Load shedding hampers SMEs

Eskom’s forecast of planned load shedding in 2015 does not bode well for growth in the small and medium enterprise sector (SME).

While SME owners were cautiously optimistic that the current economic environment was conducive for business growth in 2015, factors such as the country’s constrained power supply were impacting confidence levels.

Business Partners Limited has released its third quarter 2014 SME Index (BPLSI) results. The BPLSI, which measures attitudes and confidence levels amongst SMEs in South Africa, revealed average confidence levels of 55% that the economy will be conducive for business growth in the next 12 months, which is a decrease of 3% when compared to the second quarter of 2014.

Load shedding impact on the SME sector

The introduction of national load shedding by Eskom from mid June 2014 has had a significant impact on the SME sector, resulting in decreased productivity and financial losses. The power crisis has been referred to as one of the most critical structural impediments to economic growth in the country, and continues to have far reaching effects on SMEs across all industries.

Additionally to the power crisis, the July cut to South Africa’s 2014 GDP growth forecast by the International Monetary Fund (IMF), which was reduced from an initial 2.7% to 1.3%,  plus the two instances of raised interest rates by South African Reserve Bank, albeit marginal, have also taken its toll on SME owners’ confidence levels.

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This is the last blog for this year. We wish you an enjoyable festive season and and all the best in the New Year.

We are looking forward to welcoming you again in January 2015.