Reference: Published by SME South Africa (26 Sept 2024)

Running a business involves following the rules and regulations that apply to it. While some laws are broad, others are specific to certain industries or sectors. In certain cases, businesses need to obtain special permits to operate in particular areas, known as trade licenses.

A trade or business license is a permit that allows you to legally operate a business in a specific location. This license ensures that your business and its premises comply with all safety, health, and building regulations.

As a business owner, it is crucial to ensure you have the proper licenses and permits in place. Failing to do so can result in hefty fines, and could even jeopardize your business’s ability to operate.

This article explores what a trade license is in South Africa and how to stay compliant.

Why You Need a Business License in South Africa

In South Africa, business licenses and regulations are governed by specific laws. One of the primary legal frameworks overseeing licensing is the Business Act of 1991, which mandates that certain businesses must obtain a trade license before commencing operations.

The Business Act specifies the following key points:

• A licensing authority may be designated for specific areas by a notice in the Official Gazette.
• No business may operate in an area governed by a licensing authority without an appropriate trade license or hawker’s license.
• A license will not be issued if the business premises do not meet local zoning, safety, or health standards.
• Similarly, a license will not be granted if any equipment, storage facilities, work surfaces, or other elements used for handling or selling food fail to comply with regulations.
• Licenses may be granted on the condition that businesses make necessary adjustments to meet compliance standards before the final license is issued.

Licensing authorities have the power to suspend or revoke licenses if businesses fail to maintain compliance, and non-compliance with regulations can result in fines or even imprisonment. Additionally, ongoing violations may incur daily penalties.

The Business Act also allows for appeals in cases where license applications are denied or if approval takes longer than 21 days.

Which Businesses Require a Trade License?

Not all new businesses require a trade license, but some, particularly those in the food industry, do. According to the Business Act, the following types of businesses need a trade license:

• Food establishments
• Adult entertainment venues
• Cinemas
• Nightclubs
• Arcades
• Pool halls
• Hawkers
• Businesses with three or more vending or slot machines
• Spas, saunas, and health clinics
• Public baths and massage parlors
• Laser and ultraviolet treatment centers

If your business falls into any of these categories, it’s important to ensure that you secure the necessary trade licenses to stay compliant and avoid fines.

How to Apply for a Trade License

To apply for a trade license, you will need to submit an application to the relevant local authority, typically your municipality. The documents required for a new business license application may include:

• A certified copy of your ID or documentation from the Department of Home Affairs
• Registration papers from the Companies and Intellectual Property Commission (CIPC)
• Lease agreement (for home-based businesses)
• Liquor license (if applicable)
• Gambling authority documentation (if applicable)
• Proof of address
• Menu (for restaurants)
• Certificate of acceptability (issued by Municipal Health Services)
• Fire safety clearance certificate

Renewing Your Trade License

Trade licenses in South Africa are typically valid for 12 months, after which they must be renewed. To renew your trade license, the following documents are generally required:

• Previous trade license
• Copy of your ID or relevant documents from the Department of Home Affairs
• Liquor license (if applicable)
• Updated menu (if applicable)
• Gambling authority documentation (if applicable)
• Fire safety compliance letter
• Certificate of acceptability for food premises
• Latest lease or title deed (for home-based businesses)
• Business registration papers from the CIPC

Having all necessary documents prepared in advance will streamline the renewal process and help ensure your application is not rejected due to missing information.

While managing these legalities may seem like a tedious task, it’s essential to keep your business in good standing. Failing to secure or renew your trade licenses can lead to fines or, in severe cases, the closure of your business.

Reference: Published by Staff Writer (BusinessTech), 3 April 2024

The South African Department of Employment and Labour has released Draft Regulations for public commentary, reflecting changes in the Employment Equity Amendment Act signed by President Cyril Ramaphosa in April 2023.

These regulations set out sectoral numerical targets for employment equity, urging employers, especially those with over 50 employees, to align with these new benchmarks to accelerate transformation within the workplace.

