Mabunda et al.

Journal of Innovation and

Journal of Innovation and Entrepreneurship (2023) 12:57
https://doi.org/10.1186/s13731-023-00327-7 Entrepreneurship

RESEARCH Open Access

The effects of loadshedding on small

and medium enterprises in the Collins Chabane
local municipality
Mkateko Vivian Mabunda1* , Ricky Munyaradzi Mukonza2 and Lufuno Robert Mudzanani2

*Correspondence:
mkatekovivian77@gmail.com Abstract
1
Tshwane University South Africa is at present experiencing electricity shortages resulting in loadshedding.
of Technology, Block K, 2 Aubrey Loadshedding is the action from an electricity supplier (Eskom) of rolling power cuts
Matlakala St, Soshanguve ‑ K, that intend to lessen the load on the power supply system when Eskom is not able
Soshanguve 0152, South Africa
2
Tshwane University to supply a high electricity demand. Loadshedding remains one of the country’s most
of Technology, 109 Market critical challenges and has affected day-to-day business activities leading to some
St, Polokwane Ext 67, small businesses closing their operations. In developing economies, small businesses
Polokwane 0699, South Africa
play a significant role in the wellbeing of rural dwellers and are a major tool for local
economic development. At present, there is limited evidence in the literature pointing
out the small and medium-sized enterprises (SMEs) in Collins Chabane Local Munici-
pality (CCLM) in terms of the effects of loadshedding but there is literature describing
similar issues in other geographical areas. The exploration of the effects of loadshed-
ding on SMEs in the Collins Chabane Local Municipality was crucial to empower small
SMEs, cover scholarly gaps, contribute to policy development, and participate in aca-
demic discourse. The study uses a mixed-methods approach, adopting a triangula-
tion research design. The sample consisted of 125 members of the target population,
which included the SME owners/managers and officials from the Collins Chabane
Local Municipality such as the Local Economic Development (LED) manager, Electricity
manager, and a technician. The sample was selected using purposive, snowball non-
probability sampling, and cluster probability sampling. A total of 100 respondents were
selected for the quantitative study, while 25 participants were selected for the qualita-
tive study. Therefore, 100 respondents completed questionnaires and 25 respondents
participated in the face-to-face semi-structured interviews. The quantitative data were
analysed using the statistical package for the social sciences (SPSS), while the qualita-
tive data were analysed using the thematic method of analysis. According to the quan-
titative findings, loadshedding costs small and medium-sized businesses in the Collins
Chabane Local Municipality an average of 61% of their total revenue. Additionally,
59% of these companies had to lay off their employees because they were unable
to pay their wages. The Chi-square results demonstrate that loadshedding has been
experienced uniformly by everyone, irrespective of their demographic and busi-
ness demographic status. Therefore, demographics have no significant influence
on the experience of loadshedding. The qualitative results reveal that the losses

© The Author(s) 2023. Open Access This article is licensed under a Creative Commons Attribution 4.0 International License, which permits
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Mabunda et al. Journal of Innovation and Entrepreneurship (2023) 12:57 Page 2 of 20

associated with the effects of loadshedding on SMEs’ production are untenable. There
is an urgent need to alleviate the effects of loadshedding on SMEs. An alternative
source of power is a requirement for small businesses in the Collins Chabane Local
Municipality. It is for this reason that the South African government should grant small
businesses a subsidy for the purchase of alternative sources of energy such as strong
generators and solar panels to support them during periods of loadshedding. In addi-
tion, the South African government should encourage and capacitate small businesses
in the Collins Chabane Local Municipality to participate in producing and supplying
renewable energy by funding them, and further, foster cooperation among small
businesses and companies that are successful in the production of renewable energy.
This will assist in adding electricity generation capacity to the national grid and help
eliminate electricity instability.
Keywords: Small and medium enterprise, Eskom, Technology, Electricity deficiency,
Loadshedding, Local economic development, Municipality, South Africa

Introduction and background

Small businesses have found expression in development agendas such as the National
Development Plan 2030, African Agenda 2063, and Sustainable Development Goals. The
role small businesses play mainly in rural areas is directly linked to employment crea-
tion and income generation. For these reasons, small businesses located in rural econo-
mies are regarded as a sustainable avenue for local economic development (Rohini et al.,
2018). In Limpopo province and Collins Chabane Local Municipality (CCLM), the num-
ber of small businesses initiated has increased over the past decade. According to the
General Household Survey (2018), Collins Chabane Local Municipality has a consider-
ate number of small businesses, which shows a positive economic trend in terms of the
development of the municipality. Additionally, the number of small businesses operat-
ing in the tourism and agricultural sectors has increased and is highly reliant on pre-
paid electricity for daily operations (Community Survey, 2016). Against this background,
small businesses in the Collins Chabane Local Municipality depend on the electricity
supply as one major utility. However, CCLM has no licence for the supply and reticula-
tion of electricity, and therefore relies heavily on Eskom for the supply and reticulation
of electricity within the area of its jurisdiction (Collins Chabane Local Municipality Inte-
grated Development Plan, 2019).
On the other hand, Eskom, South Africa’s major supplier of electricity, has been bat-
tling with the imbalance between demand and supply of electricity since 2007, which
compelled them to implement loadshedding for all customers; however, loadshedding
has become more severe since 2019, when South Africa began to see a higher stage of
loadshedding for the first time, such as stage 6 (Schoeman & Saunders, 2018). Since
2022, loadshedding in South Africa has been almost perpetual, with stages up to stage 8
(Businesstech, 2023a, 2023b). However, Eskom is currently proposing up to stage 16 of
loadshedding (eNCA, 2023). Ateba et al. (2019) argue that these imbalances are mainly
caused by electricity theft (bridging), cable theft, the breakdown of power stations, and
tariff cross-subsidisation. In contrast, Phiri (2017) argues that the introduction of tech-
nology into manufacturing processes has led to an insignificant increase in electricity
demand. Jain and Jain (2017) and Botha (2019) reveal that the imbalance mentioned is
mainly because Eskom has been trying to address the social injustices or inequalities
Mabunda et al. Journal of Innovation and Entrepreneurship (2023) 12:57 Page 3 of 20

