It’s been hard to stay positive about the future of SA, Pick n Pay chair Gareth Ackerman told shareholders, criticising both the Employment Equity Amendment Act that penalises private employers for not meeting racial targets, and potential race-based water laws.
Ackerman used the group’s AGM, held on Wednesday, to criticise government policy.
At the AGM, Pick n Pay also announced that it would run at a loss for its first half to August due to one-off costs, in what is its first loss in at least 15 years.
He previously said being a South African was exhausting. On Wednesday, he stated: “When you’ve been hammered relentlessly by setbacks on every front over a long period, there’s a temptation to give in, either to fatalism or a misplaced faith in imminent redemption.”
Before criticising the effects of race-based laws, he said crime and recent truck burnings would extinguish new economic growth.
“Rolling blackouts, surging crime and criminal cartels, the breakdown of the country’s logistics capacity, the burning of trucks, and a diplomatic stand-off with our biggest trading partners have quelled any thoughts of an early economic revival.”
The Employment Equity Act signed into law in April allows the labour minister to set racial employment targets for entire industries and enact serious fines if companies fail to meet government targets.
Ackerman said: “This would have the effect of making large numbers of qualified people unemployed and substituting them with unqualified people. It is very probably unconstitutional, and could ruin many productive companies and foreign investments on which the economy depends.”
“I cannot understand why our government has not caught up with the times,” he said. “The act tries to force on business by decree an outcome that most large corporates are already doing their best to achieve. Not because they’ve been instructed to do so, but because of the growing recognition that a diverse workforce and leadership is a strategic asset.”
He said Pick n Pay had spent R50bn on buying from BEE-compliant businesses in the past financial year.
“This is a factor of eight ahead of any other retailer. Commitment and transparency should be favoured over punitive legislation.”
The government has also proposed draft regulations to the Water Act that would require farmers to have a black shareholding of 25%-75% to obtain water licences, depending on how much water they extracted or stored.
Most of SA’s water resources are still held via water use entitlements that predate 1998, while a smaller fraction was set aside through water use licences granted since then.
The draft regulations closed for comment on Tuesday.
Ackerman said this would increase food prices at a time of already high food inflation and unemployment.
“In yet another very worrying development, the new provision for race-based water rights has huge potential to impact food security. There is no line of would-be black shareholders with the necessary capital to purchase this required equity in farms. This could ruin or close many of our farms and undermine the value of all existing farms, thus also creating a banking crisis.”
Pick n Pay said the consumer is battling high food prices with food inflation almost hitting 14%,
Ackerman, however, praised Transnet’s decision to select a private port operator to co-run the container terminal in Durban and the growth in independent power projects and government unblocking broadband spectrum.
“More than 4,300MW [of independently produced power], equivalent to four stages of load-shedding, is set to come onto the grid in the next two years. That is not even counting the impact of accelerated domestic and private investments in small-scale solar generation, supported by tax incentives, and local government initiatives to procure energy independent of Eskom.”
“The consequences of this will ripple through the economy for years to come,” Ackerman said.
“If this is a genuine shift in attitude towards the private sector and a move away from the heavy hand of the state, then there is reason to believe that some of the most urgent challenges in energy, logistics and safety and security can be more rapidly turned around.”
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