A new report by the Township Entrepreneurs Alliance (TEA) and Nedbank Insights has found that load shedding has impacted almost two-thirds of township businesses, resulting in job losses and the threat of closure. The study revealed that 64% of small township businesses had stopped operations during load shedding, with almost 66% of business owners cutting jobs due to power outages. The food and beverage sector and manufacturing industries were the hardest hit by job cuts. As per the report, load shedding added to operating costs, reduced profitability, and led to decreased revenue. The food service sector faced immense challenges due to the power cuts, losing perishable items that needed cold storage, leading to wastage and revenue loss. The report also highlighted the impact of the power cuts on entrepreneurs’ mental health and resilience.
Business owners say the situation is even direr – they face closing if the power outages continue. Mlungisi Mazana, the chairperson of the Gugulethu Business Forum, pointed out that small township businesses face a large number of barriers caused by load shedding, increasing crimes on their premises during power outages. He added that they end up losing customers to bigger chain stores that have generators because a small business doesn’t have that luxury. He is also concerned that the challenges of operating during power cuts will discourage future entrepreneurs.
Dr. Azar Jammine, Director and Chief Economist at Econometrix, pointed out that small businesses tend to feel the impact of load shedding the most. While the township economy spend may be only a small portion of the country’s economy, it affects a large population that lives and works in those communities, Jammine said. He criticized the government’s repeated push towards small businesses but argued that the South African economy was still dominated by big businesses.
Dayalan Govender, Nedbank’s Managing Executive for Solution Innovation, argued that township businesses had a significant impact on the South African economy. Spaza shops alone contribute around 6% of South Africa’s GDP, employ 2.6 million people, and represent an economy of around R600 million ($39 million), and the results of the report require a response from both the private and public sectors, he said.
Chris Paladi, a former restaurant owner in Alexandra, said load shedding had heavily impacted his business. Paladi opened his restaurant with his wife in December 2021 but had to close it less than a year later due to load shedding. Load shedding affected the restaurant’s peak trading times, and it was no longer feasible to keep the business open. After the closure of his restaurant and losing his day job, Paladi is now unemployed and in debt to the landlord of the restaurant property. He believes that township businesses need to look to alternative power sources in the face of ongoing load shedding.