Detailed guidance is provided on developing Employment Equity Plans, considering the workforce profile against sector targets and the Economically Active Population data. This approach underscores a strategic move towards more inclusive employment practices, balancing ambition with realism to foster a diverse and competitive workforce.

The consultation period invites stakeholders to contribute to shaping a more equitable employment landscape by May 2, 2024.

For a comprehensive understanding and to contribute to the public comment, visiting the official notice or seeking detailed documentation is advisable.

Reference: Published by Anthony Molyneaux (TimesLive), 7 March 2024

A dispute over alleged unpaid music royalties in renowned South African restaurants has resulted in the South African Music Performance Rights Association (Sampra) initiating a criminal case. Sampra has pressed charges against Life and Brand Portfolio, a well-known restaurant group, accusing them of neglecting to pay license fees for the music played in their establishments over the past four years. Notable restaurants under Life & Brand Portfolio include La Parada, Tiger’s Milk, Harbour House, Grand Africa, Lucky Fish and Chips, Live Bait, The Lookout, and Old Town Italy.

According to Pfanani Lishivha, CEO of Sampra, these establishments have been using music unlawfully and refusing to pay the required license fees, preventing recording artists from earning ‘Needletime Rights’ royalties. Sampra, a nonprofit organization, emphasized that the collected license fees are meant to be distributed as ‘Needletime Rights’ royalties to recording artists and record companies.

Despite Sampra’s efforts, Life & Brand Portfolio remains firm in its alleged illegal use of music, leading to a legal case against the group for what is deemed as illegal and unethical conduct. Lishivha expressed concern about the exploitation of artists’ intellectual property, stating that legal action will be pursued against music users refusing to pay ‘Needletime Rights’ license fees in the coming months.

Lishivha criticized Life & Brand Portfolio, accusing them of being content with artists facing financial struggles while their businesses thrive on the exploitation of artistic talents. Sampra is determined to take a stand against such unethical practices, emphasizing that legal action is a last resort but necessary to ensure that recording artists receive their due compensation. Despite being given the opportunity to comment, Life & Brand Portfolio did not respond to questions sent by the group.

Reference: Published by Luke Fraser (BusinessTech), 11 February 2024

Due to the hard operating environment, South African entrepreneurs are increasingly unwilling to start new enterprises, limiting the creation of urgently needed jobs.

The Stellenbosch Business School’s 2023 Global Entrepreneurship Monitor South Africa (GEM SA) study shows that South Africa’s early-stage entrepreneurial activity (TEA) has dipped below pre-pandemic levels.

According to the report, the country’s weak economy and insufficient enabling environment for businesses limit entrepreneurship’s potential to boost economic growth, job creation, innovation and technology advancement, and social cohesion.

South Africa did improve its score on the GEM National Entrepreneurial Context Index (NECI), which measures the favourable environment for entrepreneurship and launching a new business, from 46 out of 50 nations in 2021 to 40 out of 51 in 2022.

However, South Africa was one of just three countries where all 13 of the enabling conditions for entrepreneurship were classified as insufficient (scoring less than five out of ten).

“Overall, we are not seeing resilience and recovery of entrepreneurial activity to pre-pandemic levels in South Africa compared to global and African perceptions, although these also are not optimistic,” stated Angus Bowmaker-Falconer, the primary author of

“This is reflective of our poorly performing economy, the impact of the energy crisis and deteriorating transport, logistics and other public infrastructure and service delivery, and the lack of a favourable enabling environment to support business start-up, growth and sustainability.”

The report’s co-author, Associate Professor Natanya Meyer, expressed concern that the intention to start a new firm has dipped below pre-pandemic levels.

“The percentage of adults aged 16-64 intending to start a new business in the next three years declined to 10% in 2023, the lowest in 20 years, after reaching an all-time high of 20% in 2021/22,” Meyer stated in a press release.

TEA, which includes active enterprises less than three years old and new businesses up to three and a half years old, fell from a pandemic high of 17.5% to 8.5% in 2022/23, a significant decrease from the 11% recorded in 2019.

Furthermore, established business ownership (more than 3.5 years) fell nearly half from 3.5% in 2019 to 1.8% in 2022/23, following a big peak of 5.2% during the pandemic years.

