Shopping malls in South Africa under investigation
The Competition Commission will consider market-conduct probes into malls and shopping centres in predominantly Black urban communities and rural areas that make it difficult for small, independent retailers to trade in those spaces and are engaging in exclusionary practices.
This is among the conclusions reached in the Competition Commission’s inaugural report on rural and township economies, published Thursday in Johannesburg.
The commission plans to use the findings to help shape its assessments of these regions’ economies.
The areas “are characterised by significant market and regulatory barriers,” the authority said.
This calls for “follow-up work on the implementation of the recommendations of previous market inquiries,” the commission said.
This includes its 2019 study on grocery retail, which found that long-term, exclusive leases between landlords and major anchor tenants were restricting competition and making it harder for smaller retailers to enter malls.
Rural areas and townships, regions to which apartheid governments forcibly relocated people of colour, remain among South Africa’s poorest areas and often bear the brunt of disruptions to services such as power and water.
Still, they’re emerging as key focus areas for established businesses, including large listed banks and retailers looking for new revenue lines in underserved markets, and to bolster growth in the continent’s biggest economy, which has expanded at less than 1% annually for more than a decade.
The township economy is estimated to be worth about R900 billion annually, according to research cited by the Public Investment Corporation and 27four Investment Managers.
About 40% of South Africa’s population live in these areas and risk-proportionate regulation is key to stimulating trade and growth for local businesses, according to the commission.
Its report showed that most independent and informal businesses don’t operate in a formal setting, and while 54% of them hadn’t tried to move to one, they expressed they’d be interested in doing so.
Among businesses that indicated challenges in attempting to relocate to a more formal setting, high rental costs were the most frequently cited barrier in both townships and rural towns.
Exclusionary practices the commission identified include unequal procurement conditions and discriminatory supply agreements that disadvantage small and medium enterprises and businesses owned by the Black majority, the watchdog said.
More competition-friendly rules could simplify licensing and permitting for businesses, standardise procedures, improve transparency, and promote credible service standards for decision-making, it said.
Regulatory burdens disproportionately weigh on smaller, less formal businesses that don’t necessarily have the resources to navigate complex compliance systems, thereby affecting the variety and quality of goods available to consumers, it added.
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