caused by the apartheid government. This includes a deliberate effort to accelerate

the provision of electricity to most black citizens who were disadvantaged because of
apartheid. Nevertheless, customers, which include businesses, citizens, and academics,
complain about the negative effect that loadshedding has on the country’s capacity for
economic development. Even now, the Pretoria High Court has granted Eskom a load-
shedding exemption order for hospitals and schools (Businesstech, 2023a, 2023b). This
is due to the role played by electricity in the mentioned sectors of the economy. It has
been discovered that several businesses shut down as a result of loadshedding, includ-
ing small businesses. Small businesses in CCLM are not immune to loadshedding chal-
lenges since Eskom is their main source of electricity and there are no backup options
for electricity supply. The small businesses in CCLM experience production challenges
because of loadshedding because electricity plays an important role in service delivery
and the production processes of these small businesses. This study argues that the qual-
ity of electricity delivered influences the performance of SMEs and their contributions
to municipal economic prosperity. The studies conducted by Nkwinika and Munzhedzi
(2016) also support the fact that electricity is essential to business production and con-
tributes to sustainable development in the country. A study conducted by Mbungu and
Inglesi-Lotz (2022) endorses the fact that a secure and uninterrupted supply of electri-
cal energy is essential to certain sectors of the economy. Therefore, loadshedding affects
the SMEs’ potential for survival, their competitiveness, and their contributions to the
municipality’s prosperity.
At present, there is limited evidence in the literature pointing out the SMEs in CCLM
in terms of the effects of loadshedding but rather there is literature describing simi-
lar issues in other geographical areas. It is therefore critical to understand how load-
shedding affects SMEs’ in Collins Chabane Local Municipality to empower SMEs, fill a
noticeable academic gap, and contribute to the academic dialogue. The study provides
strategies that SMEs can use to lessen the challenges experienced due to loadshedding.
Furthermore, the results of the study are useful to the supporting structures within small
business development, such as the Department of Small Business Development. More
so, the results of this study are valuable for future researchers to further develop strate-
gies for small-business development. Lastly, the study gives recommendations for fur-
ther research to enrich the literature on loadshedding since it is an area of concern to
policymakers. Accordingly, the effects of loadshedding on small and medium enterprises
within the mentioned municipality are explained.
A mixed method was used in this study, adopting a triangulation research design to
best answer the research questions. A sample of 125 was selected using non-probabil-
ity purposive and snowball sampling and cluster probability sampling and a total of 100
respondents were selected for the quantitative study. The mentioned sample included
122 Small Enterprise Owners within CCLM, one electricity supply manager, one electri-
cal technician, and one manager from the Local Economic Development section of the
Municipality. Therefore, 100 respondents took part in the completion of the question-
naires and 25 respondents participated in the face-to-face semi-structured interviews.
The quantitative data were analysed using SPSS, while the qualitative data were ana-
lysed using a thematic analysis. In the next segment, a summary of the literature survey,
Mabunda et al. Journal of Innovation and Entrepreneurship (2023) 12:57 Page 4 of 20

theoretical framework underpinning the study, and research methodology are presented,
followed by the results and discussion of the results, conclusion, and recommendation.

