South Africa’s SMMEs’ Power Struggle

By The Innovator Trust on 03 Nov 22

As we navigate the fourth industrial revolution era, energy as a resource is central to life as we know it. Without it, the cogs that turn the wheels of our economy are unable to operate. Large, established businesses have the resources to ensure alternative energy sources but for the small-business sector whose daily work is largely dependent on reliable power and a stable internet connection, keeping the power on is critical. Far more than a simple inconvenience, South Africans are in a severe power pandemic, with the frequency of loadshedding increasing over the last quarter.

The Struggle is Real

Global consulting firm, TMMBS, notes that the severity of loadshedding on SMMEs is more significant than what is presented at face value. The reality is that alternative power sources like generators and inverters are simply a luxury that most SMMEs in South Africa cannot afford. The loss of power leads to ill-afforded downtime and a lack of productivity. The slippery slope continues, and in several instances, the loss of productivity leads to a loss of income as delays set in, deadlines are missed, and the leeway rope runs short for customers. The business disruption is an immense burden with a very real cost to the country. While actual figures are difficult to pin down, the quantitative effect is estimated to be between R1.5 billion and R4 billion in losses daily. This is in addition to job-losses, the loss of skilled workers who have emigrated and increasing costs incurred by the country to aid the energy crisis. Despite the dire state of affairs, South African entrepreneurs continue to display unmatched resilience and positivity in the face of this adversity. With SMMEs accounting for 33% of the global GDP, the role of resilience in keeping small businesses owners afloat, cannot be underestimated.

Innovation Wins

The realities of circumstances under the new normal and crises entrepreneurs face, are ideal for innovation. Tech start-ups are playing an increasingly significant role in SA. Businesspartners.co.za highlights, "Amidst a series of unique socioeconomic challenges that are part and parcel of its status as a developing market, South African entrepreneurs are leading the charge in innovation and towards building our very own Silicon Valley in Cape Town – an environment that enables the growth and development of tech start-ups." Valued not only for their contribution to the economy but for their ability to put South Africa front and center on the global stage, the contribution that SMMEs make and the level of untapped potential is a significant factor that urgently needs more support and collective attention from both big-business and state leadership.

One example of where SMME innovation has been successful in providing solutions to present day issues in South Africa is found in the story of Cape Town based start-up, Arion Power. In direct reaction to the country’s loadshedding crisis, three UCT business students put their minds to good use during the hard lockdown of 2020, creating a device, the Wi-Box, to keep you connected to the internet during a power outage. The trio of young entrepreneurs have already sold more than 10 000 units countrywide, saving many customers, many of whom are other small businesses and home-based workers across South Africa, from potential loss of productivity and income. Another successful tech-based application which arose because of the country’s loadshedding problem, to ease the frustration of knowing when and for how long your power will be out, is the famous “EskomSePush” app created by two Cape Town based bankers as a side-hustle in 2015. To date, the app has been downloaded close to 6-million times and will soon include added features for water outage schedules and reports of fires. Solutions such as these are perfect examples of just how much potential exists within the realm of technology and the secondary benefits to the economy waiting to be derived through tech-entrepreneurship and job creation.

Take back your power

The reality of power outages has become the norm for South African citizens with just under 2000 hours (±81 days) of national load shedding reported in 2022 already. As frustrating as this enemy has been, and with no clear end in sight, we must find practical and effective solutions to coexist and keep the wheels turning, despite the loadshedding phenomenon.

Here are some smart survival tips you can employ as an SMME living with loadshedding:

Take back your power with low-cost alternative sources. If your landlord hasn’t already invested in a generator, there are other ways to work around the cost of keeping the lights on. Suppose you're in a centre, or building with other small businesses for instance, approaching surrounding businesses to purchase an alternative power source together is an option to keep the doors open and your business operating while not having to take on the cost alone. If you’ve adapted your workforce to a hybrid working model with part remote working, part office working, then investing in innovative products like the mini-UPS WiBox is a quick, hassle-free, and affordable solution to keeping productivity output levels up even when the power is off.
Plan for it as far as you can. If you realise you may lose power for four hours a day. Create a schedule where you can work from the office or a different location for those four hours or substitute your work with tasks that require no electricity, like status meetings etc. during that time.
Prepare for the risks as far as possible. Unplug devices and appliances at risk of damage due to extensive power surges.
To keep the business flow, invest in low-cost payment devices, like YOCO, that must be charged ahead of time. They are fully functional when connected to a mobile hotspot.

While we don't want to deal with the loadshedding problem, in reality, it is going to be here for a while with South Africa’s Council for Scientific and Industrial Research (CSIR) reporting that Eskom will face a 2,001 MW or more shortage for 49 of the 52 weeks in the coming year. As SMMEs, resilience and purpose compel us to survive while presenting an opportunity for innovation through technology, to thrive despite the dim outlook.

To find out more about the SMME’s Power Struggle, join us on 16^th November 2022, for a masterclass on the topic, exploring the effects on the small business sector, at the 2022 Women In Tech Appreciation Experience, powered by the Innovator Trust.

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