Property Flash


President Cyril Ramaphosa must focus on small and medium-sized businesses; the lifeblood of our economy when he addresses the country in the coming week about steps government is taking to alleviate the nation’s energy crisis, said industrial specialist landlord Inospace’s chief operating officer, Jacques Webber.

Inospace, which was founded by Rael Levitt, owns and operates SA’s largest serviced industrial and logistics parks, with more than 1500 small and medium-sized enterprises, which the electricity crisis has placed under severe strain.

“We call on the government to immediately provide unconditional assistance to SMEs whose
businesses are at an enormous risk of being annihilated by unending load-shedding”, said Weber.

He said the Department of Small Business Development announced that it was
considering relief measures to assist SMEs affected by load-shedding but action needed to be taken now as talk was just frustrating.

“These measures must be realistic and translate into financial assistance,” he said.

Small and medium-sized enterprises (SMEs) make up more than 98% of businesses across the country and contribute 39% towards the country’s GDP.

According to Weber, that contribution should increase in the coming years, further cementing the
importance of SMEs to our economy. However, these businesses are also the most vulnerable to
economic upheaval and externally driven pressures.

“While load shedding persists, thousands of SMEs are staring down the barrel contemplating
shedding jobs, lowering production or possibly winding up. The SME segment of the economy does
not have the means to get off the grid through costly alternative power solutions,” said Weber.

Inospace is a privately held group which provides industrial and last-mile logistics spaces and business services. It has an asset base worth about R3bn.

Weber said the media had done a great job in explaining the scale of the impact on SMEs by
putting faces to small business owners who are victims of Eskom and the government’s inability to
resolve the crisis, which threatens to plunge the country into economic ruin, a fear which is becoming very close to a reality.

“In 2019, the Department of Trade and Industry launched the Intsimbi Future Production
Technologies Initiative (IFPTI) to position SA’s advanced manufacturing sector for the fourth
industrial revolution,” said Weber.

“While many participants in the industrial sector were impressed with the government’s strategy,
the lack of reliable electricity supply will take the industrial sector from the fourth industrial
revolution to before the first one. Reliable power is the foundation of economic development,” he said.

Inospace believed that funds and facilities must be urgently provided to relieve smaller businesses
with their existing debts and payments.

Weber said the government relief should assist SMEs in paying for raw materials, labour and other operational costs.

“These interventions must be structured to match the patterns of small business cash flow and the extent of the impact experienced due to the load-shedding,” he said.

Inospace which owns more than 50 serviced logistics parks in Cape Town and Johannesburg, has
launched a “Living with Load Shedding” project to help its clients to minimise disruptions to their
business operations. The project includes solar solutions, inverter options and generator advice to
assist SMEs who require emergency assistance. It has also established a hotline which Inospace
clients can use for advice or emergency relief.

Inospace installs solar plants to reduce consumption on the various grids, which lowers traditional electricity demand. It also allows clients to install their own dedicated solar plants, which benefit their tenants’ electricity bills.

“Many property companies use solar as a yield-enhancing profit generator, but we will use solar to
keep our clients in business. We allow our clients to move between logistics parks and use our
business hubs with 24/7 power. They can now work between the different load-shedding stages,”
said Weber.

“Everyone hopes that load shedding will start bottoming out and slowly easing over time. But it’s
unlikely there will be any relief soon,” explained the company’s advisory document.

It went on to state that in 2023 and 2024, there will probably be more pressure on the power grid
with the possibility of unplanned breakdowns of generation units.

“Accommodating load shedding into our business operations and strategies will be essential for at least a few years,” it read.

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