As the franchise sector suffers more debilitating losses as a result of the loadshedding crisis, industry organisation the Franchise Association of South Africa (Fasa) has called on government to take urgent action to resolve the energy crisis and bring national security under control to prevent an explosion of unrest and civil disobedience.
Franchising, which contributes about 14% to the country’s gross domestic product, represents businesses across 14 different sectors. Fasa says it has done everything to ensure that its members comply with government’s guidelines and continue to contribute to keeping the economy going.
“The inadequacy of the response from the authorities in providing the very basic services that can enable businesses to operate and thrive is untenable and Fasa calls on government to act with the urgency it requires to solve the energy crisis and prevent further anarchy and the collapse of the economy,” the organisation emphasises.
Fasa says the retail sector has borne the brunt of the crisis, in particular in the aftermath of the July 2021 riots and floods in the last two years, and not enough government support.
Reports from members indicate that, if steps are not taken immediately and urgently, rioting and looting will resume and escalate nationally, which they are already seeing happening sporadically, the organisation points out.
Fasa notes that food security is also under threat as loadshedding puts pressure on manufacturers, food growers and meat/poultry suppliers who are reporting massive wastage as produce goes bad owing to incessant loadshedding.
The fast food and restaurant sector, which took strain during the pandemic, is also being hit by another blow with up to ten hours a day of loadshedding that is further debilitating the sector as, even with generators, restaurants remain unable to generate enough income during the hours of loadshedding and end up with no customers and expensive wastages, Fasa outlines.
It adds that, even those businesses that have generators, often lose thousands of rands as they have to spend more on extra supplementary expenses like fuel, labour and maintenance with each loadshedding incident. Equipment also gets damaged because of the power surges – all impacting the bottom line.
“For the broader franchise sectors – from automotive products and services, building office and home services, business to business, health and beauty, education and training to real estate, the bottom line is that the loadshedding and power crisis in South Africa is going to constrain economic growth and increase costs across the board.
“As a country, and across the global environment, we are already in a significant inflationary environment at present, and the power situation adds unnecessary pressure,” Fasa warns.
Although the increased costs of doing business hurts the bottom line, not trading during extended loadshedding is worse for business, according to many franchisors in less power-intensive sectors.
“These businesses have rallied, and because of the way the businesses are set up, they can continue to trade off the back of improved information technology systems, a few lights, and the Internet. From this perspective, they are slightly better off than businesses requiring extensive power to keep going – those using power-intensive dishwashers, ovens, stoves, fridges, freezers, furnaces, large-scale manufacturing and so on,” Fasa notes.
The organisation says it is concerned at the government’s inability to acknowledge the extent of the problem and to put any realistic and timeous solutions into action.
“We don’t believe proposed Cabinet . . . reshuffles will solve the electricity woes, and Eskom is starting to feel beyond hope, with no tangible solutions to bring enough independent power supply to the national grid.
“It is imperative that government tackle this problem immediately, to prevent further loss of business and employment. To alleviate the power crisis, Fasa suggests, as a short-term solution, that government provide some sort of rebate or reduced tariffs to key sectors to provide some industry relief,” it states.