While startup opportunities are prominent in South Africa, local businesses face reduced productivity and production, owing to disruptions caused by loadshedding, says research and consulting firm Frost & Sullivan consultant Patrick Prestele.

Loadshedding causes challenges for businesses, such as longer delivery times because of more traffic, damage to electronic devices, security issues and network unavailability.

He explains that, while lower stages of loadshedding can be bridged using generators and uninterrupted power supply systems, higher stages have a “detrimental” impact on the productivity of small, medium-sized and microenterprises (SMMEs) as well as emerging startup companies.

While SMMEs are encouraged to invest in alternative power solutions, some businesses are unable to afford them, making it difficult to remain operational during power outages.

He adds that infrastructure constraints, such as a lack of reliable access to electricity, water and an Internet connection, have also posed challenges to new businesses.

Moreover, startups also have to navigate access to financing in the early stages, such as angel and preseed funding, which Prestele says is further exacerbated by social injustice and income inequality.

“Despite the growing trend over the past few years, access to professional networks, which can guide new entrepreneurs or businesses, is lacking.”

Hence, he says the government needs to actively support the local startup ecosystem by simplifying regulations and registrations, and making funding more accessible for SMMEs, specifically those operating in less fortunate communities.

Prestele suggests that government should provide tax incentives for SMMEs, lower interest rates and provide guarantees to tenders to encourage banks and other financial institutions to provide venture capital.

“Frost & Sullivan aims to help South Africa, and the rest of the continent, reach their potential. We help organisations to advance by informing them of market dynamics, advising on how to respond to these dynamics and connecting them to relevant stakeholders in Africa and beyond,” he concludes.