Literature review
The current literature maintains that electricity has a significant impact on the living
conditions of citizens, the economy, social life, sustainable development, productiv-
ity and poverty alleviation (Emovon et al., 2018; Gehringer et al., 2019). Despite this,
research shows that most developing nations, particularly those in sub-Saharan Africa,
including South Africa, are unable to supply sustainable electricity. This is evident from
the implementation of never-ending loadshedding (Amadi, 2015; Boakye et al., 2016;
Schoeman & Saunders, 2018).
Loadshedding as the deliberate shutdown of electricity supply to parts of the economy
has been experienced in South Africa for the past decade (Ateba et al., 2019). The main
causes of loadshedding in South Africa are linked to the breakdowns in the main power
plants such as unplanned cuts of the conveyor belts, which often leads to breaking tur-
bines (Head, 2019). The breakdowns result in insufficient electricity available to meet
the demands of customers, leading to scheduled loadshedding. There are several effects
of loadshedding on the economy, such as hindered growth of SMEs. In South Africa,
SMEs operate in an open system where the demand and supply of goods are affected by
market forces (Prabowo & Noegraheni, 2019). Concerning market forces, the supply of
goods and services to SMEs has a positive impact on the production processes hence the
growth of the businesses.
In light of the above-mentioned challenges, limited electricity supply has the poten-
tial to, directly or indirectly, affect the socio-economic development, production, and
service delivery within industries that contribute to economic development (Boakye
et al., 2016; Steenkamp, 2016; Stockholm Environment Institute Working Paper, 2017).
Goldberg (2015) examines the impact of an unstable electricity supply on South African
retailers. The results indicate that R13.72 billion rand was lost in revenue for the first 6
months of 2014, revealing the impact unstable electricity supply has on the economy. In
a similar field of study to that of Goldberg (2015), Schoeman and Saunders (2018) inves-
tigate the impacts and costs of power outages on small businesses in six shopping cen-
tres located in the north-western parts of the City of Johannesburg. The results indicate
that loadshedding causes them to lose customers, decreases business income, and makes
it expensive to run the business since they must obtain backup systems. In another study,
Botha (2019) evaluates the impact of loadshedding on restaurant productivity in Nelson
Mandela Bay. The results confirm that loadshedding is a major concern since it harms
productivity.
Boakye et al. (2016) explore the impact of a power outage (‘Dumsor’) on the hotel
industry in Ghana. The results indicate that unreliable power causes a decrease in hotel
industry production. Furthermore, the insufficient and unsustainable power supply
has, therefore, been observed as a major problem in Ghana. Similarly, Bouri and Assad
(2016) contribute to the political and scientific debate surrounding the economic costs
entailed by the regular power cuts in Lebanon. Results indicate that electricity shortages
continue to harm the economy and society as a whole.
Mabunda et al. Journal of Innovation and Entrepreneurship (2023) 12:57 Page 5 of 20

Amadi (2015) investigates the causes of persistent power outages in Port Harcourt
City. The study discovered that the main causes of persistent power outages are inad-
equate power generating capacity, a shortage of gas, weak and dilapidated electrical
transmission and distribution network, and inadequate power infrastructure facilities.
Politano (2019) further explores how consumers use social media networking sites dur-
ing power outage events. This study reveals that power outages affect access to websites,
and business, and affect the daily routine of residents. Haes Alhelou et al. (2019) state
that the root cause of blackouts globally is faulty, aging equipment, and human error.
The above-mentioned authors, including studies conducted by Baker and Phillips
(2019), Hedden and Hedden (2015), Inglesi-Lotz and Pouris (2016), Jain and Jain (2017),
Jamal (2015), Lovins and Eberhard (2018), Mapane (2017), Pouris (2016), Sewchurran
and Davidson (2016), Schwerhoff and Sy (2017), Taliotis et al. (2014), Valasai et al. (2017)
are of the same view that electricity generation and supply play a significant role in the
economy countrywide and that unreliable electricity generation has an enormous nega-
tive effect on input and output within the business sector.
Noticeably, most energy studies have been conducted in Nigeria and Zimbabwe. Paris
et al., (2016: 07) highlight that more South African research is needed in the field of elec-
tricity. Furthermore, the majority of these studies are conducted in the field of business
management, therefore, there is a need for this subject matter to be conducted in the
field of public administration. Moreover, no study seeks to investigate the effect of load-
shedding on the small and medium enterprises within Collins Chabane Municipality. As
a result, this study aims to determine the effect of loadshedding on these enterprises in
the selected municipality.

Fig. 1 Conceptual framework. Author (2020)

Mabunda et al. Journal of Innovation and Entrepreneurship (2023) 12:57 Page 6 of 20

Conceptual framework of the study

Figure 1 illustrates the conceptual framework of this study.
As illustrated in Fig. 1, the loadshedding conceptual framework of this study is
grounded mainly on four factors: small business measures, disrupted communication,
operational costs, and low productivity. The framework follows that electricity shortages
are mainly caused by loadshedding, which in turn affects small-scale business produc-
tivity. Electricity is an important factor of production and is needed in any business for
quality products and services, considering that all other factors are normal. Therefore,
loadshedding as outlined in the literature and captured in the conceptual framework
leads to disrupted communication between businesses and their stakeholders. As an
example, online transactions are usually disrupted and productivity is lowered affect-
ing sales volumes. The given example negatively affects the customer’s perception of
the business while the business suffers damage to its brand, resulting in poor customer
retention.
Furthermore, security systems may be interrupted affecting their normal flow and
paving the way for possible security breaches to occur. As a result, small businesses are
reasonably exposed to potential threats that could affect the productivity of the busi-
ness such as fire, theft, and poor stock management. Consider a fresh meat supplier who
relies heavily on constant electricity for quality products to be delivered: due to power
cuts, the supplier is forced to opt for alternate sources of power or rather cope with an
intensive meat quality reduction. Due to measures implemented by small businesses to
manage power cuts, operational costs are likely to fluctuate, which affects effective cost
management and collectively limits small business development and growth. Hence,
this study was conducted within the perimeters of the conceptual framework to develop
an intervention plan founded on practical strategies that SMEs may use to survive the
unstable source of power the targeted municipal area experiences.

Theoretical framework
Various models and theories for comprehending small business structures have been
developed and applied throughout the world (Maziriri & Chinomona, 2016). Never-
theless, this study uses complexity and resource-based view theory to comprehend the
extent to which small businesses in the Collins Chabane local municipality have been
affected by the loadshedding. Therefore, complexity theory was useful in understand-
ing how small businesses interact and how their interaction is affected by loadshedding.
Resources-based theory, on the other hand, was used to determine the resources avail-
able to SMEs to keep them competitive and alive, as well as how loadshedding affects
their resources and limits their competitive advantages.

