South Africa’s government needs to introduce further reforms to improve the ease of doing business in South Africa or risk losing out on valuable skills and competition, says Massmart group chairman Kuseni Dlamini.
Writing in the group’s latest annual report, Dlamini noted recent positive developments in the electricity sector that will allow private sector organisations to produce up to 100MW of power. He added that the move to auction spectrum is key to positioning South Africa in a digitalised global economy.
“These are encouraging signs; however, there is still more work to be done, in particular in unlocking the full potential of our tourism market by making it easier for tourists wishing to visit South Africa to access visas. We are located some distance from the centres of global economic activity, and we, therefore, need to make every effort to make it easy for people to visit our country.
“If South Africa is to grow and prosper and our companies are to be globally competitive, we need access to scarce talent. We therefore also need to make the visa process for people wishing to work in South Africa easier and more user friendly.”
Dlamini noted that South Africa still faces challenges with its state-owned entities (SOEs), such as Eskom and Transnet, which drag the economy.
“We need serious and urgent action from Government to fix our SOEs. They play a key role in South Africa’s ability to be globally competitive. When they are not operating optimally, it negatively impacts job creation, economic growth, our GDP and foreign exchange earnings.
“Fixing them is the key to South Africa’s economic growth. The water crisis and the ineffectiveness of our Water Boards is another issue that urgently needs to be addressed by government, as does infrastructure. Now is the time for action, not nice words. We need tangible progress.”
Service delivery failing
Dlamini warned that South Africa is also falling behind in its service delivery at the local government level.
“We need to build more capacity at a local government level because business operations are impacted by the performance of local government.
“We need to ensure that the councils, mayors, municipalities and the metros are all fit for purpose and the future, that they run efficiently, there is no corruption and that we have qualified, competent, capable and willing people who can run world-class municipalities, which is ultimately where economic activity takes place.”
From a national perspective, South Africa needs to reprioritise the need to build capacity at the local government level, Dlamini said.
“South Africa is a country of such incredible potential, but this potential will only be realised if all of us work together to create the conditions that allow for our mutual success.”
Massmart, the owner of Makro and Game in South Africa, reported a 65% decline in headline earnings per share for the 52-weeks ending in December 2021, to a loss of 705.5 cents per share, while the group reported a loss for the year of R2.2 billion, from R1.75 billion before.
Massmart said that total group sales for the 52-weeks ended 26 December 2021 of R84.9 billion represented a 1.9% decrease compared to the same period in 2020, while comparable-store sales grew by 1.7% over the same period. The group again decided against a dividend declaration for the period.
It said that it generated a trading profit of R195.4 million, despite the severe impact of civil unrest. This was achieved through a partial offset of the civil unrest losses by insurance proceeds and by delivering a 1.2% sustainable decrease in expenses.