“The extent to which the COVID-19 epidemic affected entrepreneurship levels remains unclear. Lockdowns and related restrictions severely affected people’s ability to work and had a negative impact on trade and markets, putting pressure on economies around the world,” Bowmaker-Falconer added.

“At the same time, this crisis presented ‘problems to be solved’, and many new and established businesses pursued these opportunities.”

“In lower-income economies such as South Africa, there was generally less financial support from governments, as well as possibly fewer available jobs and income alternatives, which may have pushed more people into starting their businesses in 2020 and 2021.”

Furthermore, the company departure rate, or the percentage of persons who left their business in the previous year owing to selling or shutting it down, fell to 5% in 2019 from an all-time high of 13.9% in 2020/21, with the pandemic being the primary cause for business owners to leave.

The report also revealed that entrepreneurs had low and diminishing expectations about their company’ ability to create jobs.

In 2019, three out of ten business owners said they planned to hire six or more individuals in the following five years.

However, this figure fell to two in ten by 2022, which Bowmaker-Falconer attributed to the overall dismal economic conditions and enabling environment.

What to improve

Although the report’s findings reflect a bleak image of the condition of entrepreneurship in South Africa, Meyer emphasized that several obstacles arising from the Covid-19 pandemic must be overcome, in addition to the myriad issues faced by the country.

“As can be seen by the featured case studies in the report, South Africans are resilient, and with a better ecosystem environment factors in place, more and better-performing businesses will emerge,” she went on to say.

“Therefore, improving policies and creating a more conducive enabling environment should be a main priority for policymakers and other stakeholders.”

Reference: Published by Luke Fraser (BusinessTech), 5 September 2023

In August, South African business activity increased for the first time in a year, with the latest S&P Global South Africa Purchasing Managers’ Index (PMI) returning to positive territory after months below the line.

The PMI is a composite indicator of the private sector’s operating conditions. It increased from 48.2 to 51.0 in August.

This is the first time in six months that the PMI has risen beyond the neutral 50-point market level.

“The August South Africa PMI pointed to an encouraging turnaround in the private sector economy midway through the third quarter, as companies reported an increase in output for the first time in a year and demand conditions were broadly steady,” said David Owen, Senior Economist at S&P Global Market Intelligence.

“While inflationary pressures continued to sap customer spending power in many areas, there were hints that order books may be starting to improve, leading firms to make concerted expansion efforts.”

Despite significant increases in wages and material prices, the recovery in output enabled businesses to hire more workers and purchase more goods. The surge in layoffs is due to firms’ need to boost capacity and reduce work backlogs.

Despite the fact that new order inflows fell for the fourth month in a row due to load shedding and the cost-of-living issue, the newest statistics revealed that the drop was the weakest in the series.

Several companies also reported a rise in customer numbers and a revival in domestic demand. Export sales, on the other hand, fell somewhat in August.

There was nevertheless good news for inflation, as business costs rose at their slowest rate since January, resulting in a slower increase in a firm’s output charges.

Price pressures maintained, however, as a result of the rand’s weakness, wage hikes, and supply concerns, which were compounded by the Cape Town taxi driver strike.

Companies also witnessed a modest gain in input stores during August, while inventories fell during the previous four months. This expansion occurred despite a significant deterioration in supplier performance.

Looking ahead, South African firms remained optimistic about future activity, despite a modest drop from a nine-month high in July.

Firms were confident about increased demand, lower inflation, and a reduced impact of load shedding on their operations.

However, Owen cautioned that the August improvement should not be overblown.

“August’s rebound does little to turn the tide after a dismal start to 2023.” “Load shedding, supply disruption, and currency weakness continue to stymie firms and have an impact on demand,” he said.

“Progress on these issues would undoubtedly benefit South African businesses in the latter part of this year.”

Reference: Published by Staff Writer (BusinessTech), 30 August 2023

Trade and Industry Minister Ebrahim Patel has introduced the new Companies Amendment Bill in parliament, setting off the process of making changes to South African corporate law.

