The chairperson of Pick n Pay, Gareth Ackerman, has slammed the government for what he called its passivity in dealing with South Africa’s structural economic problems.
The chairperson of Pick n Pay, Gareth Ackerman, has slammed the government for what he called its passivity in dealing with South Africa’s structural economic problems.
“Faced with the reality of structural economic decline, the only meaningful government action seems to be inaction, and to place blame on those trying to help solve the problems,” Ackerman, whose father Raymond bought the first Pick n Pay stores, said on Thursday at an investor presentation after the release of the company’s annual results.
He bemoaned the effect the country’s energy crisis has had on the economy and how it has harmed retailers. Requests by the retail industry to be included in the government’s diesel rebate package have so far fallen on deaf ears, Ackerman added.
During his budget speech in February, Finance Minister Enoch Godongwana extended a diesel fuel levy refund to manufacturers of foodstuffs for a period of two years, effective from 1 April 2023 to 31 March 2025. This was to limit the effect of the energy crisis on food prices.
Blackouts have cost Pick n Pay about R60 million a month, the company said.
“No company can absorb these costs indefinitely given the scale of the investment needed to keep the power on and stores open,” Ackerman said.
While elevated inflation is being driven largely by external factors, Ackerman said Eskom had transferred some of its generation costs to industry through load-shedding and companies had had to absorb these costs.
Despite these cost pressures Pick n Pay had kept its internal inflation rate below official consumer price inflation and at less than half the current 14-year food inflation high of 14%.
The group raised prices by 8.5% during the year.
Ackerman said one of the consequences of load-shedding is increased food waste and it is estimated that 45% of the country’s total available food supply is wasted.
Food waste is heightened when load-shedding occurs because refrigeration units stop working, bakery ovens switch off, food production lines come to a stop and livestock are affected.
“In a country that already registers troubling levels of poverty and hunger, this is unacceptable,” Ackerman said, adding that he felt compelled to caution that the food industry was under existential threat from relentless load-shedding.
“The probability of social unrest relating to food shortages and possible store closures if blackouts get too high is now heightened,” he said.
Riots that hit KwaZulu-Natal and Gauteng in July 2021 were partly fuelled by job layoffs and economic inequality, which was worsened by the Covid-19 pandemic. This led to looting and vandalism that cost the state R50 billion and retailers such as Pick n Pay R1.8 billion.
“South Africa’s growth depends on important policy shifts. But we are unlikely to see them happen before next year’s elections,” Ackerman said.