The government should be providing some recourse for small business that have been hard hit by the unreliable power crisis, according to the Franchise Association of South Africa.
Maria D’Amico, chairperson at FASA, which represents franchise brands that cut across 14 different business sectors, said they were concerned about the domino effects of load shedding on their members.
“Some franchises on free-standing properties will incur costs to install generators or solar solutions; those in shopping centres that provide alternate power are often paying a premium for that service and then those in malls that don’t provide backup power find themselves simply trading in the dark or closing shop during load shedding because there cannot generate their own power within the mall. In all cases they are impacted and their businesses, their livelihood and that of their staff and families are under threat,” D’Amico said.
She said if small businesses were forced to close because of this crisis, the country would have lost the heart of its economy. She said franchising, with its support system, was showing resilience as franchisors were finding solutions for their franchisees - whether it was negotiating preferential supplier costs, reducing royalty fees or together with their franchisees, finding ways to retain customers and keep their doors open.
The association said that a case in point was the diesel fuel refund for those in the food manufacturing process. It said the fact that this new regulation applied solely to pure food manufacturing operations, and not to any premises at which wholesale or retail sales of foodstuff take place has been criticised as being too selective and not taking into consideration the rest of the value chain that was also impacted negatively by high fuel prices and load shedding.
FASA said retailers that rely on 24-hour generators have to put in place long-term energy generation plans and it was costing them dearly.
“Just in the last few months of 2022, two of the country’s largest supermarket groups, that is, Shoprite and Pick n Pay spent a combined R906 million on diesel for generators at stores, with Woolworths adding another R90 million, taking it up to a staggering R1 billion.”
Tony Da Fonseca, CEO of OBC Better Butchery and past chairman of FASA, said it was small businesses that would bear the brunt and be the biggest losers in this if they were also not assisted.
“Food retailers are already burdened with unrealistic energy increases, extended blackouts not only due to scheduled load shedding, but also ailing infrastructure and constant cable theft in certain areas. The food retail sector has little choice but to run their generators and to insist on imposing road-related taxes which is an absolute injustice. Retailers simply can’t absorb these costs,” Da Fonseca said.
He said that in a franchise environment where individual owners do not have the benefit of having a group ownership structure, these irregular and unexpected expenses were placing individual retailers under undue stress and destroying the ability of individual franchisees from growing and creating employment. “The wholesale and retail sector employs 20% of the nation’s workforce and this attitude reflects how little understanding government has on what it costs to secure the food value chain. Or they simply don’t care!”
Meanwhile, in the SA Sugar Journal published by the South African Sugar Association (SASA), the organisation’s Sustainability Officer Sam Maphumulo wrote that the country’s current energy crises could provide an opportunity for the South African sugar industry to export co-generated power to the grid, in line with the industry’s diversification goals.
“Co-generated power, however, is more competitive when compared to emergency generation units running on high-priced diesel than when compared to solar and wind technologies. The price of diesel could therefore be used as a debating point for the industry to get into the power generation market. Newly appointed Minister of Electricity, Dr Kgosientso Ramokgopa, has indicated his willingness to engage with the sugar sector on co-generation given the sugar industry’s potential to generate up to 800MW of co-generated electricity onto the grid,” Maphumulo wrote.
BUSINESS REPORT