A small bakery in Maputo put 150 loaves of bread into the oven this morning. But there's a problem. It was his third time that week that the power went out without warning. The bread has gone bad again. The bakery owner loses all the flour and yeast he used to make the bread, and is unable to sell the failed bread.
This is just one example of the daily reality for small business owners in Mozambique. We set out to investigate what happens to small and medium-sized businesses when they no longer have a reliable regular supply of electricity.
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We found that 95% of small and medium-sized businesses in Mozambique rely primarily on electricity from the national grid to produce the goods they sell. They use electricity productively to earn sustainable livelihoods and create jobs. However, 86% of small businesses we interviewed said their electricity supply was unstable.
This is important because the small business sector is one of the most important sectors of the economy. Small businesses are spread throughout the economy, including agriculture, which employs 80% of Mozambique's active workforce. It is often the only opportunity for self-employment and job creation. Electricity supply is so unstable that it threatens business owners' ability to earn a living and destroys their ability to create jobs.
Where did Mozambique's electricity go?
Mozambique has the world's 14th largest natural gas reserves. More than 74% of its electricity is hydroelectric, mainly generated by the Cahora Bassa hydroelectric dam. However, the government agreed to export more than 80% of this hydropower to South Africa under a 1969 agreement under which South Africa financed the construction of the dam. Mozambique recently announced that it will retain this power for its own use after the agreement expires in 2030.
Meanwhile, only 44% of the population has access to electricity. Approximately 62% of Mozambicans live in rural areas, but only 6% have access to electricity.
For those who do have electricity, the power supply is unreliable and too expensive. The bottom 40% of Mozambique's poorest households earn more than 15% of their average income for enough electricity to power some basic lights, a fan, a television, and charge a mobile phone. are paying.
what we found
We looked at information contained in household health surveys and the Energy Poverty Index, which reveals how much people spend on energy and how much energy they can use. We also spoke to 219 MSMEs to find out how they coped with power outages.
Businesses such as bakeries, poultry farms, and cement block factories can lose raw materials when power systems shut down without warning. A poultry farm requires electricity to hatch eggs and raise chicks. Cement block factories use machines to mix cement, sand, and water to produce blocks (manual work would be too time-consuming). If the power goes out during this time, the cement will dry out. Frequent power outages can also damage equipment.
Most small businesses had no backup power and had to suspend production until electricity was restored. Power outages can last minutes, hours, or even days. It was found that only 10.05% of bakeries have diesel generators installed and only 3.35% have wood-fired ovens to continue baking bread. Of note, 68% of businesses surveyed said they spend up to 14.7% of their revenue to cover electricity costs, while the remaining 32% spent an even higher percentage, up to around 39%. It means that you are spending %.
As a result, the burden of electricity costs on small businesses is high. At the same time, 82.4% of SMEs were unable to obtain loans or subsidies. His 80% of companies sell their products only in local markets, further limiting growth potential and profits.
It also found that the agriculture industry, which accounts for more than 26% of the country's gross domestic product and provides jobs to disadvantaged communities, has small and medium-sized businesses hit hard by the power outages.
Although Mozambique is energy-rich and can meet its own energy needs and contribute to the energy needs of neighboring countries, it sells more than 90% of all energy produced domestically to neighboring countries. It is also affected by extreme weather events and other climate changes. Natural disasters in Mozambique lead to losses of about $100 million annually, or 1% of gross domestic product. Taken together, these factors mean that Mozambicans face energy poverty.
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solution
Beyond the immediate problems, long-term plans to build resilient infrastructure are urgently needed.
Our research recommends that governments implement specialized state energy policies tailored to local needs. In areas with isolated populations, this means coming up with off-grid solutions such as solar and wind power. Implementing these systems will need to be combined with targeted loans and subsidies to small and medium-sized enterprises, including smallholder farmers.
Regional training programs on entrepreneurial skills, especially for women working in agriculture, are also recommended.
We also recommend joint efforts by the public and private economic sectors to help small businesses access electricity so that they can earn sustainable livelihoods and support sustainable development across Mozambique.
Dr. Miguel C Brito is a co-author of the original research behind this article.
Lula Inglesi-LotzProfessor of Economics at the University of Pretoria, Mendita A. Ugembe holds a PhD in the Sustainable Energy Systems Project at the Department of Geoengineering, Geophysics and Energy, Faculty of Science, University of Lisbon.
This article is republished from The Conversation under a Creative Commons license. Read the original article.