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At today’s annual general meeting of leading South African retailer Pick n Pay, chairman Gareth Ackerman reaffirmed his membership in a tiny club of business leaders prepared to publicly call out the country’s destructive ANC government. Ackerman rejects the notions of fatalism and blind optimism – urging action to overcome the country’s downward spiral and exposing the difficulties for what they are. Inspirational, too. Despite the challenges, Ackerman says “in spite of everything, I am somewhat more positive about the prospects for the country than I was a few months back.” Below is text of the relevant part of his address.
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By Gareth Ackerman, chairman of Pick ‘n Pay
We are surrounded by change. It is a fundamental part of our development. Sustainable change often requires a step change. The Pick n Pay Group has been embarking on step change for a number of years to ensure the business adapts to technological and societal changes which impact on all sections of our society and the difficult space in which we all find ourselves.
When you’ve been hammered relentlessly by setbacks on every front over a long period, there’s a temptation to give in, either to fatalism, or a misplaced faith in imminent redemption.
It’s been hard to stay positive about the future of SA for a long time now.
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.
The Employment Equity Amendment Act, for example, 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. It is very probably unconstitutional, and could ruin many productive companies and foreign investments on which the economy depends.
I cannot understand why our government has not caught up with the times. The Act tries to force on business by decree an outcome that most large corporates are already doing their best to achieve. 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.
Just by way of example, Pick n Pay spent over R50-billion on BEE businesses during the last financial year – a factor of 8 ahead of any other retailer. Commitment and transparency should be favoured over punitive legislation. I am proud of PnP once again achieving level 5 BEE Status.
In yet another very worrying development, the new provision for race-based water rights has huge potential to impact food security. 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.
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.
Yet we have to guard against those two temptations – fatalism on the one hand, and false hope on the other.
Fatalism will not help us because it amounts to an acceptance of the way things are. And if we accept the current state of affairs, then the downward spiral we’ve been on can only accelerate.
Blind optimism is no good either. It may cause us to overlook the difficulties that must be confronted if we are to get the country and the economy back on track.
At times like this it’s important to keep an eye on underlying factors that are most likely to influence the trajectory over a longer period than what is reflected in daily headlines.
A ray of hope
With that in mind, I want to outline why, in spite of everything, I am somewhat more positive about the prospects for the country than I was a few months back when we presented our financial results.
The first reason is the apparent recognition by government that it needs help to get the economy moving again. 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.
The second positive development has been the strong growth in the pipeline of independent power projects since the lifting of the 100MW licensing cap. More than 4,300MW, equivalent to four stages of load shedding, is set to come onto the grid in the next two years. That is not even counting the impact of accelerated domestic and private investments in small-scale solar generation, supported by tax incentives, and local government initiatives to procure energy independent of Eskom.
The consequences of this will ripple through the economy for years to come.
Similar progress is beginning to seem possible in freight transport and logistics, and we’ve also seen the unblocking of the broadband spectrum impasse at long last. We saw this week the partnership with Transnet on our ports.
Together, these issues have been persistent constraints on economic growth for many years, and their resolution would open a path to faster rates of growth and renewed confidence in the future.
That said, there is still a lot of work to be done and we must ensure we keep up this momentum.
The need for sensible policy
If there is a shift to a more pragmatic approach to policy making, it remains very uneven. Evidence of this can be found in recent Acts coming before Parliament, which have not been properly thought through and are almost certainly unconstitutional, including the examples I mentioned earlier. We hope the unintended consequences of policy shifts have been thought through!
Still, I really hope what we’re seeing in the collaboration between business representatives and government to address the electricity, transport logistics and crime challenges is a fundamental change for the better in the relationship between public and private sectors.
I hope it leads to a more considered, evidence-based approach to managing the economy and making policy across the whole of government. It is, in any case, a start.
For our part, and speaking as a member of the BUSA Board, we have agreed a strong pledge to making a real difference.
Pick n Pay was built during a period of enormous uncertainty in our country, at a time when it may have seemed foolhardy to keep believing in the possibility of a better future. Now, as then, we have continued to invest – putting R4bn into the business over the past year – as a demonstration of our commitment to build for the future.
These difficult times compel us to do what we can to help those with less and we are constantly delighted by the investments our teams make in the various communities in which we trade. I would like to thank them all for all they do in helping to feed the nation.
Confidence requires a corresponding determination to succeed, and Pick n Pay will continue to serve our customers in the way we know best, by being the most efficient business possible. We will also continue our strategic transformation to deliver a strong longer-term performance.
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