By Lehlohonolo Lehana.
South African manufacturing activity contracted again in March as rotational power cuts led to a deterioration in local business conditions, a survey showed.
The seasonally-adjusted Absa Purchasing Managers’ Index (PMI) fell to 48.1 points in March from 48.8 points in February, staying below the 50-point mark that separates expansion from contraction for the second consecutive month.
Domestic demand seems to be struggling, with some comments referring to local demand faltering due to load-shedding (power cuts),” Absa said in a statement.
Eskom has implemented power cuts every day this year that sometimes last for up to 10 hours, after a record number of days with outages last year.
However, Absa said the respondents in its survey are more optimistic about business conditions going forward.
“Following a sharp deterioration in February, the index tracking expected business conditions in six months’ time rose to 55.5 from 46.8 in February. This means that purchasing managers generally expect conditions to look better later this year, “Absa said.
Absa meanwhile says it will provide R50 million in energy subsidies under its Green Asset Finance programme to qualifying small and medium enterprises (SMEs).
The energy subsidy will provide relief to small business customers looking to finance solar installations to minimise the effects of load shedding in South Africa, the group said.
All eligible SMEs that have their commercial properties financed by Absa will be contacted by the bank and will not need to apply for this support.
Subsidies can reach up to R50,000 or 10% of the overall installation value and will be determined by clearly set-out factors.
Absa will invite all identified SME customers to opt-in or opt-out of the subsidy for their green finance needs.
“SMEs make a significant contribution to job creation and economic growth in South Africa. However, in many instances, the operating environment over the past few years has made it very difficult for these vital enablers to grow and thrive,” said Ronnie Mbatsane, Managing Executive for SME Business at Absa Relationship Banking.
“Load shedding in particular continues to hamper the potential of many SMEs. Through these subsidies we are helping to put liquidity back into the hands of small businesses to power their business into full production.”
Absa said that the launch follows considerable investments made in the renewable energy sector, such as solar offerings for Absa Home Loan clients, personal loan options for retail customers looking to acquire alternative power sources, and other customised solutions backed by subject matter experts that have helped SMEs to find the best solution for their requirements.
The bank said that it enables customers to determine their energy needs, calculate costs and link them to a trusted energy supplier.
It added that its Supplier Value Chain development initiative has supported SME installers in their SAPVIA PV Green Card accreditation, which supports emerging township economies, pipeline commercialisation and allowed Absa’s SME customers to engage in the value chain.
“The Absa energy grants underscore our commitment to this vital segment and connecting individuals and businesses to communities,” concluded Mbatsane.