in Fig. 5 . Nyoni ( 2019 ) agrees that loadshedding contributes to small businesses’ failure and closure because they cannot operate without stable internet (Nyoni, 2019 ). Zohuri and McDaniel ( 2019 ) and Politano ( 2019 ) endorse the fact that internet access is directly linked to having stable electricity. Emovon et al. ( 2018 ), Kumalo and Poll ( 2018 ), Sitharam and Hoque ( 2016 ), support the claim that SMEs suffered huge financial losses from the electricity crisis or loadshedding.

The quantity of the losses within small businesses in the Collins Chabane Local Municipality is revealed through descriptive statistics in Table 3 , which shows the difference between average income on a day without loadshedding and on a day with loadshedding. The results reveal that on a day without loadshedding, the small business received 99% of its average income, whereas on a day where there is loadshedding, the average income is 39%, which means that there is an estimated loss of 61% of income on a day of loadshedding. Studies by Ayandibu and Houghton ( 2017 ); Bruwer and Van Den Berg ( 2017 ); Kumalo and Poll ( 2018 ); Masama and Bruwer ( 2018 ) reveal that SMEs in South Africa have one of the worst sustainability rates in the world since approximately 75% of small and medium enterprises fail within three years of entering the market due to challenges such as power shortages. It can be concluded that loadshedding has a negative impact on the growth of small businesses.

Conclusion and recommendations

This study aimed to explore the effects of loadshedding on small and medium enterprises in the Collins Chabane Local Municipality. A mixed method was used to accomplish the mentioned study objective. Complexity and resource-based theories were used to underpin the study. The results of this study concur with the complexity theory that small businesses operate within complex internal and external systems and that a decision made in one component of the system affects the whole system. This study agrees with the theory by pointing out that loadshedding as implemented by Eskom has made the whole system of small businesses dysfunctional. As a result of loadshedding, raw materials are not supplied on time by suppliers, which causes a delay in the small business production process, which leads to a lack of trust and a decline in customer loyalty, which results in a loss of finances. As a result, small businesses are no longer able to play an effective role in addressing socio-economic challenges such as unemployment, poverty eradication, and inequality, preventing government policies from achieving their goals of economic development. Further, the results of this study support the resource-based theory by asserting that businesses use unique resources to remain competitive. It was discovered that small businesses in CCLM use unique technology equipment for production and marketing strategies, as well as human resources with varying skills and levels of innovative thinking, to be productive and remain competitive. Nevertheless, loadshedding has made it difficult for them to remain competitive because they have had to let go of some of their valuable resources. The results reveal that employees were retrenched due to failure to pay their salaries, and production machines were damaged. It can be concluded that loadshedding has a negative effect on SMEs' operations and their contribution to economic development. Further, the loss associated with the effects of loadshedding on SMEs’ production is untenable. As a result, collaboration among SMEs, the government, and the electricity sector is critical to ensuring the provision of sustainable electricity in the country and mitigating the effects of loadshedding on SMEs.

The study provides the following recommendations to SMEs, the Department of Energy, and policymakers:

An alternative source of power should be the requirement of small businesses in the Collins Chabane Municipality; therefore, the South African government should grant small businesses a subsidy for the purchase of alternatives such as strong generators and solar panels.

The South African government should encourage and capacitate small businesses in the Collins Chabane Local Municipality to participate in producing and supplying renewable energy by funding them. Further, cooperation among small businesses and companies that are successful in the production of renewable energy should be fostered. This will assist in adding electricity generation capacity to the national grid and help eliminate electricity instability.

The electricity provider should reduce electricity tariff rates for small businesses to make it affordable given that they are not compensated for their losses and that it is difficult to manage the increased operating costs of a business due to costs associated with replacing damaged products and equipment, loss of profit due to loadshedding, and expensive electricity at the same time.

Small businesses in the Collins Chabane municipality, especially restaurants, should opt for equipment that uses gas, such as gas stoves and fridges.

The government ought to give Collins Chabane Local Municipality the authority to generate its own electricity given that Eskom is the municipality's sole source of electricity.

Availability of data and materials

Not applicable.

