Load-shedding leaves SMEs on the edge

Most home industry players in various parts of the country are struggling to operate viably while others have closed shop due to prevailing power load shedding coupled with the high electricity tariffs.

Small and Medium Enterprises Association of Zimbabwe (SMEAZ) chairperson Farai Mutambanengwe said prolonged power outages had significantly affected production.

“There is clearly a challenge of Zesa (electricity), especially when you are outside the CBD (Central Business District). We have a lot of our members (small and medium enterprises) whose businesses have been affected by that. Some who were previously home-based have relocated their offices to the CBD since most of the time electricity is switched on around 10pm and around 3am we will be in darkness again.

“Some are resorting to generators, but when you are into a business like welding, it becomes very costly and to operate effectively, you need a bigger generator. We are seeing a lot of people stepping down from their enterprises because of the non-availability of electricity,” he said.

A home industry or cottage industry is a small-scale, decentralised manufacturing business often operated from home rather than a purpose-built facility. Cottage industries are defined by the amount of investment required to start, as well as the number of people employed.

Home industry, which is mostly carried out at high-density suburbs in urban areas in Zimbabwe entails carpentry, smithing, weaving, pottery, blanket making, stone carving and food processing.

Owing to the closure of companies and downsizing of workers by most of the big firms throughout the country due to a myriad of sanctions-induced economic challenges, a number of people that were affected by these turns of events resorted to eking out a living through the informal trade and crafts.

Bulawayo Upcoming Traders’ Association secretary-general Dumisani Ncube said apart from the chronic power outages, the electricity tariffs have been an obstacle to entrepreneurial activities.

“The tariffs are so heavy and this is affecting SMEs as they can no longer carry out their work properly. SMEs are now being forced to increase the selling price of their products upon factoring in electricity costs and as such, it’s the consumers that suffer in the end. We have since approached Zesa to consider giving registered SMEs subsidised power and we are waiting for a response. We also engaged Minister (of Women Affairs, Community, Small and Medium Enterprises Development) Dr Sithembiso Nyoni on the matter and she promised to take up the issue,” he said.

In October last year, the Zimbabwe Energy Regulatory Authority (ZERA) approved an application by Zimbabwe Electricity Transmission and Distribution Company (ZETDC) to raise the tariff to 162,16 cents (US$0,11) from 38,61 cents.

The increase in tariffs was meant to enable ZETDC to raise money to repair its generators, as well as pay for imports from South Africa’s Eskom and Mozambique’s Hydro Cahora Bassa totalling US$19,5 million every month.

Bulawayo was once touted as Zimbabwe’s industrial hub, but many of the industries. have either closed shop or relocated. Most of those that are still operating in the country’s second largest city have downsized their workforce culminating to more than 20 000 job losses.

A greater number of those that lost their jobs started their own small enterprises at their homes.

Bulawayo Chamber of SMEs chairperson Mr Energy Majazi concurred with Mr Ncube’s sentiments, but hinted that the organisation was in the process of registering members into clusters to enable them to be housed in various dormant factory shells in the industrial areas.

“Electricity is always unavailable and to add more woes to this, domestic electricity has become very expensive and in most cases most of the SMEs are finding it difficult to manufacture their products. It’s now up to them to seek alternative workplaces in industrial areas. Actually, we are in the process of registering SMEs to be accommodated in industrial areas where they can get cheaper electricity. Even though it comes once in a while, but at least they will get it at a lower cost. We realised that at home they can’t operate even if the Zesa (electricity) is there, it’s very expensive. So, it’s advisable to those still operating from their homes to move to designated industrial areas,” he said.

Contacted for a comment, Dr Nyoni confirmed meeting SMEs in Bulawayo, but was quick to point out that there was nothing much the Government could do.

Since Zimbabwe attained its independence in 1980, the country has relied on mostly hydropower and thermal energy generation.

But due to old equipment at its thermal station, falling water levels and lack of capital investment in the sector, the country is facing power deficits with households and industry alike going for up to 16 hours a day without power.

Said Dr Nyoni; “The significance of the home industries in the economy is very big. As a country we are moving towards improved production and growth, . . . there is no economy that grows without production. So, the thrust of the ministry towards home industries will be to improve production and workstations. Already the Government is talking about smart cities and within those smart cities they will be some smart SMEs working places,” she said.

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