Complexity theory
This theory holds that organisations are made up of interconnected and well-structured
parts and the decision or action of one component affects the other (Park & Jo, 2017).
Thus, a goal of complexity theory is to understand how parts of the system interact, how
they change over time, emphasises how systems tend to evolve in a nonlinear fashion
and how feedback loops affect the evolution system (Rosenhead et al., 2019). The lit-
erature reveals that both internal and external factors can be forecast using this theory
Mabunda et al. Journal of Innovation and Entrepreneurship (2023) 12:57 Page 7 of 20

(Cairney & Geyer, 2017). Therefore, it was useful in understanding how small businesses
interact and how their interaction was affected by the loadshedding.
This study supports this theory by confirming that organisations operate in a
complex internal and external system. According to the results of this study, small
businesses operate within internal systems consisting of input, transformation, and
output. In addition, they operate within an external system consisting of the govern-
ment, which includes the national, provincial, and local government (municipalities),
suppliers, Eskom, customers, and the community at large. Small businesses interact
with the mentioned organisations to be competitive, survive and contribute to local
economic development.
The findings show that the national and provincial governments provide policies
and financial support and establish institutions to support small businesses with the
aim of improving the economy. Municipalities interact with small businesses by giving
them rules and regulations on how they should operate, supplying them with services
such as water, sewage, and waste removal, and issuing permits for them to operate. In
turn, SMEs should pay for such services. As a result of their payments to municipali-
ties, small businesses become an essential component of municipalities’ development.
Small businesses interact with suppliers of raw materials to purchase what they need
to use in the manufacturing process. Small businesses turn to Eskom for electricity to
run their manufacturing machines, which in turn leads to innovation and technology
adoption, and Eskom, in turn, receives money from small businesses. The business
interacts with the community, which is also its customer; the community purchases
the small business’s output, which helps the business survive financially; in turn, the
small business provides employment opportunities to the community. This results in
the reduction of poverty and the local economic development of the area.
The theory states further that a decision made in one component affects the whole
system (Lai & Lin 2017; Rosenhead et al., 2019). The study agrees with the theory by
pointing out that Eskom’s loadshedding, which disrupts small businesses’ manufac-
turing processes, has made the whole system dysfunctional. As a result of loadshed-
ding, raw materials are not supplied on time by suppliers, which causes a delay in
SME manufacturing, which leads to a lack of trust and a decline in customer loyalty.
As a result, small businesses are no longer able to play an effective role in address-
ing socio-economic challenges such as unemployment, poverty eradication, and ine-
quality, and preventing government policies from achieving their goals of economic
development.
The theory also points out that this system consists of feedback loops in which
the system’s components receive inputs from the environment, convert them into
outputs, and then return the outputs to the environment in a continuous feedback
loop (Lai & Lin, 2017). Whether the data generated are positive or negative, it pro-
vides benchmarks to measure and improve SMEs’ performance (Esu & Ufot, 2017).
As predicted by the theory, the results demonstrate that the outcome of the process
has feedback, whether positive or negative. It has been found that their performance
feedback manifests in more referrals, customers, sponsors, and job opportunities,
as well as advancements in technology and innovation. In cases where they are not
performing well, customers decline, job opportunities disappear, poverty increases,
Mabunda et al. Journal of Innovation and Entrepreneurship (2023) 12:57 Page 8 of 20

and the use of technology becomes slow. Given that loadshedding is still occurring,
SMEs in the Collins Chabane Local Municipality are unable to respond to criticisms
or feedback. Unless an alternative source of power is arranged for them or subsidies
are provided for them to purchase backups as the study suggests, they will not able to
do their best.

Resource‑based view
Resource-based view (RBV) theory urges that the possession of strategic resources pro-
vides an organisation with a golden opportunity to develop a competitive advantage over
its rivals (Idowu et al., 2020). This theory was used to determine the resources avail-
able to SMEs in the Collins Chabane Local Municipality to keep them competitive and
alive, as well as how loadshedding affects their resources and limits their competitive
advantages. The results of this study support the theory by asserting that businesses
use unique resources to remain competitive. It was discovered that small businesses in
CCLM use unique technology equipment for production and marketing strategies, as
well as human resources with varying skills and levels of innovative thinking, to be pro-
ductive and remain competitive. However, loadshedding has made it difficult for them to
remain competitive because they have had to let go of some of their valuable resources.
The results reveal that 59% of small businesses in the CCLM retrenched their employees
due to inability to pay their salaries, and production machines were damaged. According
to this study, the provision of sustainable electricity can end the loadshedding-related
disturbances of small enterprises. Although the provision of sustainable electricity is not
achievable at this point, the recommendations made in this paper can help minimise the
effects of loadshedding on small businesses.

