The Impact of Load Shedding on Small Businesses and the Economy
Discover how load shedding impacts South African small businesses and the broader economy. Lesedi Dlamini explores the costs, job losses, and 2026 recovery trends.
For nearly two decades, the term “load shedding” has been synonymous with economic frustration in South Africa. While the national grid has shown significant stability as we move into 2026—marking over 200 days without rolling blackouts by early January—the scars left on the economy remain deep. For a small business owner, a power cut isn’t just an inconvenience; it is a direct assault on productivity, security, and survival.
In this cluster of our South Africa Economic Overview, we unpack the true cost of the energy crisis. We look at how “darkness” translates into Rands and cents, and what the current “breather” means for the future of small, medium, and micro enterprises (SMMEs).
The Economic Price Tag: Billions Lost to Blackouts
The macro-economic impact of load shedding is staggering. Economists estimate that at its peak in 2023, the energy crisis cost the South African economy approximately R2.9 trillion in lost output. While this figure dropped to an estimated R481 billion in 2024 as the grid stabilised, the cumulative damage has consistently shaved between 0.7 and 3.2 percentage points off our annual GDP growth.
Lesedi’s Economic Insight: The “Leaky Bucket” Analogy
Imagine trying to fill a bucket (our economy) with water (growth). Load shedding acts like a series of large holes in the bottom of that bucket. No matter how hard we work to pour in more water through trade or tourism, billions of Rands simply leak out because we cannot keep the machines running or the lights on consistently.
The Survival Struggle for Small Businesses (SMMEs)
While large corporations can often afford massive generators or industrial-scale solar plants, SMMEs are frequently left vulnerable. Small businesses contribute roughly 36% of South Africa’s GDP and are the country’s primary job creators, yet they bear the brunt of energy instability.
1. Operations and Productivity
For a township bakery or a suburban hair salon, no power means zero production. Studies show that over 60% of township small businesses are forced to stop operations entirely during active load shedding. Orders are delayed, clients cancel, and competitors with backup power gain an unfair advantage.
2. Spoilage and Stock Losses
The food and beverage sector is the hardest hit. Constant power interruptions lead to “spoilt food, baking mixes, or melted ice creams,” forcing owners to throw away their working capital. For a business with thin margins, losing a fridge full of meat can be the difference between staying open and facing closure.
3. The Hidden Cost of “Coping”
To survive, many SMMEs have turned to expensive alternatives:
- Generators: While they provide power, they drastically increase production costs due to high fuel consumption.
- Gas Equipment: Many “chisanyamas” and restaurants have shifted to gas stoves and ovens to maintain service.
- Shift Work: Some manufacturers now work through the night or on weekends to align with power availability, which often requires paying overtime or “short-time” to staff.
Employment: The Human Cost of the Energy Crisis
Load shedding is a “job killer.” It is estimated that nearly 66% of small businesses have had to shed jobs specifically because of the energy crisis. The sectors most affected by these layoffs include:
- Food and Beverages: 83% job loss rate.
- Manufacturing: 83% job loss rate.
- Agriculture: 76% job loss rate.
- IT Services: 70% job loss rate.
These aren’t just statistics; they represent thousands of South African families losing their primary source of income.
Impact Analysis: Load Shedding vs. Business Health
Energy Crisis: The Hidden Toll on Small Businesses
| Area of Impact | The Consequence | Long-term Effect |
|---|---|---|
| Financial | Increased operating costs (fuel/generators). | Risk: Declining margins and potential bankruptcy. |
| Operational | Reduced working hours and capacity. | Market: Loss of share to larger, powered competitors. |
| Psychological | High levels of stress and anxiety for owners. | Critical: Business “hopelessness” and mental health struggles. |
| Security | Alarm systems and electric fences fail. | Exposure: Increased risk of burglary and vandalism. |
Is the Crisis Finally Over? The 2026 Outlook
As we stand in 2026, the outlook is “cautiously optimistic”. The government’s Energy Action Plan (EAP) and the National Energy Crisis Committee (NECOM) have facilitated a surge in private sector investment and a significant improvement in Eskom’s operational performance.
However, even with “zero load shedding” achieved for extended periods, businesses remain wary. Infrastructure concerns have now shifted toward water security and the virtual collapse of certain rail and port networks, which some economists say has effectively replaced the energy crisis as the new “binding constraint” on growth.
Support and Resilience: How to Protect Your Business
If you are an entrepreneur, 2026 is a year for “judgment” rather than reckless acceleration. Here is how to build a more resilient business:
- Access Energy Funding: The Industrial Development Corporation (IDC) and other state bodies offer concessionary funding for SMMEs to implement solar and battery solutions.
- Digital Transition: Moving operations online or using digital payment platforms can help stabilise cash flow and allow for more flexible working arrangements.
- Collaborative Power: Join small business park clusters where electricity supply might be guaranteed or collaborate with neighbors to install shared renewable energy plants.
- Financial Planning: Use periods of grid stability to pay down debt and build an “energy buffer” in your savings. For more on navigating these structural shifts, consult our South Africa Economic Overview.
FAQ: Load Shedding and the Economy
1. Does the end of load shedding mean immediate economic growth?
Not necessarily. While it removes a massive hurdle, South Africa still faces “structural” issues like port inefficiencies, high interest rates, and a skills gap that continue to limit our growth potential.
2. Can I get a tax break for buying a generator or solar?
The South African government has previously introduced incentives, such as the Section 12B tax allowance, which allows businesses to deduct the cost of renewable energy investments. Always check the latest SARS guidelines for the 2026 tax year.
3. Which sector is most resilient to load shedding?
Service-based businesses that can operate remotely (like consulting or software development) tend to be more resilient, provided they have basic UPS (Uninterruptible Power Supply) systems for their internet and computers.
Turning the Lights Back On
The impact of load shedding on the South African economy has been a masterclass in “what doesn’t kill us makes us stronger”. Our SMMEs have shown incredible agility, shifting to gas, solar, and flexible hours to stay afloat.
As the grid stabilises in 2026, the focus must move from mere survival to sustainable growth. By learning the lessons of the “dark years,” South African businesses are now better equipped to handle future shocks. The energy is returning, but the true light at the end of the tunnel will be an inclusive, resilient economy that supports every “Economic Translator” from the township to the boardroom.
