Straightforwardness is so ingrained in Dutch culture that it has its own word, bespreekbaarheid (speakability) — anything can and should be spoken about.
Pick n Pay’s Dutch CEO, Pieter Boone, was true to form after unveiling an underwhelming financial performance, largely due to the government’s hapless handling of the electricity crisis.
It’s not just the nearly R500m spent on diesel, or that crime is rising at its stores during blackouts, or that food waste is growing, it’s the “existential threat” to the country’s food producers amid a lack of security of water and energy inputs. An Arab Spring scenario is what keeps Boone awake at night.
“We cannot afford a second wave of the July unrest that we saw [in 2021],” he said in an interview last week. “I’m quite outspoken given the fact that I’m Dutch: privatise Eskom, better yesterday than tomorrow.”
Just take a look at Astral’s update last week to see where we are heading. I asked Boone what he thought then of the Competition Commission’s recent accusations of price gouging in an inflationary environment levelled against the food retail sector in its Essential Food Price Monitoring Report.
He took a similar line to his chair, Gareth Ackerman, who labelled it a cheap tactic to deflect from the government’s complicity in the form of increasing key input prices due to load-shedding.
Pick n Pay is emblematic of how the private sector is starting to buckle under the weight of continued stage 4 and above load-shedding. Due to increased costs and capital expenditure to keep the lights on, shareholders carry the cost of state failure. Pension funds of workers and tax revenues also pay the price and there is an economic opportunity cost. It is spectacularly bad.
Trust breakdown
But what all this reveals is symptomatic of something more existential. We will fix load-shedding, eventually, but remain an economic underachiever because, despite the president’s exhortations to the contrary in his state of the nation address and many investment conferences, the ANC-led government and its quasi-courts, in the form of super-regulators such as the Competition Commission, loathe business and the private sector.
In the world of SA antitrust, as the Americans call it, there is a clear breakdown of trust between the regulator and the private sector. It is hard to miss the Competition Commission’s increasing focus on targeting the private sector. Its healthcare inquiry, for example, scrutinised only private health care and ignored the elephant in the room: the collapse of the public healthcare system.
Or the mobile data inquiry, which homed in on discounting instead of addressing factors such as load-shedding and inefficient regulation by the Independent Communications Authority of SA (Icasa) that have contributed to high data costs.
It seems the commission’s main aim with these market inquiries is to force companies into agreements on “commitments” or “remedies”, which it can then report to parliament. Just look at the agreements with the large retailers to remove exclusivity clauses in leases.
Similar suggestions about “remedies” have been made by the commission in its provisional report in the Online Intermediary Platform Market Inquiry, in which it proposed that crucial technology providers such as Google, Takealot and Apple should drastically alter their business models in ways the commission thinks will address alleged “unfairness” to small businesses, and implement programmes to support “historically disadvantaged people” in SA.
Misguided policies
This is despite evidence that online platforms have drastically benefited many SA markets, and no evidence that any online platform has actually hampered competition in any relevant market in SA. Trade, industry & competition minister Ebrahim Patel’s fingerprints are all over this.
Now the commission is set to launch a market inquiry into the upstream steel industry, an industry in which almost all the factors that have led to the near total demise of the downstream SA steel industry are linked to misguided government policies and significant underperformance by state-owned entities.
Yet the commission seems intent on focusing on “ownership patterns of steel mills” and “measures to promote entry and expansion of steel producers, in particular, firms owned by small and medium-sized businesses and/or firms owned by historically disadvantaged people”, rather than engaging with allegations of widespread collusion by suppliers to Eskom or investigating whether Eskom’s suppliers are charging excessive prices.
All of this is costing a lot of money — the commission once indicated in a submission to the Organisation for Economic Co-operation & Development that the private healthcare inquiry cost R200m — and sending a negative signal to investors.
One can only hope the commission will focus on real competition concerns in its upcoming fresh produce and steel market inquiries, rather than politics or securing “public interest” commitments. Worryingly for an economy already genuflecting before the all-knowing dirigiste master planners, precedent is that the public’s interest will actually be trumped by the desire to trample on the private sector rather than embracing it.
• Avery, a financial journalist and broadcaster, produces BDTV’s ‘Business Watch’. Contact him at badger@businesslive.co.za.
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