SMEs see light as load-shedding ends

By Victor Kalalanda, February 23, 2021

Salons, barbershops bore the brunt of recent power crisis

Like snow in the summer sun, the depression wrought by rolling power blackouts is dissipating—yes—but in its wake it leaves beautician Charity Bwalya with a gloomy face, which greets me when I step into her roadside hair parlour in Lusaka’s Kalingalinga township.

Salons like this one in Lusaka's sprawling township, Kalingalinga, fell on hard times when the power crisis deepened Picture by Victor Kalalanda

With the demise of load-shedding, small business owners now exude hope for the future Picture by Victor Kalalanda

Her salon falls into the broader category of Zambia’s more than one million informal micro and small medium enterprises (MSMEs), among which electricity, one of several operating costs, had loomed so large due to longer periods of load shedding lasting between eight and 15 hours.

But with Zesco recently sounding the death knell when it announced that load-shedding has ended in Zambia, Charity, in the manner of a stranded sailor who spots a rescue craft heaving into view, leapt for joy.

And since the development has started her business on a return to normalcy, her current state now fulfills every letter in one of the world’s most soothing words—hope.

“So then when power would go for that long, how were you coping?” I asked the 38-year-old hairdresser.

“It was very difficult because the way we do business, it’s based on power. You need to wash the head of that client. After you’re done washing it, you need to dry the hair and that involves power, so without power it means that person will just say, ‘Oh, I’ll come back when power’s there.’ So you’ll find that maybe the whole day you’re just sitting doing nothing. It was very bad, at least now it’s fair,” she said.

When the power crisis deepened, the salaries for Charity’s two workers went unmet for months on end, and so were her rentals and incurred debts, launching an avalanche of emotions for the unemployed social work graduate who thought she could help her jobless husband and four children survive on an informal sector enterprise that does not comply with the full extent of government laws and regulations.

And so it was relief at last when Government through Zesco’s corporate affairs manager, Dr John Kunda, said “there is no loadshedding; the only time power is being cut is when there is an overload in an area and the power system trips, but even in such circumstances, power is restored within 20 to 30 minutes.”

Since 2015, when widespread electrical power shutdowns became more rampant and Zesco subsequently introduced load management schedules, small business owners of the salon type bore the brunt of the energy crisis.

This is because as largely unregistered and hard-to-tax businesses, the informal SMEs are less likely to have access to basic infrastructure and financial services, as compared to their formal counterparts, whose greater productivity and higher revenues can readily warrant the adoption of alternative energy supply when hydropower from Zesco fails.

In fact, in his 2012 informal sector study on Zambia, economist Manju Kedia Shah states that “there is a clear dichotomy in financial sector borrowing. Almost without exception, only registered firms have access to overdrafts and loans.”

But yet this sector contributes massively to the more than two million informally employed Zambians as recorded by the 2018 Labour Force Survey Report.

It is with the informal SMEs, therefore, that it is easy to see the relationship between electricity and poverty, since power blackouts mean no business, which is the major source of income for many Zambian households.

For Joseph Chiwanchi, a 27-year-old welder who fends for a family of five, load-shedding actually entailed possible sight damage due to the nature of his job.

“It was bad. Power would come back in the night and you can’t weld in the night because [infrared light] damages your eyes with time. So clients were delayed. You were lucky if you made a K50. You had to use it so wisely,” he says.

For butcheries, kilogrammes of meat products went to waste as they started crawling with maggots.

“Most of the products [in which] we add spices, like sausages, mince, chicken and pork got spoiled faster and we just to get rid of them. We had losses up to K2, 000 and because my boss didn’t understand he ended up cutting from my salary. We would get used to the eight hours schedule and ordered more products but when there was a sudden increase we made losses. My boss almost went to the extent of closing the shop,” says Mary Banda, who works in a butchery that is now roaring back to life.

In Mary’s case, the butchery resorted to reduced stock, which affected the business when demand went up.

Furthermore, Leonard Muhupu, 51, owns a 12-year-old butchery business and he shares sentiments which seem representative of his industry.

“That load-shedding was too worse. At least now with power you can even have storage [for longer periods for meat products],” he says.

In the barbershop business category, heightened load-shedding had dramatic consequences like a client ending up with a half cut head and refusing to pay for the incomplete service.

“People would only pay after a full haircut. So when load-shedding increased the money I used to make reduced. I made maybe a K30 or K40 when on a normal day I make a K200 or K300,” says barbershop owner Levy Kunda.

Many of these small businesses would today be sputtering to a halt if it were not for improved rainfall and Zesco’s investment in new electricity infrastructure and embracing an energy mix, a combination of factors which now ends load-shedding in Zambia.

According to Zesco public relations manager, Hazel Zulu, “The current weather-induced power deficit calculated at peak demand is about 600 megawatts. 

However, with the good inflows that [Zambia has] experienced, the average demand is met without problems. Zambia has enough installed equipment to meet the peak demand of 2300 megawatts against the installed capacity of 2800 megawatts.  In a good year with all variables, that is, good rainfall being in place, there is a surplus of 500MW.”

It must be noted that as Zesco’s flagship project, when the Kafue Gorge Lower (KGL) Hydro Power Station is commissioned, the Zambia’s current installed capacity of 2,800 megawatts will escalate to 3,550 megawatts, a historic development that will put the country ahead of meeting its growing energy demands for a secure and sustainable future.

And as a departure from overreliance on hydropower, Zesco has continued to invest in renewable energy such as solar, wind and thermal power, a rich energy mix that is mutually reinforcing.

In fact, Zesco itself has consummated a deal with Power China to develop solar projects at a cost of US$548 million.

Such is the level of investment and policy execution that warrants renewed success for informal sector SMEs, and underpins Zesco’s claim that load-shedding is dead and buried.

There is absolutely no way, indeed, that local businesses could fail to thrive when the country’s electricity corporation is projecting excess power supply and has positioned itself to become the hub of electricity trading in the region by the year 2025.

When beautician Charity says “things are now stabilising” at her salon business, and beams with pleasure as a client steps into her parlour, no one can debate her because having seen the worst she knows what this truly means: the golden age for Zambian SMEs is here.

It is a golden age because now there will be a peak of commercial  activity.