Fuel price hikes are putting new pressure on small businesses in South Africa’s townships, according to the Township Entrepreneurs Alliance (TEA).
The group said the higher costs reach far beyond filling up a vehicle. They affect stock collection, supplier deliveries, staff transport and getting goods to customers.
“Fuel is not only a transport cost. In the township economy it travels through the entire value chain,” said Bulelani Balabala, CEO of TEA.
“Every additional rand spent on moving stock or making a delivery is money that cannot go into stock, jobs, marketing or growth,” Balabala said.
TEA said households also pay more to travel when fuel goes up. This leaves them with less money to spend at local shops.
The group said this creates a double squeeze. Many small businesses cannot easily absorb extra costs, and they cannot raise prices without losing customers.
According to TEA, the businesses most at risk include spaza shops, street food traders, caterers, bakeries and butcheries. Fresh produce traders, delivery operators and e-hailing drivers are also exposed.
Construction businesses and informal traders who travel to wholesalers to buy stock face the same problem, the group said.
TEA said many of these businesses depend on daily cash flow. They have little money set aside to cover sudden jumps in running costs.
One township business owner earlier told TEA: “It is already affecting my business because the competition is tight already and with the price increase things are very hard.”
The group said businesses that compete mainly on price face a hard choice. Passing on costs can drive customers away, while absorbing them cuts the money left for stock, staff and expansion.
TEA advised owners to look again at their costs and cash flow. It suggested combining stock-buying trips and forming buying groups with nearby businesses.
The group also said owners could use closer suppliers where this makes business sense. They should check delivery routes, minimum order values and delivery fees.
TEA said owners should work out the full cost of each product or service, including transport charges from suppliers. Weekly cash-flow forecasts and early talks with suppliers can help spot shortfalls in time.
The alliance is also asking the government to step in. It wants short-term relief for qualifying micro and small businesses and easier access to working capital.
TEA also wants the state to pay small suppliers faster. It called for stronger local buying by government and more spending on local logistics and market infrastructure.
The group said shared buying systems could cut unnecessary travel and transport costs for small traders.
According to TEA, small enterprises in township and rural areas support local jobs and household incomes. They also keep money moving within their communities, the group said.
Source: this article is based on reporting by Bizcommunity. Image: Bizcommunity. Written with the help of AI and published by the Tzaneen Voice Business desk. See our Editorial Standards.
Anelisa Nkuna covers business and money news for Tzaneen Voice. Anelisa reports on the rand, fuel prices, interest rates, jobs, Eskom, Transnet, farming and company results. The aim is simple: explain what the numbers mean for household budgets, small businesses and workers in South Africa.