Load Shedding and its Influence on South African Small, Medium and Micro Enterprise Profitability, Liquidity, Efficiency and Solvency

Business Re-Solution Working paper BRS/2021/001

16 Pages Posted: 3 May 2021

Date Written: April 21, 2021

Abstract

The socio-economic significance of Small, Medium and Micro Enterprises (SMMEs) to the South African economy cannot be overstated. Although South African SMMEs assist the economy with alleviating poverty, boosting the national economy, and creating jobs, they are reported to have very weak sustainability rates with 75% of these business entities failing after operating for less than three years. Among the reasons for the latter dispensation is the volatile supply of electricity (load shedding). Since most South African SMMEs are reliant on electricity to operate, this study aimed to theoretically investigate the influence which load shedding has on the profitability, liquidity, solvency and efficiency of these entities. This non-empirical, exploratory student constituted a conceptual paper. From the research conducted, it became evident that the profitability, liquidity, efficiency, and solvency of South African SMMEs are adversely influenced by load shedding.

Keywords: Load shedding, South Africa, Small businesses, SMMEs, Sustainability

JEL Classification: M10, M20, M40, M41

Suggested Citation

Mbomvu, Lumka and Hlongwane, Imannuel Thobile and Nxazonke, Nozuko Pearl and Qayi, Zukile and Bruwer, JP, Load Shedding and its Influence on South African Small, Medium and Micro Enterprise Profitability, Liquidity, Efficiency and Solvency (April 21, 2021). Business Re-Solution Working paper BRS/2021/001, Available at SSRN: https://ssrn.com/abstract=3831513 or http://dx.doi.org/10.2139/ssrn.3831513

Lumka Mbomvu

Independent ( email )

Nozuko Pearl Nxazonke

Independent ( email )

Zukile Qayi

Independent ( email )

JP Bruwer (Contact Author)

Business Re-Solution ( email )

South Africa

HOME PAGE: http://www.businessresolution.co.za

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