Acknowledgements

I acknowledge the TUT ethical committee and the Collins Chabane Local Municipality for granting me permission and ethical clearance to conduct this study. I acknowledge the Department of International Relations and Cooperation for funding my main research project.

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Mabunda, M.V., Mukonza, R.M. & Mudzanani, L.R. The effects of loadshedding on small and medium enterprises in the Collins Chabane local municipality. J Innov Entrep 12 , 57 (2023). https://doi.org/10.1186/s13731-023-00327-7

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Please note you do not have access to teaching notes, does loadshedding affect the housing market in south africa some empirical evidence.

International Journal of Housing Markets and Analysis

ISSN : 1753-8270

Article publication date: 11 January 2023

The purpose of this study is to quantify the impact of electricity power outages on the local housing market in South Africa.

Design/methodology/approach

This study uses the autoregressive distributive lag (ARDL) and quantile autoregressive distributive lag (QARDL) models on annual time series data, for the period 1971–2014. The interest rate, real income and inflation were used as control variables to enable a multivariate framework.

The results from the ARDL model show that real income is the only factor influencing housing price over the long run, whereas other variables only have short-run effects. The estimates from the QARDL further reveal hidden cointegration relationship over the long run with higher quantile levels of distribution and transmission losses raising the residential price growth.

Research limitations/implications

Overall, the findings of this study imply that the South African housing market is more vulnerable to property devaluation caused by power outages over the short run and yet remains resilient to loadshedding over the long run. Other macro-economic factors, such as real income and inflation, are more influential factors towards long-run developments in the residential market.

Originality/value

To the best of the authors’ knowledge, this is the first study to examine the empirical relationship between power outages and housing price growth.

Electricity distribution and transmission losses (EDTL)
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Loadshedding
House prices
South Africa
Quantile autoregressive distributive lag (QARDL) model

Marope, A. and Phiri, A. (2023), "Does loadshedding affect the housing market in South Africa? Some empirical evidence", International Journal of Housing Markets and Analysis , Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/IJHMA-10-2022-0148

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Impact of loadshedding in South Africa: A CGE analysis

Abstract. The aim of this paper is to provide a practical contribution to the body of knowledge on the impact of loadshedding in South Africa. This study adopted a pragmatic research methodology by using a computable general equilibrium (CGE) model for empirical analysis. This study estimates that loadshedding will reduce economic growth by 2.3%, this higher than the Banks earlier prediction of a 0.6%. This study is limited to the effects of loadshedding and shed light on the South African economy that has been adversely affected by the Covid 19 pandemic and its recovery trajectory which is now stifled by persistent load shedding. Empirical analysis of the effects of loadshedding through the usage of the CGE model establishes the originality of this study.

Keywords. Loadshedding; Electricity; Energy; CGE model.

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What is the impact of load shedding in South Africa?

Rebecca Egan

Senior Intelligence Analyst

Load shedding in South Africa: What is the electricity crisis?

South Africa is experiencing high stages of load shedding affecting businesses and society. In an attempt to prevent the collapse of the electrical grid, Eskom (national public electricity utility) has implemented rolling blackouts. The load shedding schedule is divided into 8 different stages, with each stage increasing the number of hours per day that the electrical supply will be turned off. Earlier in 2023, load shedding reached stage 6, with power outages of at least 6 hours a day.

Rolling blackouts are expected to last for the remainder of the year. President Ramaphosa described rolling power cuts as an existential threat to the economy and social fabric of the country.

The electricity crisis has heavily impacted business and the economy and is feeding existing political and societal ruptures.

The image shows the impact of the outages resulting in increased criminality and political demonstrations [image source: Intelligence Fusion].

What is the economic impact of load shedding?

The ongoing energy crisis is hindering the economic growth of the country. The second quarter of 2022 showed that the country’s GDP decreased by 0.7%. South Africa’s chance of a recession in 2023 is 45%, with the economy unlikely to grow by 0.3% each quarter. Economists predict that the GDP of 2023 will decrease to 1.2% from 2.3% in 2022.

Load shedding has affected South Africa’s economic recovery as the power cuts cost the country between 204 million rand (USD 11,281,997.64) and 899 million rand (USD 49,773,519) per day.

What are the wider infrastructure challenges?

