Home Business Tariff increase threatens MSME sustainability – BUFE
Business

Tariff increase threatens MSME sustainability – BUFE

Share
Business Federation of Eswatini Chief Operations Officer Mangaliso Maseko. (File pic)
Share

MBABANE – The Business Federation of Eswatini (BUFE) has warned that the recently approved 13.61 per cent electricity tariff increase for the 2026/2027 will significantly strain MSMEs.

The federation said such will further tighten an already challenging operating environment.

The tariff hike, approved by the Eswatini Energy Regulatory Authority (ESERA) and announced on Tuesday, forms part of a multi-year adjustment trend that business leaders argue continues to outpace inflation and erode competitiveness.

BUFE Operations Manager Mangaliso Maseko said the latest increase would have a ‘significant negative impact’ on MSMEs, where energy costs remain a major input expense.

 “The approved 13.61 per cent for 2026/2027 by ESERA will have a significant negative impact on micro, small and medium enterprises (MSMEs), ensuring that energy costs will remain a high-pressure factor for MSME sustainability in the medium term,” said Maseko.

He noted that the continued escalation of electricity tariffs is forcing small businesses into difficult decisions: Either absorb higher operational costs at the expense of profitability or pass the burden on to already constrained consumers.

According to BUFE, the most immediate consequence of the tariff hike will be reduced profitability and strained cash flow among small businesses.

Energy-intensive sectors such as manufacturing, agriculture and retail are expected to feel the greatest impact.

For agro-processors, cold storage facilities and small manufacturers, electricity is not a discretionary cost, but a core production input.

*…

Solar shifts from option to necessity

MBABANE – One of the most notable structural shifts, according to BUFE, is the accelerated move towards alternative energy solutions, particularly solar photovoltaic (PV) systems.

BUFE Operations Manager Mangaliso Maseko observed that high and recurring tariff increases are transforming solar investment from a resilience strategy against load shedding into a financial necessity for long-term cost control.

“The high tariff increases are accelerating the necessity for MSMEs to invest in alternative energy solutions like solar,” he said.

However, the transition is not without challenges.

While solar systems offer long-term savings and greater energy security, the upfront capital requirements remain a major barrier for many small businesses.

Installation of PV systems and battery backup infrastructure demands significant initial investment, funds that many MSMEs simply do not have.

This creates a two-tier business environment, where firms with access to capital can insulate themselves from rising tariffs, while smaller, under-capitalised enterprises remain exposed.

In response to rising costs, MSMEs are increasingly focusing on energy efficiency and demand management.

BUFE reports that businesses are investing in LED lighting, energy-efficient machinery and optimising operational hours to avoid peak-tariff periods.

“Energy efficiency and demand management have become key survival strategies,” Maseko noted.

*Full article available on Pressreader*

Share
Written by
Nhlanganiso Mkhonta

Nhlanganiso Mkhonta serves as Business Editor at the Times of Eswatini. He reports on business, economics, finance, investment, entrepreneurship and public policy, producing insightful coverage and analysis of the issues driving Eswatini’s economy and the wider African business environment.

Leave a comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Don't Miss

Swazipharm blames ministry delays, commits to compliance

LOBAMBA – After being implicated in the delivery of medical drugs that were later recalled, prominent pharmaceutical supplier Swazipharm has reaffirmed its commitment...

DNA plan could swallow E126m of Home Affairs budget

MBABANE – Making DNA testing compulsory before issuing birth certificates could cost taxpayers about E126 million annually, enough to fund free Grade I...

Shembe forgives Zulu King after video fallout

MBABANE – Members of the Nazareth Baptist Church in Eswatini have rallied behind His Holiness Unyazi Lwezulu Shembe after he publicly forgave Zulu...

Maloma Colliery calls for calm as wage talks continue

MBABANE - Maloma Colliery Ltd has offered employees a cumulative nine per cent salary increase over two years, but wage negotiations have reached...

Family sues EEC over E6m for Mpolonjeni child electrocution

MBABANE - The Eswatini Electricity Company (EEC) is facing lawsuit of more than E6 million following an electrocution incident that allegedly claimed the...

Related Articles

FNB takes SME support directly to regions

MBABANE – FNB Eswatini is expanding its support for the country's small...

FDI inflows plunge to E810m in 2025

MBABANE – Eswatini attracted approximately E810 million (US$45 million) in foreign direct...

EIPA defers 2nd Investment conference

MBABANE – Government has postponed the highly anticipated second edition of the...

Tribunal clarifies insurance tax rules in landmark ruling

MBABANE – The Revenue Appeals Tribunal Eswatini (RATE) has delivered yet another...