As SA grapples with the worst rolling power cuts in nearly three years, the franchise sector is seeking an urgent meeting with the department of small business to discuss the fallout.
Unlike their bigger rivals, many small businesses do not have the cash to acquire alternative energy sources.
The energy crunch comes at a time when businesses are still recovering from the Covid-19 pandemic and the civil unrest that unleashed a wave of looting in parts of KwaZulu-Natal and Gauteng about a year ago.
“Continual load-shedding is not sustainable. It increases costs and reduces profits, resulting in job losses and reduced opportunities,” said Richard Mukheibir, MD at Cash Converters.
“If living through a pandemic for over two years has taught us anything, it is that it’s imperative to have a recession-proof business, one that will make it through the good and bad economic cycles.”
Before the pandemic, the franchise sector generated R734bn in turnover in 2019, equivalent to 14% of GDP, and employed an estimated 500,000 people, according to the Franchise Association of SA, which conducted a survey at the time.
Small businesses are often seen as a potential area of job creation, but at the same time are invariably susceptible when the economy falters. With power utility Eskom unable to generate enough capacity to meet demand, the effect has been particularly intense for the sector.
SA is home to 850 franchisors and 48,000 franchisees, according to the association, which said many of its members are in “survival mode”.
"Our concern is more on the franchisees because franchisors will not continuously bail the franchisees out. They can support them up to a certain level. It is then upon the department of small business. I have written a letter to the minister requesting a meeting to say: these are the burning issues that need to be attended to urgently,” Franchise Association of SA CEO Freddy Makgato said.
“We would have loved the department of small business development to lobby the department of trade, industry & competition, which will then lobby the Treasury to say, let us find a better way of alleviating this economic burden on small businesses. It is the responsibility of the department of small business development to ensure that the environment becomes conducive to small businesses to continue to operate.”
Karen Doveton, a managing partner at events management company The Production Line, said the load-shedding has had a marked effect on her business.
“Email in particular is our main communication tool in that our suppliers will send us quotations or visuals, which we then have to send on to our clients. On Thursday, the mails just went down completely because of load-shedding. We have never had it this bad before.”
The Production Line offers marketing and event services, predominantly to the pharmaceutical industry. It generates more than R10m in revenue per year and uses a broad base of suppliers for jobs.
“Small businesses in SA don’t have a voice. I don’t think the government for one minute is considering the effect of load-shedding on us. This is an ongoing problem, not something that just happened. It’s been particularly bad in the past week to a point that a massive server went down, affecting our communication, which is our lifeline in terms of our business,” Doveton said.
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