South Africa is facing wider infrastructure issues. There have been ongoing rail disruptions caused by the lack of spare parts for trains and security to run them.

A 2022 report on infrastructure in South Africa assessed that 15 of the 32 infrastructure segments are satisfactory. The overall rating of the infrastructure was a D, meaning that it is poorly maintained and not coping with the normal demand. The SAICE claims this infrastructure is potentially a severe inconvenience and/or danger to the public if no action is taken.

How is load shedding impacting small businesses?

Small businesses have had to adjust operating hours to accommodate the load shedding schedule. Loss of planning, low staff morale, theft increases, loss of internet connectivity, payment processing disruption and broken equipment are other ways small businesses have been affected. The increased cost of doing business has led to companies letting go of staff, whilst others have been pushed to the brink of closure. A Small Enterprise Finance Agency (Sefa) and Ministry of Small Business Development survey found that 71% of businesses have been negatively affected by load shedding.

The image shows some of the disruptions that have occurred due to the planned blackouts [image source: Intelligence Fusion].

Affected Sectors

What's the government’s response to the crisis.

In response to the crisis, a state of disaster was declared, and a minister of electricity was appointed within the presidency. With the implementation of the state of disaster, the government intends to respond to the crisis with fewer bureaucratic delays.

The National Executive Committee strategic planning meeting stated that in order to rebuild, save and protect Eskom, it would require a reallocation of the national budget. The national budget is already strained by a growing welfare state at a time when the emigration of skilled and high-income earners poses a threat to the tax system, according to Standard Bank Group.

Whilst the state of disaster has been implemented, prior experiences of this have not been positive. The state of disaster could lead to an increase in maladministration, corruption and unauthorised expenditures. Some also believe that adding the position of minister of electricity will add to bureaucracy.

Pravin Gordhan stated that Eskom is heavily impacted by corruption within the company. Gwede Mantashe, an influential figure with the ANC, stated that there are multiple actions that need to be taken in order to end load shedding within the next 6-12 months: power should be imported from neighbouring countries, employ more skilled employees and an urgency to repair its coal-fired plants.

As part of the state of disaster, the government will also offer more support to farmers, food processors and distribution and logistics companies while also exempting critical infrastructure from load shedding. In order to combat problems within the energy sector, Ramaphosa has organised the National Energy Crisis Committe e. The purpose of the NECOM is to ensure that the Energy Action Plan, announced by Ramaphosa on the 25th July 2022, is implemented quickly and that the government’s response is coordinated effectively.

The Energy Action Plan has a number of measures that are designed to assist in the betterment of the sector. These include private sector investment in the generation of energy, and there is an emphasis on renewable energy.

ANC (African National Congress)

The latest polls show that electoral support for the ANC has dropped to new lows. Divisions are also forming within the party. Members of the party loyal to the ex-president Jacob Zuma are leaving the party to form a far-left movement known as the Radical Economic Transformation Movement (RETMO), formed by Carl Neihaus. RETMO is seeking to topple Ramaphosa in the 2024 elections. If influential members of the ANC, like Ace Magashule, join RETMO, this could take away from their voter base.

EFF (Economic Freedom Fighters)

In response to the crisis and the decisions of the ANC, the EFF held a national shutdown on the 20th March. The EFF is calling for the resignation of President Ramaphosa and for a reliable electricity supply. The EFF held protests in major cities, such as; Durban, Cape town, Bloemfontein, Pretoria and Johannesburg.

The national shutdown has been described as only the beginning, and they are calling for intensified efforts to get President Ramaphosa to resign.

The image shows demonstrations that may impact businesses, assets and people [image source: Intelligence Fusion].

DA (Democratic Alliance)

On 25th January, the DA declared a National Day of Action against the ANC’s load shedding and their unaffordable electricity price increases. The DA has stated that it will challenge the declaration of a state of disaster in court, claiming that the ANC has issued “nonsensical regulations and abused procurement processes during the pandemic”. The DA has released a list of solutions to address the electricity crisis.

What is the social impact of load shedding?

Civil unrest.

Planned and unplanned protests have taken place in response to the ongoing electricity crisis, affecting other service delivery.