Research methodology
A mixed-method approach was used, adopting the triangulation research design to best
answer the research objectives of the study. This approach assisted the researcher with
different but complementary data on the same topic to best understand the research
problem. The sample of this study was selected from the target population. The ideal
target population is defined as the population that incorporates the total collection of all
units of analysis about which the researcher wishes to make specific conclusions (Asia-
mah et al., 2017). The Collins Chabane Local Municipality consists of a population of
approximately 347,975 people (Collins Chabane Local Municipality Integrated Devel-
opment Plan, 2021–2022). The population was then reduced to meet the study crite-
ria. Study subjects were only small businesses of any kind that are autonomous, affected
by loadshedding, and run by individuals or entities that are not branches of larger cor-
porations with less than 200 employees. Small business owners, regardless of race or
nationality, in the Collins Chabane neighbourhood were considered. Moreover, Collins
Chabane Local Municipality officials with experience facilitating local economic devel-
opment and delivering electricity were considered. As a result, 125 samples were chosen
from the population who satisfied the aforementioned requirements.
A sample size of 100 out of 125 was drawn to participate in the quantitative study
through the guidance of the Raosoft sampling size calculator, and the samples used in
Mabunda et al. Journal of Innovation and Entrepreneurship (2023) 12:57 Page 9 of 20

120
100
100
80
60
40
20
1 3 2 3 5 2 6 4 3 5 7 2 5 2 13 1 11 1 11 1 12
0
Air condioning…

Motor mechanic

Tavern
Bakery

Resort

Retail
B&B

Barber shop

Butcher

Cellphone repair

Panel beater
Poultry

Saloon
Fruits and veg
Internet café

Restaurant

Spares

Trading
Tuckshop
Total
Carwash
Brick yard

Fig. 2 Type of business consulted

previous studies conducted on similar issues were also considered. Therefore, this study
consisted of 76 owners and 24 managers of small businesses who participated in the
completion of questionnaires. The types of small businesses consulted are illustrated in
Fig. 2.
A total of 25 participants were selected to participate in the qualitative study through
face-to-face, semi-structured interviews, and saturation was reached. Out of that num-
ber, there were 22 small enterprise owners within CCLM, one electricity supply man-
ager, one electrical technician, and one manager from the local economic development
section of the municipality. This study was dominated by small businesses, which consti-
tuted 122. The sample size was arrived at considering issues of improving data trustwor-
thiness, credibility, transferability, and the general rule of thumb for phenomenological
studies as is the case for this study (Creswell, 2015). The respondents who participated in
the quantitative study were selected using probability cluster sampling and non-proba-
bility snowball sampling. The participants who took part in the interviews were selected
using purposive non-probability sampling, since it focused on well-informed partici-
pants to provide detailed experiences and rich information on this subject.
The data collected through questionnaires were analysed using the Statistical Pack-
age for the Social Sciences (SPSS). Accordingly, descriptive statistics such as frequency
counts, percentages, and mean were used to analyse the data, and inferential statistics
such as Chi-square and linear regression were used to test the associations between the
variables. The data collected by interview were analysed using inductive thematic analy-
sis. Moreover, before undertaking this research, approval was granted both by the par-
ticipants and the municipality to conduct the research, and ethical clearance approval
was also obtained from the Tshwane University of Technology ethical committee. None
of the research participants were exposed to human practices. Furthermore, confiden-
tiality was preserved by ensuring that no data was linked to any name via data coding.
Lastly, consent forms were signed by participants and respondents.

Study limitations
Given the fact that loadshedding is a national issue, this study was limited to the elec-
tricity crisis or loadshedding in South Africa, focusing strictly on the effect of loadshed-
ding on SMEs in the Collins Chabane Local Municipality. Data were collected through
Mabunda et al. Journal of Innovation and Entrepreneurship (2023) 12:57 Page 10 of 20

mixed-methods research techniques to obtain the views of SME owners and managers
and the relevant respondents within CCLM in the Limpopo Province of South Africa.
Due to financial, transportation, and time constraints, the study sampled only 125 par-
ticipants. The findings are not generalised to all municipalities in South Africa within
the context of small business development. However, the findings can be transferred to
other small businesses in municipalities that portray similar economic environments
while facing similar loadshedding challenges, thereby contributing to the effectiveness of
addressing this problem.

Qualitative results
The effects of loadshedding on small and medium‑sized businesses
The empirical evidence reveals that loadshedding interrupts production machines, busi-
ness plans, financial flows, communication, and information flows. Further, loadshed-
ding has implications for business income, service delivery, personnel, and operating
resources, including security systems and the use of technologies. The implications of
these are further discussed below.

• Interruption of the production machines

Small and medium-sized businesses were asked whether loadshedding had an effect
on their operations. Most small businesses in Collins Chabane Local Municipality run
on electricity-powered machinery and technology. For example, brick yards use con-
crete block machines to make bricks; breadmaker machines are used by bakeries; gran-
ulator machines are used by mechanics for panelbeating; electricity-powered chargers
and welding machines are used for cell phone repair, hairclippers and hair dryers are
used in saloons; incubators are used for poultry businesses; and machines to cut meat
and fridges to cool meat are used in butcheries, etc. Many of these businesses do not
have backups, such as generators, due to a lack of financial resources. Because the equip-
ment used requires an uninterrupted electricity supply for efficient production, this puts
a halt to production and connectivity. As a result, the business is forced to close during
loadshedding and reopens when it comes back. One respondent said:

It affects our daily operation. The stock gets rotten, fridges get damaged, and as I’m
speaking, it has damaged the microwave and kettle. I have sent them to be fixed,
which is an extra cost to the business is. When the electricity goes off while I’m done
preparing potatoes to be fried, they end up getting rotten without being fried, so we
had to throw them in a bin. It also results in pay cuts for employees since we are
running at a loss. We don’t have generators, and we were once using a gas stove, but
we stopped using it since it is dangerous at this place. There are many schoolchildren
who are passing by.

