Businesses face crisis over government’s ‘disturbing’ new policies: PnP chair

Pick n Pay chairperson Gareth Ackerman says that it has been difficult to feel positive about South Africa “for a long time now”, and recent policy moves from the government have not helped at all.

Speaking in the opening address of the retailer’s Annual General Meeting, Ackerman said that two new policy shifts from the government have heavily leaned into racial politicking that will have far-reaching and damaging consequences for businesses in the country.

This, on top of all the other issues companies have had to contend with.

“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.

“To add to this, there have been recent government policy and legislative changes, which are particularly concerning. I am clearly not alone in finding these developments disturbing,” he said.

The first policy shift is the Employment Equity Amendment Act, which Ackerman said threatens private employers if they fail to employ a workforce mirroring racial demographics.

This would have the effect of making large numbers of qualified people unemployed and substituting them with unqualified people, he said.

“It is very probably unconstitutional, and could ruin many productive companies and foreign investments on which the economy depends,” he said.

Ackerman’s comments mirror the backlash these new laws have received – despite assurances from the government that jobs are not on the line, and that the new BEE laws are not quotas.

The government and one of the most vocal critics of the new laws – trade union Solidarity – even signed a “settlement agreement” on the matter, where the Department of Employment and Labour seemingly agreed to ensure that race was not the only factor at play in the new laws. Legal experts called the agreement a waste of time.

According to Ackerman, the EEA amendments are ‘behind the times’ and try to force business – by decree – to do what they are already trying to accomplish.

“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. This is the very foundation of ESG principles that most companies are following with vigour and energy,” he said.

The racial politicking continues, however, with another development – the government’s race-based water rights, which would require all potential water licence applicants to have 25% to 75% BEE shareholding in order to qualify.

“The new provision for race-based water rights has huge potential to impact food security,” Ackerman said.

“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,” he said.

“At a time of high food inflation and unemployment, I can’t believe the government would propose policies that would close down productive farms and businesses, and in doing so increase food shortages and food prices.”

Ackerman’s concerns on this matter were shared by representatives in the agricultural sector, AgriSA, which also sounded the alarm on food security in the wake of the government’s proposed policy.

The Department of Water and Sanitation has responded to these concerns by pointing out that the new policy would only apply to new licence applications – not renewals – so the current licence holders would not be required to have the requisite BEE shareholding.

It also noted that 98% of South Africa’s water sources are already licenced, so the BEE rules would only apply to the remaining 1.5%.

Some hope

While Ackerman’s view of the current policy landscape in the country is broadly negative, the PnP chair did have some hope.

He said that despite everything, the prospects for the country are brighter than a “few months back”, largely thanks to a strong drive for new energy capacity and what seems to be a shift from the government to at least recognise that it has to get the economy moving.

“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,” he said.

However, “there is still a lot of work to be done, and we must ensure we keep up this momentum,” he said.

Read: Load shedding wipes another R300 million from Pick n Pay