The protests varied in size depending on the area where they were held. In major metropolitan areas, protests with a larger turnout were seen. In most cases, these protests were peaceful, with minor disruptions affecting traffic and service delivery, with rare cases of violence and looting reported. Public service workers held strikes calling for a wage increase, and unions such as; SAPU and NEHAWU have joined the strikes.

There was a marked increase in protests in March 2023:

The image shows an increase in protests and demonstrations in March 2023 [image source: Intelligence Fusion].

There is a likelihood that these blackouts will worsen inequality within the country, with many higher-income areas reportedly not receiving the same harsh rolling blackouts as other lower-income areas. Higher-income households are also more resilient to the effects of power outages. Load shedding is also leading to unemployment, or wage freezes as companies cut costs to stay afloat and to deal with the inevitable drop in productivity.

Power cuts are also affecting people’s ability to study or look for employment. For one gigabyte of data, people are paying 85 rand, which is the equivalent of four hours of work for people earning minimum wage.

Racial Tension

Due to the increased number of protests being reported around the country, it is likely to lead to an increase in racial tensions or xenophobic attacks, particularly if there is a breakdown in law and order, as was the case in 2021 in areas including Durban where law enforcement’s inability to cope with looting led to communities resorting to vigilantism. Tensions may be higher since the planned national shutdown that occurred on the 20th March by the EFF or if there is a total grid collapse.

Load shedding is impacting households in a variety of different ways. Food inflation reached a 14-year high, partly due to the Ukraine war and COVID-19, and prices could spike if sustained load shedding continues . Household electricity appliances and devices are affected in a variety of ways, with some posing a fire risk. An increase in fires at formal structures in Johannesburg has been associated with increased power outages. Informal settlements are also at risk.

There is a known link between power outages and increased crime, causing concern to businesses and households.

Increased crime has been observed in higher-income areas, however, the number of crimes in lower-income areas is also increasing. Businesses or households without back-up power systems are particularly exposed as their alarm and/or CCTV systems are not functional at all times. Additionally, security companies have stated that criminals may be taking advantage of security systems being damaged by the continual power outages.

Increased crime can be offset through increased visible policing, and businesses or households could employ private security. However, police are largely dependent on street lighting, an effective crime prevention measure. What’s more, electrical infrastructure has been targeted by cable thieves during load shedding. In December 2022, the theft of electrical cables led to a loss of supply to customers in the town of Darnall in KwaZulu-Natal.

The image shows increased burglary and theft in the area due to load shedding [image source: Intelligence Fusion].

The decline of policing in South Africa has been well documented. Research by Lizette Lancaster of the Institute for Security Studies found that the police’s ability to solve murders declined by 38% in the past decade since 2011/2012.

The Head of Justice and Violence Prevention at the Institute for Security Studies, Gareth Newham, has stated that over the past five years, there has been a decline in the police’s ability to solve armed robberies and tackle organised crime. An increase in attacks on police stations during rolling blackouts is another concern, as it leaves people and businesses vulnerable to crime.

In conclusion, South Africa is being negatively affected by the load shedding as it is impacting various economic, public and private sectors throughout the country. With the ongoing energy crisis, we are likely to see a continuation of the civil unrest through protests and increased political and racial tensions across the country.

At Intelligence Fusion, we help transform the risk management practices of organisations by providing them with unrivalled situational awareness via our threat intelligence platform. We track and accurately geolocate, among other things, crime, unrest and hazards across the globe in near-real-time, as well as the impact of the changing threat landscape on businesses, governments and the military.

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Rebecca is Senior Intelligence Analyst for Sub-Saharan Africa at Intelligence Fusion.

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How Does Load-Shedding Affect the Community?

Load-shedding negatively affects many sectors throughout South Africa and contributes significantly to the rapidly declining economy. Eskom’s planned power outages cripple the community’s most vulnerable members, educational institutes, agricultural sectors, domestic and international tourism industry, small business enterprises, health care providers, and many other essential services.

Load-shedding critically impacts businesses, companies, and consumers throughout South Africa, resulting in a diminishing economy that bleeds billions of rands daily . According to Foreign Policy, “had load-shedding never occurred, the country’s economy could be 17% larger than it is today.

The macroeconomic consequences of load-shedding have been devastating.

