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

Abstract

Abstract 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.

Keywords

• Small and medium enterprise
• Eskom
• Technology
• Electricity deficiency
• Loadshedding
• Local economic development