The SBI asks President Ramaphosa to help small firms and households
February 8, 2023
As South Africans continue to endure the brunt of rising cost of living, the Small Business Institute has appealed to President Cyril Ramaphosa to place the plight of small businesses – their owners and employees – and households at the centre of his address tomorrow.
“We ask the President to provide urgent relief to struggling small businesses that are affected by the rising cost of capital and crippling load shedding,” says SBI CEO John Dludlu.
SA has been battling severe load shedding – stages 3 to 6 – for the past few months as Eskom, the power utility, struggles to generate enough power.
“Small businesses and households, which cannot afford to immediately get off the national grid, have been the worst affected. Every day, we are inundated by small business owners who are suffering from the devastating impact of load shedding. We ask the President to ask relevant organs of state to accelerate relief measures for SMEs affected by load shedding,” he says.
Although SA’s SMEs are resilient, the past few years have been especially tough: The Covid-19 pandemic, floods in KwaZulu Natal and the Eastern Cape and the July 2021 mayhem in KwaZulu Natal and Gauteng. “These events came on top of long-standing underlying conditions such as late payments to SME suppliers, red tape and low economic growth. The segment has hardly recovered, and now it has to cope with rolling power outages and rising interest rates. It’s unbearable. We ask the President to instruct all the departments that owe small suppliers to settle these debts at once – this could alleviate severe cash flow problems suffered by business owners,” Dludlu says.
He adds: “Last year, the President announced measures to help SMEs bounce back quickly from Covid. Whilst welcomed, the environment in which this scheme was introduced has significantly changed: load shedding has escalated, and interest rates have been rising fast to contain inflation. This requires that we tweak and rethink the relief measures, and design new ones to deal specifically with load shedding.”
Similarly, households are going through hardship because of load shedding. “We look forward to how government will cushion households and small businesses from the 18% tariff increase granted to Eskom by the National Energy Regulator of SA. “
“Small businesses are also suffering from the effects of failing state-owned enterprises and are caught up in fights between organs of state such as Eskom and non-paying municipalities. SMEs aren’t in a position to litigate out of these fights,” says Dludlu.