Find out more about how load-shedding impacts local communities below.

Effect on Small Businesses

Due to the increased number of power outages, small businesses (SMMEs) often need help meeting customer deadlines, resulting in poor customer satisfaction and retention.

Not only do SMMEs face the challenge of not being able to generate an income, but they also have to deal with the following issues:

Staff Morale – Load-shedding dramatically decreases workplace morale. Staff members must be more productive during and after a power outage, meet sales targets despite critical infrastructure remaining offline, and successfully communicate with customers and suppliers through telecommunications networks.
Damaged Equipment – SMMEs face the issue of damaged equipment stemming from power surges. Power surges result in an increased flow of electric current resulting in electrical shorts.
Security – The absence of electricity leaves businesses vulnerable to cybersecurity attacks and in-store theft.
Inability to trade – Restaurants and stores require electricity to operate and generate income. With power, these businesses can function normally. Without electricity, they cannot.
Lack of internet connectivity – Wireless internet and cell tower networks are crucial to the operations of many businesses. Load-shedding prevents SMMEs from accessing their networks, halting online communication, e-banking, and other digital services.

Effect on Hospitals and Community Health Centres

Eskom’s planned power outages present a massive challenge for healthcare workers and hospitals. Public hospitals need electricity to provide sufficient health care services to patients.

Healthcare providers often have generators to combat these outages. However, due to increased operating costs, employing fossil fuel generators is not a sustainable long-term option. Typically, backup power is only supplied to priority wards and services.

Frequent blackouts destroy medical equipment. Healthcare centres must upgrade equipment with uninterrupted power supplies (UPS) to prevent damage caused by power outages.

Medicines that require storage at controlled temperatures are affected or spoiled by outages. Healthcare providers can’t maintain accurate temperatures to ensure that perishable medications and precious fluids like blood and plasma remain viable and safe to administer.

Load-shedding creates an additional backlog of surgical procedures. Thousands of patients have to wait for extended periods to undergo surgery. This issue has resulted in the Ministry of Health meeting with Eskom to try and ensure patient safety due to load-shedding.

Making matters even worse, healthcare workers are at risk of criminal acts during power outages due to having to start work early in the morning or finish late in the evening.

Effect on Households

Load-shedding profoundly affects the day-to-day life of South Africans and can damage or destroy household electrical devices and appliances.

Surges occurring once power is restored can fry sensitive electronic devices. Devices carrying reactive loads are at the most significant risk of damage.

Battery-powered devices are indirectly affected by load-shedding. Each time a battery is charged and discharged, it’s called a cycle. Depending on the battery chemistry type , a battery can last anywhere from a few hundred (lead acid) to a few thousand cycles ( LiFePO4 ).

A home battery backup solution can be a lifesaver during load-shedding, but constant cycling will reduce its chronological lifespan.

Near-constant load-shedding has led to increased crizheyzme rates , making personal safety even more of an issue in a country with one of the highest murder rates in the world. During the week, home burglary incidents have increased by 3.2% and 8% over the weekend.

From a financial standpoint, South African households spend an average of R5,000 a month to mitigate the effects of load-shedding.

Effect on Schools and Education

The continuous disruption of power has a massive impact on learning and teaching. Some schools aren’t designed to allow natural sunlight into the learning environment. In addition to this, most schools don’t have access to alternative energy generation or backup.

Schools that rely on technology to instruct students fall behind on the recommended learning material, resulting in poor grades. At-home students struggle to follow online classes and meet deadlines making learning difficult.

Issues with traffic due to load-shedding also cause students (and educators) to arrive late to school, causing additional learning disruptions.

Final Thoughts

From the most prominent companies to individual South Africans and their families, the entire nation faces severe challenges due to load-shedding.

Small businesses must manage profit loss and customer retention, while healthcare systems deal with critical equipment damages and the inability to perform medical treatment, surgeries, and services.

Households are left with rising interest rates and increased expenses. Many are seeking alternative power solutions to keep their homes safe during blackouts.

EcoFlow has a wide range of backup and off-grid power solutions that can help keep the lights on even during extended load-shedding.

Check out our load-shedding electricity backup and solar generator solutions today .

