South African Companies Close Down Due To Loadshedding. Despite the ongoing energy crisis in South Africa, recent data from Statistics South Africa (Stats SA) shows a decrease in business liquidations. However, economists warn that the numbers may not be as positive as they seem, and the energy crisis continues to impact small and medium-sized South African companies.
South Africa’s Business Liquidations in January 2023 Show a Slight Improvement Despite Ongoing Energy Crisis
In January 2023, South Africa recorded a total of 81 business liquidations, marking a decrease of 32.5% from the 120 businesses that shut their doors in the same month in 2022. While this news appears to be positive, economists at Absa warn that these statistics may not be as promising as they seem.
South African Companies Close Down Due To Loadshedding
Recent data from Statistics South Africa (Stats SA) shows that company liquidations decreased by 42 cases, but liquidations of closed corporations increased by three cases during this period. The total number of liquidations in the three months ended January 2023 also increased by 1.2% compared to the same period in the previous year.
The majority of liquidations occurred in the financing, insurance, real estate, and business services industries, with 30 total liquidations, while the group’s unclassified sectors followed in second place with 24 total liquidations. Trade, catering, and accommodation companies saw 13 total liquidations.
This decrease in business liquidations comes amidst an ongoing energy crisis in South Africa. Many businesses, from large listed entities to small corner shops and informal traders, are facing intense power cuts and high operational costs for diesel generators. The S&P Global South Africa Purchasing Managers Index (PMI) contracted to 48.7 points in January 2023, indicating a contraction in business activity in the country for the first time below 50 in three months.
South African Companies Close Down Due To Load shedding
The government recently announced that businesses can reduce their taxable income by 125% of the cost of an investment in renewables. However, the upfront cost to take advantage of this is high, particularly for generators relying on diesel, which is experiencing yet another price hike from 1 March.
The ongoing electricity crisis is costing the South African economy as much as R899 million per day, according to the South African Reserve Bank. The large-scale foods company Tiger Brands reported that stage 6 to stage 8 rolling blackouts would set it back R120 million for additional generating capacity to keep the business afloat. During stage 6 load shedding, Pick n Pay incurred approximately R60 million per month to run diesel generators, while Shoprite spent approximately R90 million per month on fuel for its generators, totalling R560 million.
Although the January print indicates a slight improvement in business liquidations, economists warn that these figures are lagging indicators and that business liquidations could rise anew in the coming months. The February print will shed more light on whether businesses are more resilient than expected or whether January’s numbers were just a temporary moderation from the recent upward trend.
The ongoing electricity crisis is costing the South African economy as much as R899 million per day, according to the South African Reserve Bank. The government recently announced that businesses would be able to reduce their taxable income by 125% of the cost of an investment in renewables. However, everything needed to take advantage of this comes at a high cost, especially generators that rely on diesel, which is experiencing yet another price hike from 1 March.
Some international companies are hiring remotely in South Africa, offering a way for skilled professionals to work without being affected by the power crisis. These companies allow employees to work from home or another remote location, providing flexibility and reducing the need for commuting. Here are five examples of international companies hiring remotely in South Africa:
- Amazon – Amazon has been expanding its remote workforce in South Africa, hiring for various positions such as virtual customer service associates and customer service associates.
- GitLab – GitLab is a remote-first company that offers an all-remote work environment. The company is currently hiring for positions in South Africa, including a senior security engineer and senior software engineer.
- HubSpot – HubSpot is a technology company that provides software and services to help businesses grow. The company offers remote work options for employees, including those in South Africa, for positions such as customer support specialist and partner sales manager.
- Lionbridge – Lionbridge provides language and technology services to help clients improve their customer experience. The company offers remote work options for positions such as software tester and social media evaluator.