Participants also emphasise the loss of profits and customers resulting from businesses
closing due to loadshedding. Fast-food manufacturers or restaurants, for example,
require electricity for every process of cooking meals. Because the processes demand an
uninterrupted electrical supply for successful output, loadshedding causes poor output.
Another person said:
Mabunda et al. Journal of Innovation and Entrepreneurship (2023) 12:57 Page 11 of 20

I have the electricity-powered chargers and the welding machine for cell phone
repair. They shut off or cease to function during loadshedding. I can leave work
during loadshedding without ever making a cent because the customer arrives
and chooses to leave before the electricity is restored. I did not make any money
that day, but I still have to pay rent, provide for my family, and pay the staff at
the end of the month.

Another said:

I’m a motor mechanic who works to service motor vehicles, which includes over-
riding, changing of breaks, clutches, gearboxes, and diff, and I depend on elec-
tricity to do most of the things, like drilling and grinding. I have four employees.
When there’s no electricity, we sit and do nothing, which delays us from doing our
job. Loadshedding always has the potential to tarnish our business because we
don’t deliver as promised. It has cost my company between R400 000 and R600
000 financially.

• Interrupted business plan

The results show that small businesses, such as fast-food restaurants, often follow a
set schedule regarding delivery and preparation of food. The incidence of loadshed-
ding, however, prevents perishable goods from being delivered and delays the delivery
of food. This results in both suppliers and SMEs losing money. Another owner said:

Most of the time we are unable to serve our customers since when they go for
lunch you will find that we are not yet done preparing food due to loadshedding,
so they end up going to other shops like Shoprite, and in that way, we lose custom-
ers.

Plans for poultry company delivery were disrupted since some stocked chickens per-
ished because of loadshedding, which resulted in the delivery of less than what was
agreed upon to the customers. Additionally, businesses that provide goods and services
face frequent interruptions, leading to missed deadlines.

• Interrupted financial, communication, and information flows

The results reveal that the machines that handle money or payments for small busi-
nesses, such as speed points, tills, and ATMs, require electricity for them to run.
Therefore, if small businesses without backup electricity are unable to conduct online
transactions due to loadshedding, the business has to send the customers back home
without receiving any service. Other owners stated:

It has a financial impact on the business because we have to pay the rent at the end
of the month and the landlord does not cut the price. Whether there is loadshedding
or not, the costs remain the same.

Furthermore, loadshedding results in network issues, preventing businesses from

accessing their emails and digital devices. In this way, their suppliers are unable to com-
municate or exchange information via email, cell phones, and other online platforms. As
Mabunda et al. Journal of Innovation and Entrepreneurship (2023) 12:57 Page 12 of 20

a result, SMEs are affected by loadshedding since they cannot transact or send informa-
tion on time.

• The following are the implications of loadshedding on business income, service deliv-
ery, personnel, and operating resources

In the event of loadshedding, financial performance declines because of a drop in cus-

tomers. Businesses receive significantly less than they spend; they spend more money
and get less profit. As a result of loadshedding, goods expire when they are not sold in
time. Furthermore, food and stock rot when they are not kept chilled, and equipment is
damaged and needs to be replaced. Other owners said:

I am running a fruit and vegetable business. Fruits do not last four to seven days
unless they are refrigerated. So when there is loadshedding, fruits decay because we
don’t have a place to store them, and I have to throw them away because we can’t
sell a rotten stock, and if health officials discover that we are selling rotten stock,
they can shut down our business. I used to have six employees, but I now only have
four since it is tough to pay them.

Furthermore, rental businesses are suffering because loadshedding causes sewage sys-
tems to become blocked, which necessitates the expenditure of extra funds to unblock
them. This further causes customer inconvenience, leading rental businesses to lose
customers.

• Interruption to security systems

Some small businesses use an alarm system to safeguard their assets. When there is
loadshedding, many security systems are affected since they are powered by electricity.
As a result, SMEs’ security is jeopardised because their systems are not performing at
their best. Therefore, loadshedding exposes SMEs to theft, poor stock management and
other forms of criminal activity. Another owner said:

…When loadshedding occurs regularly, it can quickly deplete backup batteries in

alarm systems and other devices, such as electronic gates. This poses risks to the
business because the failure of security systems allows theft to occur. Also, loadshed-
ding damages electronics when one forgets to turn it off because when the electric-
ity comes back, it comes with power with such force, electronics can be irreparably
damaged.

• Interruption on the use of technologies

IT businesses are unable to provide online services, assist schoolchildren with

research, print, scan, or perform any other internet-required activities. This is because
the IT and technology infrastructure are heavily reliant on electricity. This discourages
the use of technological devices in the Collins Chabane Local Municipality.

Quantitative results
The quantitative results demonstrate the level of dependence on electricity by small
businesses and the impact the loadshedding has on small companies in the Collins Cha-
bane Local Municipality.
Mabunda et al. Journal of Innovation and Entrepreneurship (2023) 12:57 Page 13 of 20

Table 1 Whether the business depends on electricity

Does your business depend on electricity to Freq Percent Cum
operate?

