Pick n Pay chair Gareth Ackerman has become the latest business leader to lambast the government over its ties with Russia, warning the ANC’s support of the Eurasian military power threatened a trade agreement that allows SA exports to enter the US duty-free.
In a scathing critique, Ackerman said it was “beyond understanding” that the government would risk losing out on the African Growth and Opportunity Act (Agoa), which provided preferential access to US markets — by its overt support for Russia after its invasion of Ukraine.
He was speaking at the release of the retailer’s full-year results in which it reported a falling profit in part due to excessive load-shedding costs.
In March, FirstRand CEO Alan Pullinger described SA’s failure to condemn Russia’s invasion of Ukraine as morally “despicable”, saying the decision to stage joint naval exercises with Russia could be “catastrophic” for the local economy.
A week later, Standard Bank CEO Sim Tshabalala cautioned that SA’s position on the war in Ukraine should not come at the expense of the bank’s role as a financial institution.
The government has faced growing criticism for inviting President Vladimir Putin to attend the Brics summit in Durban in August, while the International Criminal Court has issued a warrant for his arrest.
Ackerman has long been an outspoken critic of ANC policies.
“At a time when growth-orientated policy change and certainty should be the only items on the agenda, we are mixing up policy with politics.
“How our government can risk Agoa — and other bilateral agreements — through overt support for Russia after its invasion of Ukraine and threatening to withdraw from the ICC is beyond understanding.”
In February, the chair of the US House of Representatives’ Africa subcommittee and other Republicans called on the Biden administration to review US relations with SA and the Agoa deal due to SA’s ties with Russia. This came after SA held naval exercises with Russia and China off the east coast.
Ackerman said SA should consider the Western economies’ pledge to help finance the energy transition away from coal with funding of $8.5bn when approaching its international relations.
“Without this capital, it will be difficult to end blackouts and reduce our reliance on coal-generated power.”
As load-shedding increased in 2022, Pick n Pay spent R60m a month on diesel to power generators, with expenditure rising to R84m a month in January and February. This huge expense cut into its profit.
Ackerman said: “Without this unnecessary cost, our result would have beaten our own forecasts and those of many external commentators.”
Deaf ears
Retailers have pleaded with the government to be given a rebate on the diesel taxes they pay that go towards the Road Accident Fund and other road costs. About 37% of the diesel price goes to road taxes, but only food manufacturers have been offered a rebate.
Ackerman said: “This is unconscionable, particularly when rolled up across the economy and the hardship the blackouts are causing. Requests by the retail industry to be included in the government’s diesel rebate package have so far fallen on deaf ears.”
The cost of load-shedding has also led to rising food costs.
However, all the listed grocery retailers have been keeping their in-store inflation lower than official figures. Pick n Pay’s inflation for the 12 months to end-February was 8.5%, while official food inflation during the period was 10.4%.
Despite this, in April the Competition Commission suggested food retailers were profiteering from increased food costs as food inflation is sitting at about 14%, leading to outrage by many agricultural economists.
Ackerman called the commission’s comments incorrect and irresponsible.
“It is distressing to see irresponsible efforts to shift the blame for food inflation on to retailers. The recent statements by the Competition Commission and government spokespersons are a case in point. They have inexplicably accused the sector of making unjustifiable profits.
“We have absorbed much of the cost inflation, particularly on basic commodities, by saving costs in our business.”
He said absorbing the cost of blackouts and keeping food prices lower than inflation was “taking a Herculean effort”.
Ackerman also had harsh words for the government about SA’s stagnant economy.
“We are at a particularly precarious time in SA. With official unemployment sitting at 32.7%, and much higher among young people, the IMF has just forecast our growth at 0.1% this year.
“That isn’t even standing still. It’s going backwards.”
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