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The impact of electricity crises on the consumption behaviour of small and medium enterprises
A Von Ketelhodt
Sasol Limited
A Wöcke
Gordon Institute of Business Science, University of Pretoria
Abstract
Small and medium enterprises (SMEs) will play a key role in future economic and social strategies in South Africa. However, we find that SMEs are particularly vulnerable to shocks in their external environment due to a general lack of skills and resources. This is critical as the future demand for electricity in South Africa is likely to outstrip supply and electricity will become increasingly unreliable and expensive. We surveyed 250 SMEs in Cape Town and found that the prevailing policy methods of changing electricity consumption behaviour: information campaigns, increasing prices, and providing rebates for energy savings, have had limited results and are unsustainable when applied to SMEs. Keywords: Small and medium enterprises, electricity supply, electricity crisis, Cape Town, consumption
generally lack the resources necessary to invest in alternative sources of energy and they generally do not have the in-house capabilities for sound asset management. A small enterprise in South Africa is defined as employing fewer than 50 staff, while a medium enterprise is considered to have fewer than 200 by the South African Small Business Act (South Africa, 1996). SMEs contribute between 45 and 50% of South Africa’s GDP and employ more than 50% of all formally employed in South Africa (Business Owner, 2006). The South African Government’s future growth policy and industrial policies rely heavily on the future growth of this sector; however, SMEs are far more vulnerable to volatility in the macro-economic environment. SMEs are particularly vulnerable during expansion phases and are less likely to have in-house capabilities for sound asset and risk management. This was illustrated starkly in the 2006 Cape Town electricity crisis.
Introduction
Small and
A Von Ketelhodt
Sasol Limited
A Wöcke
Gordon Institute of Business Science, University of Pretoria
Abstract
Small and medium enterprises (SMEs) will play a key role in future economic and social strategies in South Africa. However, we find that SMEs are particularly vulnerable to shocks in their external environment due to a general lack of skills and resources. This is critical as the future demand for electricity in South Africa is likely to outstrip supply and electricity will become increasingly unreliable and expensive. We surveyed 250 SMEs in Cape Town and found that the prevailing policy methods of changing electricity consumption behaviour: information campaigns, increasing prices, and providing rebates for energy savings, have had limited results and are unsustainable when applied to SMEs. Keywords: Small and medium enterprises, electricity supply, electricity crisis, Cape Town, consumption
generally lack the resources necessary to invest in alternative sources of energy and they generally do not have the in-house capabilities for sound asset management. A small enterprise in South Africa is defined as employing fewer than 50 staff, while a medium enterprise is considered to have fewer than 200 by the South African Small Business Act (South Africa, 1996). SMEs contribute between 45 and 50% of South Africa’s GDP and employ more than 50% of all formally employed in South Africa (Business Owner, 2006). The South African Government’s future growth policy and industrial policies rely heavily on the future growth of this sector; however, SMEs are far more vulnerable to volatility in the macro-economic environment. SMEs are particularly vulnerable during expansion phases and are less likely to have in-house capabilities for sound asset and risk management. This was illustrated starkly in the 2006 Cape Town electricity crisis.
Introduction
Small and
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