Economic Effects of Load Shedding on Small and Medium Enterprises in Kalingalinga and Ibex Hill.

Abstract

Background: In Zambia, the phenomenon of load shedding was pervasive and profoundly affected the business landscape, particularly for SMEs in urban and peri-urban areas such as Kalingalinga and Ibex Hill. These areas, which experienced substantial growth in SME activities due to urbanization and economic policies that favored entrepreneurship, were severely impacted by the irregular power supply. The frequented power outages disrupted production, reduced operational hours, and increased the costs of doing business due to the need for alternative power sources (Ackah-Baidoo, 2016). Objectives: The main objective of the research was to analyze the economic effects of load shedding on Small and Medium Enterprises (SMEs) in Kalingalinga and Ibex Hill. This objective was focused on understanding how frequent power outages affect business operations, profitability, and overall sustainability. Methods: A quantitative approach was employed to fully comprehend the economic effect of loadshedding on SMEs. The study sample consisted of 50 SMEs in Ibex and Kalingalinga. The data was collected using a well-structured questionnaire addressing the research questions of the study. The collected data was coded and partially analyzed in SPSS and the regression analysis was done using STATA. Purposive data sampling was adopted to correctly capture SME’s that were within the study’s parameters. Results: The Findings revealed that 62% of SMEs reported significant operational disruptions, with 90% experiencing reduced capacity due to power outages. Increased operational costs (56%) and revenue losses—with 74% of SMEs reporting reduced sales—were key financial consequences. SMEs adopted alternative power solutions, with 43% investing in solar energy and 30% using generators, yet 78% found these strategies only moderately effective. Employment was also affected, as 66% of SMEs had to reduce staff due to operational challenges. Further, the variables used in the SUR model were all significant and reflected the outlined outcome. Recommendation: The study recommends increased adoption of renewable energy, government incentives for SMEs, operational adjustments, financial planning, and workforce adaptation strategies to mitigate the impact of load shedding on small businesses.