For individuals and businesses seeking timely and accurate information on the load shedding schedule , Loadshedding.com stands as a premier resource. This platform offers up-to-the-minute news and schedules tailored to specific regions in South Africa. For informed planning and uninterrupted operations, choose Loadshedding.com as your trusted source.

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Small businesses in townships are struggling to stay afloat

While the survey was meant to quantify the impact of loadshedding on small business in the township communities, unpack what is driving the impact and draw insight to develop alternative solutions, the overriding finding was that township business owners are struggling to stay afloat amidst the crippling rolling blackouts.

Key findings of the survey include:

64% of township small businesses halt operations during loadshedding
Almost 66% of business owners have shed jobs because of loadshedding
Loadshedding has led to increased operating costs, lost revenue and declining margins, affecting profitability
Solar is the most preferred alternative energy option (although generators are the most used), but most businesses don’t know where or how to start looking for this solution
Business challenges caused by power cuts are having an impact on mental health, resilience and the entrepreneurial ability to hustle.

Have you read? SA government working on energy relief packages for struggling SMMEs

Small business is shedding jobs because of loadshedding

Though the survey shows that more than 60% of township small businesses stop operating when loadshedding is in effect, it also shows a measure of resilience amongst businesses. Around 19% have tapped into alternative energy sources and 17% are improving other ways to keep going.

Generators are the most prevalent alternative energy source. Though generators are cheaper than an equivalent battery backup system, running them can be very expensive depending on the stage of loadshedding.

Dayalan Govender, Nedbank Managing Executive Solution Innovation: “Given that spaza shops contribute around 6% of South Africa’s GDP, employ 2.6 million people and represent an economy of around R600 million, the results are troubling and require a response from both the private and public sectors.

Speaking around the finding that almost 66% of the respondents said they had been forced to shed jobs as a result of loadshedding, Lizzy Mogale, Managing Executive: Insights and Advisory at Nedbank Retail and Business Banking, highlighted the following: “In the food and beverages as well as manufacturing sectors, 83% of business owners reduced staff count; in agriculture 76% of businesses and in IT services 70% of business owners mentioned that they had to let go of some of their staff. On average, only 29% had no staff loses, while 5% of these businesses were permanently closed.”

Of interest Unpacking backup options in the face of loadshedding

How to design affordable solutions for small businesses

Bulelani Balabala, Founder of Township Entrepreneur Alliance ( TEA ) said the report sheds light on how small business owners are struggling to sustain their operations. “Nevertheless, despite having to cope with the added costs around things such as of fuel to run generators, it also revealed the resourcefulness and resilience of township micro-enterprises, even under the most extreme circumstances and with little outside support.”

Green economy specialist Masopha Moshoeshoe: Green Economy Specialist & Green Hydrogen Lead in the Investment and Infrastructure Office in the Presidency noted that the research results were valuable as they shed light on the lived experience of township business owners. “These conversations are important because they enable a broader understanding of the daily disruption to livelihoods.

“What is important now, is to determine the way forward. The interest in moving from generators to green energy is encouraging, and government and the private sector need to work together proactively to find ways to design affordable, sustainable solutions for these business owners,” said Moshoeshoe.

Franc Gray, Chief Lending Officer at Hohm Energy, said it was clear that most business owners did not know where to start looking for solutions. “Collectively, we need to devise a strategy for educating cash-strapped businesses about solar solutions, including how to calculate power needs, and where to find reputable installers. Generators are the cheaper short-term solution but in the long term, solar is more cost-effective. The aim must be to demystify how it works.”

Of reference SMEs making the case for collaborative and distributed energy resources

Impact goes beyond just the numbers

However, the impact of loadshedding on this sector goes beyond simply the numbers. The compound effect of COVID-19 lockdowns, the July 2021 unrest, intensified load-shedding, and increasing water constraints were reported to be putting a strain on the mental well-being of business owners and their employees.

“Despite the incredible hustling resilience of these business owners, there is a sense that people are starting to give up because it feels as though they are fighting a losing battle,” said Mogale. “When resources such as electricity and water become unavailable, deprivation can lead to hopelessness. This points to the need to support small business in dealing with mental health.”

