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The impact of load shedding on business and the economy

The impact of load shedding on business and the economy

It has been over a decade since South Africans first experienced load shedding. Although we’ve forcibly adjusted to the stages and plan our days accordingly, the long-term impacts on business and our economy still hit hard. Load shedding was first introduced in the later months of 2007 following continuous national blackouts to prohibit the failure of South Africa’s overall electricity supply. To this day, the future looks somewhat dark for our business sectors.

Let’s consider the impact of load shedding from a business and economic perspective.

According to Foreign Policy, “Had load-shedding never occurred, the country’s economy could be 17% larger than it is today. It is because load shedding increases operating costs but decreases revenue and declines margins, all of which affect the profitability of a business. Large and small businesses suffer, and more than 60% of business owners have reported involuntary job cuts due to revenue losses incurred during energy cuts. Load shedding causes a halt in operations, leading to equipment damage and a decline in productivity. Because employees cannot work, they do not meet deadlines, thus furthering financial losses for the company.

Economically, it is predicted that the GDP of 2023 will decrease to 1.2% from 2.3% in 2022, affecting our agriculture, forestry, and fishing sectors the most, but with retail, property and healthcare sectors not far behind.

Is there a way forward?

Realistically, these numbers could get worse if the government, Eskom and other stakeholders cannot alleviate grid conditions and fail to accelerate the rollout of independent power projects to relieve Eskom from the burden. Furthermore, some lights at the end of the load shedding tunnel could be drawn from President Ramaphosa’s proposals to resolve the power crisis, which included:

  • Intervening to lift the licensing requirement to 100MW, followed by a complete withdrawal of the licensing requirement.
  • Reducing the timeframe for environmental authorisations to 53 days for projects gazetted as Strategic Infrastructure Projects.
  • Reducing the timeframe for registration with NERSA from four months to an average of 14-19 days.
  • Reducing the timeframe for grid connection from 210 days to 105 days.
  • Reducing the timeframe for land-use authorisations for energy projects from 90 to 30 days.

Furthermore, measures such as the tax rebate for installing solar panels, as announced in the National Budget Speech, will assist South Africans in accessing affordable energy and reduce their reliance on the grid.

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