One of the significant improvements in the bill, which was released for public comment in 2021, is that it requires listed firms in the country to disclose the top-paid to bottom-paid 5% of workers in their reporting.

Patel earlier stated that the measure will contribute in the resolution of South Africa’s inequality concerns.

South Africa is currently one of the most unequal countries in the world, with significant disparities in wealth distribution between top and bottom earners.

High levels of CEO pay have been a sensitive topic around the world, but none more so than in South Africa, where some top executives earn more than R500,000 each day, compared to the average of R800 or the poverty line of R25.

In recent years, there has been a considerable increase in the number of shareholders of publicly traded businesses voting against high executive pay at Annual General Meetings, notably in the financial industry.

In terms of the new proposed rules, in addition to the present salary reporting obligations, South African corporations will be required to include the following in their reporting:

• The remuneration policy of the company, which must be detailed in a separate section of the remuneration report;
• An implementation report detailing each director’s or specified officer’s compensation and benefits;
• The total remuneration of an employee with the greatest total remuneration, containing all income and perks, including employer contributions to benefit funds, short-term incentives or bonuses, and long-term incentives. This is not restricted to the CEO; any other executive or prescribed officer can be involved.
• The total remuneration of an employee with the lowest total remuneration in the organization, encompassing all salary and benefits, including employer contributions to benefit funds and incentives or bonuses.
• The average salary of all employees, the median remuneration of all employees, and the remuneration gap, which is the ratio of the total remuneration of the company’s top 5% highest paid employees to the total remuneration of the company’s bottom 5% lowest paid employees.
• The revised pay report, including all of these facts, must be authorized by the company’s board of directors and presented to the shareholders at the annual general meeting, where it must be voted on for approval by the shareholders.
• The new legislation emphasize not only pay, but also other elements such as beneficial ownership of a corporation and reducing red tape.

The department wants to increase the ease of doing business in South Africa by eliminating “unnecessary red tape” and making regulations transparent, user-friendly, compatible with well-established concepts, and not overly restrictive on company conduct.

Another significant focus of the proposed legislation is better transparency of the ultimate owners of a company’s shares. This is part of the state’s larger effort to combat corruption and money laundering, and it was made possible by the General Laws Amendment Act, which was passed at the end of 2022.

The government thinks that by enacting the modifications, it would attract investors while also making the local economy more productive and efficient, allowing it to create more jobs.

The amendments intend to:

• Insert new definitions and revise the meaning of ”security.”
• Clarify the effective date of a Notice of Amendment to a Memorandum of Incorporation;
• Allow the Commission to publish the notification about the location of a company’s records as prescribed.
• Distinguish areas where access to company records may be restricted;
• Prepare, present, and vote on the company’s remuneration policy and directors’ remuneration report;
• Allow for the submission of a copy of the yearly financial statement;
• Allow the court to validate the illegitimate creation, allotment, or issuance of shares.
• Clarify that unpaid shares are to be transferred to a stakeholder and handled with per the terms of a stakeholder agreement.
• Exempt the subsidiary company from the financial support requirements.
• Provide for situations in which a special resolution is required for a firm to acquire its own shares.
• Allow for the presentation of a social and ethics committee report as well as a remuneration report at a public company’s annual general meeting.
• Provide for the conditions under which a private corporation will be regulated;
• Allow for the publication of the application for exemption from the requirement to select a representative.
• Committee on Social and Ethical Issues;
• Deal with the social and ethics committee’s composition.
• Provide for the social and ethics committee to prepare a social and ethics committee report, as prescribed, to be presented at the annual general meeting or shareholders meeting, as applicable.
• Provide for the appointment of an auditor at a shareholders’ meeting in the case of a private corporation, personal liability company, or non-profit company if such appointment is required by the Act;

Extend the concept of an employee share program to encompass circumstances in which shares of a corporation are purchased;

Provide for post-commencement financing for unpaid sums owed to the landlord during the course of the business rescue proceedings.

Under specific conditions, the Commission may substitute a contested corporate name.

