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
References: Bartlett, C. (1983). MNCs: Get off the reorganizational merry-go-round. Harvard Business Review, MarchApril, pp.138-145. Business Day, Power Cuts take their Toll on Businesses, 10 May 2006. Business Day, South Africa: Erwin queries R5.6 bn loss from power blackouts, 15 April 2006. Business Owner, Increase in small business growth, October 2006. Business Report, SA Power Cuts hit Namibia’s Industry, 8 March 2006. Cape Business News, Big and Small at its Mercy, 6 April, 2006. Department of Minerals and Energy. (2003). Integrated Energy plan for the Republic of South Africa. South Africa: Pretoria. Department of Minerals and Energy. (2005). Energy Efficiency Strategy for the Republic of South Africa, South Africa: Pretoria. Department of Trade and Industry. (2006a). A National Industrial Policy – Draft, South Africa: Pretoria. Department of Trade and Industry. (2006b). Draft Regional Industrial Development Strategy, South Africa: Pretoria, www.thedti.gov.za/publications/ rids.htm (Accessed on 3 November 2006). Eskom. (2006). The success of the demand-side management programme during the electricity crisis in Cape Town. Presentation to South African National Energy Association, September 2006. Falkena, H., Abedian, I., von Blottnitz, M., Coovadia, C., Davel, G., Madungandaba, J., Masilela, E., & Rees, S. (2001). SMEs access to finance in South Africa – a supply side regulatory review. Policy Board for Financial Services and Regulation, South Africa: Pretoria www.treasury.gov.za/documents/me/p1 24. pdf (accessed on 10 November 2006). Harzing, A. (1997) Response rate in international mail surveys: Results of a 22 country survey. International Business Review, Vol. 6, No. 6, pp.641-665. Health, C., & Sitkin, S.B. (2001). Big-B versus Big-O: what is Organizational about Organizational Behaviour? Journal of Organizational Behaviour, Journal of Energy in Southern Africa • Vol 19 No 1 • February 2008 11 February, pp250-268. International Energy Agency. (2005). Saving Electricity in a Hurry, OECD/IEA Publication Service: Paris. Lutsenhiser, L. (1993). Social and behaviour aspects of energy use: Annual Review Energy Environment, 18, pp247-89. Mail & Guardian, DA: Erwin guilty of misleading the public’, 26 March 2006. Mail & Guardian, Earthlife Africa hits out at Eskom over Koeberg, 10 January 2006. Mail & Guardian, Mbeki: There is no electricity crisis, 30 March 2006. Mail & Guardian, Koeberg repair ‘could take nine months’, 30 January 2006. Mail & Guardian, Screwed by Big Energy, 17 March 2006. McMakin, A.H., Malone, E.L., & Lundgren, R.E. (2002). Motivating residents to conserve energy without financial incentives, Pacific Northwest National Laboratory, Final manuscript to the Environment and Behaviour Journal National Energy Regulator of South Africa. (2006). Investigation into the electricity outages in the Western Cape for the period November 2005 to March 2006. www.ner.org.za/documents/Nersa082 006.pdf (accessed on 13 November 2006). Planet Ark. (2006a). Power cuts cost firms R500m, http:// 111.fin24.co.za/articles/economy/display_article.asp? ArticleID=1518-25_1887293 (accesses on 10 May 2006). Planet Ark. (2006b). Analysis – Cape Town Blackouts Herald South Africa Energy Crunch, www.planet ark.com/dailynewsstory.cfm/newsid/35345/story.com (accessed on 10 May 2006). Rumelt, R. (1995). Inertia and transformation. In: Montgomery, C.A. (ed.) Resources in an Evolutionary Perspective: Towards a synthesis of evolutionary and resource-based approaches to strategy. Kluwer: Academic Publishers: Norwell, pp101-132. South Africa. (1996). Small Business Act, No, 102 of 1966. South Africa: Pretoria. South Africa. (2006). AsgiSa background document. www.info.gov.za/speeches/briefings/asgisabackground.pdf (accessed on 10 November 2006). Stern, P (1999). Information, Incentive and pro-envi.C. ronmental consumer behaviour, Journal of consumer Policy, 22, pp.461-478. Tushman, M. Newman, W. & Romanelli, E. (1986). Managing the unsteady pace of organizational evolution. California Management Review, Fall, pp.29-44. Zabel, H.U. (2005). A Model of Human Behaviour for Sustainability, International Journal of Social Economics 32(8), pp717-735. Received 7 May 2007; revised 20 December 2007 12 Journal of Energy in Southern Africa • Vol 19 No 1 • February 2008