Similar to the societal and business shift that occurred when the COVID-19 epidemic first hit our South African shores in 2020, business owners need to adopt a significant mindset and behavioural shift when looking at possible solutions to deal with load-shedding.

Survey participants made several suggestions for who to curtain some of the impact. These included: reduce the length of load-shedding to one hour, make more affordable alternative power solutions available, make solutions more accessible, and find external funding to help to ease the challenges.

Read more about the impact of loadshedding on township businesses below:

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PDF THE IMPACT OF LOAD SHEDDING ON THE ECONOMIC ...
1.6 Hypothesis of the study ... of load-shedding depends on the specific Eskom region or on the Municipality, based on local circumstances. 1.2 Background statement The study aims to identify the impact of load shedding towards the economic growth of South Africa. To better understand and learn more about the topic at hand, the relationship ...
Load Shedding and its Influence on South African Small, Medium and
This paper investigates the theoretical impact of load shedding on the profitability, liquidity, efficiency and solvency of South African small, medium and micro enterprises (SMMEs). It proposes a conceptual model based on the socio-economic significance of SMMEs and the volatility of electricity supply in South Africa.
The effects of loadshedding on small and medium enterprises in the
South Africa is at present experiencing electricity shortages resulting in loadshedding. Loadshedding is the action from an electricity supplier (Eskom) of rolling power cuts that intend to lessen the load on the power supply system when Eskom is not able to supply a high electricity demand. Loadshedding remains one of the country's most critical challenges and has affected day-to-day business ...
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The load-shedding technique is among the features used to balance the power consumption in the power system upon less power production. Towards achieving these, different mechanisms, algorithms ...
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In this paper, a Computable General Equilibrium (CGE) model. is considered to analyse the impact of loadshedding on the South Afric an. economy. The model is a static CGE model applied to South ...
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The impact of load shedding has been significant and far reaching. It is hoped that these results will be of value for industry stakeholders in dealing with the crisis and will provide powerful motivation to ensure the correct measures are taken to keep lights on. Keywords: Load shedding
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This research paper explores the impact of load shedding on the retail sector in South Africa using a mixed-methods approach. It quantifies the cost of load shedding on the industry and highlights the major challenges and opportunities for retailers in the context of the electricity crisis.
A systematic literature review on under-frequency load shedding
The hypothesis of this study is that machine learning algorithms can be effectively used to classify a vast amount of literature in the field of UFLS in terms of clusters and, by doing so, helping identify useful information to all involved stakeholders (researchers, equipment manufacturers, legislators, regulators, system operators, etc.) and ...
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Loadshedding power cuts directly affect the production line. Darkness is an enabler of criminality and thugs thrive in darkness. According to Lieutenant Patrick Jacobs of the SA Police Service's Visible Policing, "The dangerous consequences of load shedding come about when street lights and traffic lights are down at night.
Impact of loadshedding in South Africa: A CGE analysis
This study estimates that loadshedding will reduce economic growth by 2.3%, this higher than the Banks earlier prediction of a 0.6%. This study is limited to the effects of loadshedding and shed light on the South African economy that has been adversely affected by the Covid 19 pandemic and its recovery trajectory which is now stifled by ...
Mapping and Spatial Analysis of Electricity Load Shedding ...
The results show that annual load shedding exposure varied greatly, ranging from 1117 to 3244 h. The exposure values exhibit statistically significant spatial clustering (Moran's I = 0.3329, p < 0.01). Several neighborhoods classified as load shedding hot or cold spots, clusters and outliers are also identified.
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The impact of load shedding on the economic growth of South Africa
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Loadshedding is hurting small business in South Africa
64% of township small businesses halt operations during loadshedding. Almost 66% of business owners have shed jobs because of loadshedding. Loadshedding has led to increased operating costs, lost revenue and declining margins, affecting profitability. Solar is the most preferred alternative energy option (although generators are the most used ...
Description of hypothesis about loadshedding into geography
Another hypothesis is that loadshedding can exacerbate existing social and economic inequalities, as the impacts of power outages are often felt disproportionately by different groups. For example, loadshedding can disrupt essential services such as healthcare, education, and water supply, which can have greater impacts on vulnerable ...

The effects of loadshedding on small and medium enterprises in the Collins Chabane local municipality

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