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It is time for government to clarify and augment its bounce-back loan scheme to support small businesses affected by rolling blackouts. Solar tax relief must also be extended to financial assistance to match small business cash flow and the extent of the impact experienced due to load shedding.
President Cyril Ramaphosa announced a raft of new measures to combat the country’s existential power crisis in his state of the nation address recently after the country had over 200 days of load shedding in 2022 and not a single day without blackouts since the beginning of 2023.
Needless to say, the power crisis decimated small businesses that cannot afford to manage the unreliable electricity supply.
Ramaphosa also announced that last year’s Covid-19 “bounce-back” loan scheme to help businesses recover from the pandemic would now be used to assist them in getting funding for solar power.
“National Treasury is working on adjustments to the bounce-back loan scheme to help small businesses to invest in solar equipment and allow banks and development finance institutions to borrow directly from the scheme to facilitate the leasing of solar panels to customers,” he said.
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Last year, government launched the bounce-back loan scheme administered by banks and other financial institutions and guaranteed by the government for companies that need finance to recover from the effects of the pandemic.
Ramaphosa said the department of small business development will work with National Treasury on how the scheme can be strengthened to assist small and medium enterprises and businesses in the informal sector.
Now Inospace, South Africa’s largest owner of serviced logistics parks, is pushing for government to clarify what the loan scheme will entail. “Inospace believes government must urgently provide funds and facilities to help small businesses with their existing debts and payments, buy raw materials and manage other operational and procurement costs,” Jacques Weber, COO of Inospace says.
“These interventions must be structured to match the patterns of small business cash flow and the extent of the impact experienced due to load shedding.”
Weber says solar tax relief is better than nothing, but this will not help small businesses survive or bounce back. “We therefore call on government to immediately provide unconditional financial assistance to SMEs whose businesses are at an enormous risk of being annihilated by unending load shedding.”
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The department of small business development recently said that, together with public and private stakeholders, it was working on an energy relief package for SMEs affected by load-shedding. “We would welcome “bounce-back” measures that translate into financial assistance,” says Weber.
SMEs are often called the lifeblood of South Africa’s economy and represent over 98% of businesses, employing up to 60% of the workforce with a gross domestic product (GDP) contribution of 39%.
Weber says SME’s contribution should increase in the future, further cementing their importance to the economy. “However, these businesses are also the most vulnerable to economic upheaval and externally driven pressures.”
While load shedding persists, thousands of SMEs are staring down the barrel contemplating shedding jobs, lowering production or possibly winding up. The SME segment of the economy does not have the means to get off the grid through costly alternative power solutions, he says.
The department of trade, industry and competition launched the Intsimbi Future Production Technologies Initiative (IFPTI) in 2019 to position the country’s advanced manufacturing sector for the fourth industrial revolution.
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“Despite the president’s optimism to end load shedding, Inospace believes the problem will not disappear quickly. The company has launched a Living with Load Shedding project to help its clients minimise disruptions to their business operations and negotiated discounted prices with various service providers of alternative energy solutions, including solar energy, inverter and generator options, to assist SMEs within its portfolio.”
Inospace also established a hotline service to provide clients with advice or emergency relief and installs solar plants in its parks to reduce consumption and lower demand on various power grids. Through this project, clients can now install their dedicated solar plants to reduce electricity bills.
“Many property companies use solar as a yield-enhancing profit generator, but we will use solar to keep our clients in business. Our clients can move between logistics parks to use the business hubs with 24/7 power, enabling them to work through the different load shedding schedules and stages.
“With no new generation capacity added to the system, the possibility of unplanned breakdowns of generation power units will continue. Planning for load shedding in our business operations and strategies will be essential for at least a few years,” Weber says.
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