President Cyril Ramaphosa must focus on small and medium-sized enterprises (SMEs) when he addresses the country in the coming week regarding the steps government is taking to alleviate the nation's energy crisis, industrial and logistics parks owner and operator Inospace COO Jacques Weber says.
More than 1 500 SMEs, which have been hard-hit by the impacts of loadshedding, run their businesses from Inospace's logistics parks.
"We call on the government to immediately provide unconditional assistance to SMEs whose businesses are at an enormous risk of being annihilated by unending loadshedding," Weber says.
He referred to the Department of Small Business Development, recalling that it was considering relief measures to assist SMEs affected by loadshedding.
“These measures must be realistic and translate into financial assistance,” he states.
SMEs play a significant part in South Africa's economy, making up more than 98% of businesses nationwide and contributing 39% towards the country's gross domestic product. According to Weber, that contribution is likely to increase in the next few years.
However, these businesses are most vulnerable to economic upheavals and externally driven pressures.
“While loadshedding persists, thousands of SMEs are . . . 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,” Weber notes.
He explains that, in 2019, the Department of Trade and Industry launched the Intsimbi Future Production Technologies Initiative (IFPTI) to position South Africa's advanced manufacturing sector for the Fourth Industrial Revolution.
"While many participants in the industrial sector were impressed with the government's strategy, the lack of reliable electricity supply will take the industrial sector from the Fourth Industrial Revolution to before the first one. Reliable power is the foundation of economic development," Weber says.
Inospace believes that funds and facilities must be urgently provided to relieve smaller businesses with their existing debts and payments. The company, which specialises in providing industrial and last-mile logistics spaces with business services, believes that government relief should assist SMEs in paying for raw materials, labour and other operational costs.
"These interventions must be structured to match the patterns of small business cash flow and the extent of the impact experienced due to the loadshedding,” Weber says.
Inospace, which has more than 50 serviced logistics parks in Cape Town and Johannesburg, has launched a "Living with Loadshedding" project to help its clients minimise disruptions to their business operations. The project includes solar solutions, inverter options and generator advice to assist SMEs who require emergency assistance. It has also established a hotline, which Inospace clients can use for advice or emergency relief.
Inospace installs solar plants to reduce consumption on the various grids and lower demand. The company also allows clients to install their own dedicated solar panels, which benefit the tenants' electricity bills.
"Many property companies use solar as a yield-enhancing profit generator, but we will use solar to keep our clients in business. We allow our clients to move between logistics parks and use our business hubs with 24/7 power. They can now work between the different loadshedding stages," Weber says.
"Everyone hopes that loadshedding will start bottoming out and slowly easing over time, but it's unlikely there will be any relief soon. Accommodating loadshedding into our business operations and strategies will be essential for at least a few years.”