Yes 100 100.00 100.00

Total 100 100.00

Table 2 Whether loadshedding is experienced

Do you experience loadshedding Freq Percent Cum

Yes 100 100.00 100.00

Total 100 100.00

Yes 5.0

No,95.0
Fig. 3 Alternative source of power

• The question was posed to determine the level of dependence on electricity by small
businesses in the Collins Chabane Local Municipality. The results in Table 1 show
that 100% of the small businesses in the Collins Chabane Local Municipality rely on
electricity to operate.
• The study also used a questionnaire to examine whether loadshedding has an impact
on small businesses in the Collins Chabane Local Municipality. The results in Table 2
show that all participants (100%) experienced loadshedding in the Collins Chabane
Local Municipality.

Further, the test of association was performed by Chi-square to determine whether

the experience of loadshedding is influenced by gender, age group, race group, educa-
tional level, marital status, respondents’ status, years in business, business area, type of
business, employee numbers, working hours, additional income, the status of business
premises, and the status of dependency on electricity. The findings demonstrate that
loadshedding has been experienced uniformly by everyone, irrespective of their demo-
graphic and business demographic status. Therefore, none of the demographic factors
mentioned had a significant influence on the experience of loadshedding.
Mabunda et al. Journal of Innovation and Entrepreneurship (2023) 12:57 Page 14 of 20

62.0

32.0

1.0 5.0

always daily sometimes weekly

Fig. 4 How often loadshedding is experienced

Table 3 Descriptive statistics of averages

N Minimum Maximum Mean Std deviation
Stat Stat Stat Stat Std error Statistic

Av. working hours in a day of loadshedding 100 0 11 4.62 0.253 2.526

Av turnover when there is no loadshedding 100 80.00% 100.00% 99% 0% 3%
Average turnover in a day with loadshedding 100 0.00% 100.00% 39% 2% 25%
Average estimated loss due to power outage 100 0.00% 100.00% 61% 2% 25%
Valid N (listwise) 100

• The inquiry was made to see whether the small enterprises in the Collins Chabane
Local Municipality had a backup power supply that they utilise when loadshedding
occurs. Figure 3 shows that 95% of these businesses do not have an alternative source
of power, whereas 5% of the businesses do.
• The Collins Chabane local municipality’s small enterprises were also asked about
how frequently loadshedding occurs.

The result in Fig. 4 shows that most of these businesses (62%) experience loadshed-
ding daily, followed by those that experience it weekly, which constitutes 32%. The
remaining 5% very occasionally experience it, whereas the lowest percentage (1%)
always did. Based on these results, it is that loadshedding severely affects SMEs in the
Collins Chabane Local Municipality because the majority experience it daily.

• The descriptive statistics were performed on the average working hours of load-
shedding in a day, average turnover in a day with loadshedding, turnover when
there is no loadshedding, and estimated loss due to a power outage to determine
to what extent the small businesses in the Collins Chabane Local Municipality
have been impacted by loadshedding. The results are shown in Table 3.
Mabunda et al. Journal of Innovation and Entrepreneurship (2023) 12:57 Page 15 of 20

100
90
80
70
60
100 Percent
50
40
59
30
41
20
10
0
No Yes Total
Fig. 5 Loss of employees due to loadshedding

Table 2 shows that on a day of loadshedding, the average working hours were five
hours, the maximum number of hours was 11, and some did not work at all. The aver-
age turnover in a day with no loadshedding was 99%, the maximum was 100% and the
minimum was 80%. On a day with loadshedding, the average turnover was 39%, but
there was one with a maximum turnover of 100%, probably with an alternative source
of power, and a minimum turnover of 0%, likely those without one. A power outage
results in an average loss of 61%, which is significant because it is a large amount.

• It was also determined whether the business had lost employees due to loadshed-
ding. Figure 5 shows that the majority (59%) of small businesses lost their employees
due to loadshedding, compared to the 41% that did not lose their employees. Consid-
ering that the number of businesses that lost employees is high, it can be concluded
that loadshedding results in employee layoffs in the Collins Chabane Local Munici-
pality and that loadshedding has impacted employment growth in South Africa at
large.

Discussion of the results

The qualitative evidence reveals that electricity is a critical input to the production pro-
cess of small businesses in the CCLM. This is supported by quantitative results, which
show that 100% of small businesses in the Collins Chabane Local Municipality rely on
electricity to operate and produce. These results also confirm that electricity is a vital
part of industrial operations in both small and large businesses (Baker & Phillips, 2019).
Studies by Phiri (2017), Chishimba (2017) and Nyoni (2019) endorse the importance of
electricity by revealing that it drives economic growth in developing countries and that
modern society is largely reliant upon it for daily routine. The study conducted by Sch-
oeman and Saunders (2018) on the impact of loadshedding on small businesses in the
City of Johannesburg also discovered that the majority of SMEs (90.7%) rely on electric-
ity for the operation of their businesses. Thus, it may be said that power is essential for
small enterprises to succeed.
The small businesses in the Collins Chabane Local Municipality suffer from loadshed-
ding. Quantitative results in Table 2 confirm that 100% of small businesses in the CCLM
Mabunda et al. Journal of Innovation and Entrepreneurship (2023) 12:57 Page 16 of 20