Provide for the Companies Tribunal to mediate, conciliation, and arbitrate exclusively in relation to relief or complaints under the Act;

and to further provide for the functioning and control of the Companies Tribunal.

Make provisions for Financial Reporting Standards Council declarations.

Reference: Published by Staff Writer (BusinessTech), 23 July 2023

Deloitte, a financial services company, predicts that technology will continue to reshape businesses around the world.

The company investigated the effects of cutting-edge technology, cyber and trust, and core modernization in its most recent Tech Trends 2023 research.

In the upcoming 18 to 24 months, work and life will undergo significant transformation, according to Deloitte.

The business listed the tendencies they anticipate will manifest:

Internet immersion for businesses

Technologists have begun to pivot toward interfaces that allow users to participate in all-encompassing immersive virtual reality as they realize that screens can no longer get smaller.

According to Deloitte, virtual reality will probably transition from a purely gaming platform to a business tool within the next few years.

Virtual reality has already begun to make its way into offices thanks to businesses like Meta and Apple.

Introducing AI

Deloitte stated that a small number of companies may experience true competitive gains from developing stronger algorithms as AI technologies become more standardized and commoditized.

The strength with which AI is integrated into a company’s processes will set it apart from its rivals. The most important factor in this case is trust, which has advanced more slowly than machine learning technology.

According to Deloitte, the corporate sector needs to rethink what it means to trust robots, particularly as they increasingly move closer to serving as decision-making tools.

Multi-cloud administration made easier

According to the financial services organization, some businesses are starting to use an abstraction and automation layer that resides digitally in the cloud.

For organizations feeling overrun by too many tools and business data dispersed across the cloud, metacloud technologies would provide a single point of control.

Flexibility

Employers now need to be forward-looking as technology advances, making hiring for today’s challenges an outmoded practice.

Upskilling is anticipated to be used to choose and create future workers, particularly in tech industries.

Decentralisation

According to Deloitte, “Blockchain-powered ecosystems are becoming essential for both the creation of digital trust and the development and monetization of digital assets.”

Organizations are expected to adopt decentralized systems and business models increasingly frequently, placing their faith not in a single entity but rather in a group of users.

Modernization of mainframes

Deloitte stated that legacy systems will be modernized rather than replaced despite the predicted fast digitization and myriad changes.

Businesses are using mainframes – and their priceless data – to drive digital transformation by using tried-and-true methods for modernizing outdated systems.

Reference: Published by Staff Writer, 10 July 2023

According to Micaela Paschini, an attorney with Tax Consulting SA, the Companies and Intellectual Property Commission (CIPC) has launched its new ‘Beneficial Ownership Register’ platform that businesses must comply with.

Businesses now have to disclose their beneficial ownership to the CIPC by October 2023, according to Paschini, as a result of concerns expressed by the Financial Action Task Force (FATF) on the nation’s shortcomings in terms of financial crime and anti-money laundering.

This implies that the “warm body” behind a firm may no longer speak anonymously.

For anyone who owns an item that is valuable or has a more complicated ownership structure, she said this has broad consequences.

The CIPC will consider the company to be non-compliant if this information is not updated and maintained, but more importantly, it hurts the company in practically every element of conducting business, including putting the banking connections at danger, according to Paschini.

The FATF recommended that corporations that violate their requirements to maintain beneficial ownership should face sanctions, and the government has followed this advice.

The CIPC’s e-services landing page now includes capabilities for the declaration of Beneficial Ownership, as displayed below:

Although there have been a few new forms that businesses must fill out in order to comply with the CIPC, the registration of beneficial ownership is perhaps the most crucial, according to the expert.

Companies and close companies must now create and keep a Beneficial Ownership Register that includes the following information:

• Profitable businesses
• Non-profit organizations
• External businesses
• State-owned enterprises that are not excluded
• Closed businesses

The concept of Beneficial Ownership does not change for listed firms that meet the criteria to be considered affected corporations, according to Paschini.

In regards to a firm, “beneficial ownership” refers to a person who, directly or indirectly, “ultimately owns that company or exercises effective control of that company,” according to Paschini.

