Zinhle Tyikwe, CEO of the Consumer Goods Council of South Africa, which represents the biggest food retailers in the country, says consumers will pay the price of the government's refusal to grant them a tax rebate on the billions they're having to spend on diesel because of load-shedding.
“We're saying to the government, take us seriously. We cannot continue to guarantee the availability of food when there is no security of electricity. At some point retailers are going to have to pass on the costs of having to cope with this load-shedding, and we know that already people are going to bed hungry.”
Finance minister Enoch Godongwana announced a diesel tax refund for food manufacturers in his budget but “ignored” retailers whose key role in the food supply chain the government takes for granted, she says.
“Our members have always complied with every new government regulation, tax and levy; they've adapted and adjusted to meet every challenge resulting from government failures. So government tends to say this sector is going to adjust and adapt to this situation as well.
“But load-shedding has created a situation our members are not able to simply adjust to and get on with it. It's reached a point where it is now unbearable for them.”
The government needs to understand that the food value chain doesn't start and end with food production, she says.
“There's transportation and logistics, there's storage and there's retailing. I don't understand how they can just look at one part of the food value chain and ignore all the others which are just as key to food security.”
Their letters to the Presidency and the ministers of finance and trade, industry & competition, spelling out why they cannot continue to absorb the costs of diesel indefinitely, have been ignored.
“We don't see any of the urgency that we feel coming from government.”
The government's refusal to extend the diesel rebate to food retailers makes nonsense of the president's claim that the national state of disaster will protect consumers from excessive pricing and ensure the availability of food, says Tyikwe.
“They're not understanding what it costs us to continue securing the food value chain in this situation of load-shedding.”
The president's expansion of his costly cabinet at a time of growing financial crisis for the country makes it hard not to wonder if the government is divorced from the financial and logistical realities that retailers are having to grapple with, she says.
They would rather he had focused on improving the performance of his two existing energy ministers than create a third energy minister.
“But now we have a new minister of electricity we need to get a clear indication of what exactly he'll be doing and what powers he will have to do it.”
Their “biggest fear” is that having three energy ministers will only add to the confusion around the government's response to the energy crisis and further delay decisive action.
“We want clarity on the responsibilities and roles each minister will have. If there's ambiguity of any sort we're not going to be able to move as decisively as we need to.
“What we want is a president and ministers who are able to take decisions that are decisive and bold. Because we're at a time now where it can't just be business as usual.”
Could her members do more to absorb the costs of load-shedding and hold back on price increases?
In the six months from September 2022 to February 2023 the big food retailers spent more than R1bn on generators and more than R500m a month on diesel
They're already doing more, she says. According to a recent CGCSA survey, in the six months from September 2022 to February 2023 the big food retailers collectively spent more than R1bn on generators and more than R500m a month on diesel.
There are also the costs borne by the sector every time a food production cycle has to be aborted because of unscheduled load-shedding, and having to throw out food no longer safe for consumption whenever the cold chain they're fighting to maintain at huge expense is broken.
“We really, really want to engage with government. Our CEOs across the whole fast moving consumer goods sector were ready and available on March 3 to engage with ministers and the president to say: 'What is it we can do as an industry to assist so that we can find solutions together?', and we were advised at the last moment that they're not available.”
They'd been given that date, she says. They've been promised alternative dates which they're still trying to secure as a matter of urgency.
“It's important that government understands the critical nature of the state we're in as a country and how it impacts our sector.
“If we're viewed as an essential sector from a food and medicine production and storage perspective, as government has said, then they need to understand what we're going through.”
The food and medicine sector is resilient, she says.
“In fact all businesses in South Africa are resilient. We've taken all the punches and tried to continue with business as usual. What we're trying to say right now to government is that we can no longer continue with business as usual.
“Our economy has shrunk by 1.3%, our population is increasing by 1.6%, unemployment will continue to increase because we're not growing. And business is not being provided with an environment in which we can start to turn this around.
“We are not future fit as a country. How do we make sure that we are future fit?”
These are the discussions they want to have with the government, she says.
She points out that the council represents more than 9,000 companies in the fast moving consumer goods sector, which contributed 12.2% to GDP in 2021, with the wholesale and retail sector alone employing 20% of South Africa’s workforce.
“We can create more jobs and contribute to growth. We want to play our role. Can they then play their role as government and provide us with an environment that is enabling?”
She says it's “a scary thought” that at a moment of such crisis for the country government can't seem to find the time to meet them.
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