experience loadshedding, with the majority experiencing it daily (62%). The findings also
reveal that loadshedding interrupts production machines, business plans, financial flows,
communication, and information flows. Further, loadshedding has implications for busi-
ness income, service delivery, personnel, and operating resources, including security sys-
tems and the use of technology. As a result of the disruption to the production process,
the majority (59%) of small businesses are forced to lay off their employees because they
can no longer afford to pay them given that they were no longer making enough profit
and operating costs had increased. This finding is shown in Fig. 5. Nyoni (2019) agrees
that loadshedding contributes to small businesses’ failure and closure because they can-
not operate without stable internet (Nyoni, 2019). Zohuri and McDaniel (2019) and
Politano (2019) endorse the fact that internet access is directly linked to having stable
electricity. Emovon et al. (2018), Kumalo and Poll (2018), Sitharam and Hoque (2016),
support the claim that SMEs suffered huge financial losses from the electricity crisis or
loadshedding.
The quantity of the losses within small businesses in the Collins Chabane Local Munic-
ipality is revealed through descriptive statistics in Table 3, which shows the difference
between average income on a day without loadshedding and on a day with loadshedding.
The results reveal that on a day without loadshedding, the small business received 99%
of its average income, whereas on a day where there is loadshedding, the average income
is 39%, which means that there is an estimated loss of 61% of income on a day of load-
shedding. Studies by Ayandibu and Houghton (2017); Bruwer and Van Den Berg (2017);
Kumalo and Poll (2018); Masama and Bruwer (2018) reveal that SMEs in South Africa
have one of the worst sustainability rates in the world since approximately 75% of small
and medium enterprises fail within three years of entering the market due to challenges
such as power shortages. It can be concluded that loadshedding has a negative impact on
the growth of small businesses.

Conclusion and recommendations

This study aimed to explore the effects of loadshedding on small and medium enter-
prises in the Collins Chabane Local Municipality. A mixed method was used to
accomplish the mentioned study objective. Complexity and resource-based theories
were used to underpin the study. The results of this study concur with the complex-
ity theory that small businesses operate within complex internal and external systems
and that a decision made in one component of the system affects the whole system.
This study agrees with the theory by pointing out that loadshedding as implemented
by Eskom has made the whole system of small businesses dysfunctional. As a result
of loadshedding, raw materials are not supplied on time by suppliers, which causes
a delay in the small business production process, which leads to a lack of trust and
a decline in customer loyalty, which results in a loss of finances. As a result, small
businesses are no longer able to play an effective role in addressing socio-economic
challenges such as unemployment, poverty eradication, and inequality, preventing
government policies from achieving their goals of economic development. Further,
the results of this study support the resource-based theory by asserting that busi-
nesses use unique resources to remain competitive. It was discovered that small busi-
nesses in CCLM use unique technology equipment for production and marketing
Mabunda et al. Journal of Innovation and Entrepreneurship (2023) 12:57 Page 17 of 20

strategies, as well as human resources with varying skills and levels of innovative
thinking, to be productive and remain competitive. Nevertheless, loadshedding has
made it difficult for them to remain competitive because they have had to let go of
some of their valuable resources. The results reveal that employees were retrenched
due to failure to pay their salaries, and production machines were damaged. It can
be concluded that loadshedding has a negative effect on SMEs’ operations and their
contribution to economic development. Further, the loss associated with the effects
of loadshedding on SMEs’ production is untenable. As a result, collaboration among
SMEs, the government, and the electricity sector is critical to ensuring the provision
of sustainable electricity in the country and mitigating the effects of loadshedding on
SMEs.
The study provides the following recommendations to SMEs, the Department of
Energy, and policymakers:

• An alternative source of power should be the requirement of small businesses

in the Collins Chabane Municipality; therefore, the South African government
should grant small businesses a subsidy for the purchase of alternatives such as
strong generators and solar panels.
• The South African government should encourage and capacitate small businesses
in the Collins Chabane Local Municipality to participate in producing and supply-
ing renewable energy by funding them. Further, cooperation among small busi-
nesses and companies that are successful in the production of renewable energy
should be fostered. This will assist in adding electricity generation capacity to the
national grid and help eliminate electricity instability.
• The electricity provider should reduce electricity tariff rates for small businesses
to make it affordable given that they are not compensated for their losses and that
it is difficult to manage the increased operating costs of a business due to costs
associated with replacing damaged products and equipment, loss of profit due to
loadshedding, and expensive electricity at the same time.
• Small businesses in the Collins Chabane municipality, especially restaurants,
should opt for equipment that uses gas, such as gas stoves and fridges.
• The government ought to give Collins Chabane Local Municipality the authority
to generate its own electricity given that Eskom is the municipality’s sole source of
electricity.

Abbreviations
ATM Automated teller machine
CCLM Collins Chabane Local Municipality
ESKOM Electricity Supply Commission
GDP Gross Domestic Product
IT Information and technology
LED Local economic development
SMEs Small and medium-sized enterprises
SPSS Statistical Package for the Social Sciences
Mabunda et al. Journal of Innovation and Entrepreneurship (2023) 12:57 Page 18 of 20

Acknowledgements
I acknowledge the TUT ethical committee and the Collins Chabane Local Municipality for granting me permission and
ethical clearance to conduct this study. I acknowledge the Department of International Relations and Cooperation for
funding my main research project.

Author contributions
MVM: conceptualisation, writing and editing. RMM and LRM: conceptualisation and supervision. All authors have agreed
to the submission of this paper.

Funding
Not applicable.

Availability of data and materials

Not applicable.

Declarations
Competing interests
Not applicable.

Received: 14 November 2022 Accepted: 2 September 2023

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