Beneficial Ownership can occur, for instance, when someone:

1. Possesses a beneficial interest in a company’s shares;
2. A person who utilizes or oversees the use of voting rights attached to stock in a firm;
3. Possesses the authority to appoint or remove a company’s directors or has control over that activity;
4. Possesses the ability to exert influence over, including through a chain of ownership or control, a partnership, a legal entity, a group of people, or a person acting in accordance with the terms of a trust arrangement (such as a trustee or beneficiary);
5. Can fundamentally affect a company’s management in any other way.

Individuals holding more than 5% Beneficial Ownership in a corporation are required by law to provide the CIPC with their information. Additionally, updates must be made to Beneficial Ownership within five days of any changes.

A confirmation certificate will be issued after the data has been processed and entered into the CIPC’s platform.

“Companies and their directors may suffer if a Beneficial Ownership Register is not created and kept up to date. In addition to investigations, compliance notices, hefty penalties, and disqualification from serving as a director of a company, said Tax Consulting SA.

According to Paschini, it is ultimately the responsibility of shareholders, directors, and company owners to adhere to the new CIPC regulations.

Reference: Published by Luke Fraser, 5 June 2023

Government finalising big change for businesses in South Africa

The firms Amendment Bill, which aims to reduce the pay gap between the highest-paid and lowest-paid employees at listed firms, will be finalized in Cabinet within three months, according to Trade and Industry Minister Ebrahim Patel’s administration.

The proposed Bill said that listed firms would have to report the ratio of the top-paid to the bottom-paid 5% of employees, which was released for public comment in 2021.

Patel stated in his presentation to Parliament that the Bill’s completion will aid in addressing South Africa’s inequality problems.

South Africa had the worst income inequality in the world, according to the 2021 Gini Index, which assesses inequality through income distribution.

The minister earlier stated that the bill also intends to guarantee greater governance over excessive director remuneration and increased openness about ownership and financial records.

The average nominal take-home pay in April 2023 was R14,534, a significant decrease from the R15,170 noted the previous month.

The atmosphere remains unfavorable for comfortable salary rises or the creation of jobs, according to BankservAfrica. “As companies are put under pressure from the harsh load shedding, high production costs, rising interest rates, and moderating demand,” the company stated.

Organizations “will probably stay in the’survival model’ for a long time.”

Executives in South Africa’s largest banking and mining firms continue to make much more money, nevertheless.

The average remuneration for the CEOs of Anglo-American, BHP Billiton, Sibanye-Stillwater, Thungela Resources, and African Rainbow Minerals (ARM) in 2022 was R131.64 million ($10.93 million) per year.

Mike Henry, the CEO of BHP Billiton, earned R269.22 million ($14.7 million) in 2022, which included a basic pay, cash bonuses, short-term incentives, and long-term incentive programs.

This amount is significantly more than Capitec CEO Gerrie Fourie’s (R62 million) and Nedbank’s Mike Brown’s (R43.6 million) respective salaries.

Arguments in favor and against

The new Bill is necessary for South Africa, according to the largest labor union in the nation, the Congress of South African labor Unions (Cosatu).

According to Cosatu, “this will help to start addressing the apartheid wage gap that is still pervasive in many industries, in the mining, banking, and retail sectors.

“(Cosatu) wants the Public Investment Corporation and other investment funds who manage workers’ pension and insurance funds need to play a more activist role in placing limits on what chief executive officers earn and the wage gaps in companies where they are shareholders,” the group said.

The new laws, according to Business Leadership South Africa (BLSA) chief executive Busi Mavuso, will harm South Africa’s reputation as a favorable location for doing business.

By adding to all the other onerous compliance requirements, “these elements collectively lessen the attractiveness of South Africa as a place for companies to do business,” she claimed.

“Why would a firm, whether domestic or foreign, want to list on a South African stock exchange when we’re placing so many barriers in their way while others are doing everything they can to attract them? This is yet another factor that causes corporations to domicile or list in Mauritius or London rather than South Africa, where exchange restrictions are more cumbersome.

