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Consumer goods body counts cost of loadshedding, poverty, failing infrastructure

Consumer Goods Council of South Africa co-chair Gareth Ackerman

Consumer Goods Council of South Africa co-chair Gareth Ackerman

12th October 2023

By: News24Wire

  

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The consumer goods industry's largest representative body warned on Wednesday that the cost of load shedding, failing infrastructure and rising poverty were a "potentially lethal cocktail" requiring urgent action by the government.

But the Consumer Goods Council of South Africa (CGCSA), which represents more than 9 000 businesses including SA's top retailers and food manufacturers, also called on the private sector to work with government to kick-start the economy and get it on a growth trajectory, instead of criticising from the sidelines.

Speaking at the organisation's annual summit in Johannesburg, the CGCSA's co-chairs Gareth Ackerman and Johann Vorster, and its CEO Zinhle Tyikwe, also noted improvements, such as government increasingly showing a willingness to work with the private sector to find solutions at local and national level.

But it was clear from their comments that doing business in SA was not for the fainthearted.

Ackerman, who chairs grocery chain Pick n Pay, said loadshedding was still one of the biggest negative impacts on the economy, costing businesses "billions and billions of rands" in diesel to keep the lights on. This added to the impact of roads falling apart and a dysfunctional rail system:

The damage to our trucks because of potholes is huge, the cost of insurance has gone up maybe two and a half times since the (July) 2021 riots. It hasn't come down again because the country risk has gone up. All of these factors are increasing the cost of business in SA and the consumer is ultimately ending up having to pay for it.

Ackerman also stressed that consumer salaries and wages are not keeping up with the rising cost of goods - meaning South Africans are becoming poorer.

As a result, more people are being forced into the social grant system.

It does become a potentially lethal cocktail which needs to be adequately addressed by the government, and government policy needs to be looked at to make sure that we are addressing issues and get economic growth.

Loadshedding impact

Dialling into the conference virtually, Vorster, who is also CEO of dairy producer Clover, said conditions had been tough for manufacturers. Beyond the "diesel and the trucks and potholes", industries such as the dairy sector had to undertake serious equipment cleansing, which was severely hampered by loadshedding.

Power cuts put an “enormous amount of pressure” on manufacturers, he said, highlighting the impact on dairy and chicken producers.

Vorster also said power cuts had affected water supply, which meant installing numerous water tanks at a prohibitive cost.

"One tank will cost you R12-million and then you still need to get all the infrastructure around it…"

As to SA back on a growth path, Ackerman cited Saudi Arabia, which had managed to increase its economic growth to 8 to 9% with the help of policy changes after languishing with minimal growth about five years ago.

He acknowledged that Saudi Arabia could rely on its oil wealth to kick-start the growth programme, and noted that it had poor human rights policies. However, he said, SA had resources "under the ground" that could be used to trigger more growth from the economy.

He said top businesspeople were working with the SA government in several areas, including transport, security and energy. But the challenge was that "government isn't doing its job properly" and businesses were having to do things that they were already paying taxes for the government to do.  

Tyikwe said to this end, the CGCSA was also working hard to try to get businesses rebates for infrastructure investment.

She said the consumer goods sector was one of SA's biggest employers, with its members formally employing 2.5-million people. Because it played such an important role in ensuring food security and contributing to SA's GDP, it made sense for the government to work closely with it to increase economic growth and create more jobs.

She said its members all loved South Africa, but needed government to improve economic conditions and attract investments, while allowing companies to make profits, which are essential to help businesses reinvest in themselves to grow and create jobs.

Better cooperation 

There were bright spots, with Vorster highlighting improved cooperation between municipalities and the private sector. This included early warnings of load shedding, water supply disruptions and other interruptions, enabling companies to make contingency plans.

He appealed to companies "not do the famous thing of standing on the sidelines shouting". SA could "win as a nation" if every company also offered its help in its own community or municipality, he added.

He also believed SA had not run out of ideas for solutions, saying there were quick fixes readily available to the government as well.

"For example, I can't see why it should take you a year to appoint a CEO of Eskom, and they say Transnet will be even longer."

It was also possible to attract engineers to SA, as well encourage more skilled people to come and assist the country in finding solutions by lifting entry visas for skilled workers.

Speaking on the sidelines of the summit, Ackerman told News24 there were positive signs the government was working more with business.

"It is starting to have an effect. We are starting to see things slowly start to move."

Asked about water infrastructure issues increasingly coming to the fore, particularly in Johannesburg, Ackerman said it came down to a lack of service delivery at local level.

"You are seeing this with water, sewerage, with potholes, you a seeing a huge amount of litter sitting on the side of the road. All of this could be cleaned up by utilising the resources effectively. Government has the resources to do it, but it doesn't have the skills or capacity to actually deliver on those areas. That is the real problem."

But while SA was in a difficult position, it was not the "worst in the world".

"I don't think we are a basket case, but I don't think we are running the country and the economy as efficiently as we could," said Ackerman.

Edited by News24Wire

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