Pick n Pay chairman Gareth Ackerman warned that recent government policy and legislative changes can ruin many productive companies, threaten food security, and create a banking crisis.
Speaking at the company’s AGM, Ackerman admitted that it’s been hard to stay positive about the future of SA for a long time.
Intensified load-shedding, criminal cartels wreaking havoc, the breakdown of the country’s logistics capacity, and diplomatic problems have crushed hopes of an early economic revival.
Recent government policy and legislative changes, including the new Employment Equity Amendment Act, are particularly concerning.
The Act threatens private employers if they fail to employ a workforce mirroring racial demographics.
“This would make large numbers of qualified people unemployed and substituting them with unqualified people,” he said.
“It is probably unconstitutional and could ruin many productive companies and foreign investments on which the economy depends.”
The Act tries to force quotas on businesses – an outcome that most large corporates are already doing their best to achieve.
In 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,” Ackerman said.
“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.”
He said the policies and regulations would increase food shortages and food prices, hitting the poorest South Africans the hardest.
A ray of hope
Ackerman said despite everything, he is more positive about the prospects for the country than a few months back.
The first reason is the apparent recognition by the 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,” he said.
The second positive development has been the strong growth in the pipeline of independent power projects since lifting 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.
“The consequences of this will ripple through the economy for years to come,” Ackerman said.
Similar progress is beginning to seem possible in freight transport and logistics, and unblocking the broadband spectrum impasse is also positive.
“These issues have been persistent constraints on economic growth for years, and their resolution would open a path to faster growth rates and renewed confidence in the future,” he said.