Reference: Published by Staff Writer, 22 May 2023

Businesses in South Africa are buckling under load shedding – as liquidations climb

According to the most recent business liquidation figures released by Stats SA, 523 enterprises have closed their doors in South Africa as of this writing.

112 firms were liquidated in April 2023, 99 voluntarily and 13 involuntarily, according to the statistics body.

This brings the overall number of business liquidations for the year to 523 and joins the 168 that occurred in March.

For the fourth consecutive month this year, the financial, insurance, real estate, and business services sectors—204 in total since January 2023, including the 45 liquidations in April—were the most severely impacted industries.

Following suit, unclassified industries recorded 26 liquidations, while the trade, catering, and lodging sector added 24 more in April.

The only mentioned industries without liquidations were those in the mining and quarrying, agriculture, hunting, and forestry, and power, gas, and water sectors.

The impact of load shedding on South Africa’s small and medium-sized enterprises (SMEs) is severe, and nearly all of them have experienced production and income losses as a result of the power outages.

In a recent parliamentary question-and-answer session, the minister of small business development was asked if her office had evaluated the effects of electrical blackouts on small firms. The question raised the issue of load shedding’s effects on SMEs.

In response, Minister Stella Ndabeni-Abrahams cited data from the Small Enterprise Finance Agency (Sefa) that demonstrated load shedding has a major negative impact on SMEs.

Only 214 of the 1,500 Sefa clients who were to participate in this study answered.

The majority of those surveyed worked in manufacturing, retail trade, lodging and food services, transportation, building and construction, social services, financial services, agriculture, and mining and quarrying.

The following findings were among those noted:

• Due to load shedding, all respondents experienced a loss in sales and production;
• 76% of those surveyed said they still don’t have backup power systems in place to lessen the impact of load shedding;
• The majority of respondents said they used the load shedding schedule to plan their business operations and have decreased their production to deal with the impact of load shedding;
• The majority said they needed support with funds to buy alternative energy sources and with loan restructuring in relation to their agency loan repayment obligations;
• Most of these companies operated for between one and five years.

Many business stakeholders have also remarked that rampant and intensified load shedding has resulted in unpredictable labor bills because many companies have had to rely on casual workers to correspond with the erratic load shedding schedules.

The study was done in August 20222, and given that 2023 has been the worst load shedding year to far, SMEs are probably facing even more difficult economic situations.

What’s happening

According to Ndabeni-Abrahams, the department has taken note of the difficulties SMEs are having as a result of increasing load shedding and is currently in consultations to find solutions.

“The DSBD and its agencies are looking at a three-pronged approach for supporting SMMEs and Co-operatives affected by load shedding,” she stated.

These comprise:

• The Power Purchase Product (PPP), often known as alternate power sources, provides instant assistance for both formal and informal businesses. Supporting SMMEs with alternative energy-generating equipment (generators and Photovoltaic installations – PV) is a project of the Small Business Development Portfolio (DSBD, Seda, and Sefa). The following program structures will be used to carry out the program:
  • Through the DSBD’s Informal and Micro Enterprise Development Programme (IMEDP), informal businesses will receive support.
  • Support for small enterprises will be provided by Seda’s Asset Assist Program.
  • Through Sefa’s Township and Rural Entrepreneurship Programme (TREP), small to medium businesses will be promoted.
• On behalf of the government, Khula Credit Guarantee (KCG) administers the Guarantee Program through the Bounce Back Scheme. With all relevant parties, including the National Treasury, the scheme’s custodian, extensive discussion is still needed before moving forward with this medium- to long-term intervention.
  • The National Treasury has expressed interest in and is considering expanding the bounce-back program to include all Development Finance Institutions in ongoing discussions.
• Consultation with numerous stakeholders to develop a wider portfolio with a main emphasis on the promotion of novel concepts.
  • Ongoing discussions with numerous departments and pertinent organizations to establish sustainable, long-term solutions for the provision of energy.

Prior to implementing any of these programs, the department is still awaiting National Treasury approval, continued Ndabeni-Abrahams.