EDD transactions adds R10.8bn to local economy

21st December 2016

By: Ilan Solomons

Creamer Media Staff Writer

  

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Settlements concluded during the year by the Economic Development Department (EDD) has resulted in R10.8-billion being released back into the local economy.

This included, among others, settlements with beer and cider giant Anheuser-Busch InBev (AB InBev), carbonated soft drink producer Coca-Cola Bottling Africa (CCBA), retail group Edcon, health and beauty retailer Clicks, steel producer Arcelor Mittal and seven construction companies.

These transactions either introduced new public interest obligations on mergers, or provided for funding for developmental projects or supported actions by the competition authorities against collusion in specific industries. Additionally, the EDD facilitated the introduction of new criminalisation provisions against collusion and cartel conduct in the economy, on May 1, with stiff jail sentences of up to ten years.

The department further noted that these deals saved about 57 200 jobs and will create at least 4 600 jobs. Moreover, about 120 000 small spaza shops and taverns will be given the right to stock and display products from competitor brewers and soft-drink bottlers, opening the market for beverages in the “boldest way yet” in South African retail history

AB InBev, which purchased brewing and beverage company SABMiller committed to spend R1-billion on promoting new employment outside its core operations. The EDD highlighted that AB InBev would also support small, emerging farmers with a R600-million facility through which 800 new farmers will be developed with total employment gain of 2 600 workers, while the remainder of the funding would support entrepreneurship and social programmes in South Africa.

This initiative is aimed at turning South Africa from a net importer to a net exporter of beer inputs. “AB InBev will retain the current 6 000 jobs of the workforce for a five- year period and provide protection against retrenchment; open up competition by craft brewers through granting them access to 10% of fridge space in taverns; develop low-alcohol and no-alcohol choices for the local market and commit to the location of the African headquarters in South Africa,” the ministry pointed out.

Further, CCBA on the merger of three bottling operations, committed to retain the current 7 500 jobs for a three-year period and provide for protection against retrenchments for specified categories of staff and would provide R800-million funding to create new jobs in its value-chains, of which a R400-million facility will support small, emerging farmers as well as packaging companies. An additional R400-million is available to support the opening of new spaza shops and retail outlets.

Coca-Cola will allocate 20% of its equity in sparkling fruit juice producer Appletiser for black South Africans and 20% equity in CCBA for black South Africans; opening up 10% of the fridge-space in coolers and display cabinets owned or financed by Coca-Cola in 117 000 spaza-shops and small retail outlets, to smaller and rival soft-drink bottlers; deepening the localisation of its local supply-chain including commitments to retain the production base of Appletiser in South Africa

Edcon converted its debt to equity and transferred ownership of the company to its creditors, which included commitments by the group to support the local clothing, footwear and textile industry, retain 43 630 current jobs in the company, subject to market conditions, and grow the number of new jobs in its retail and manufacturing operations by 2 000 workers.

Construction companies Murray & Roberts, Aveng, WBHO, Group Five, Steffanutti Stocks, Raubex and Basil Read committed to a new R1.5-billion reparation fund for developmental projects in addition to a R1.4-billion penalty for past collusion and agreed to deep transformation through sale of equity or support for the development of black construction companies that will place “many billions of rands” in share-value or contracts in the hands of black South Africans.

Clicks, which acquired the pharmacies of private hospital group Netcare, committed to protecting 207 jobs, work towards creating a further 65 additional employees, maintain or improve its levels of localisation and small business procurement and provide at least 80 bursaries to pharmacy students and 100 learnerships to young pharmacist assistants.

The EDD also noted that it had “relaunched” an agreement with retailer Walmart to support localisation to expand its impact and resulted in a number of new localisation initiatives, including a local two-minute noodle maker, an environment-friendly furniture-maker and a pump-filter manufacturer were introduced into the company’s local supply-chain.

The department further said that it had rallied stakeholders around certain policy and programmes that would have a significant impact on the country’s economy and thereby ensure that government responded in an “informed and more aligned manner” to the challenges faced by the South African economy.

“This was a challenging year for economic development globally and domestically but significant progress was also registered in South Africa. The economy avoided going into a recession in part through the collective action of business, labour and communities working with government, though growth remained very modest,” stated the department.

Edited by Megan van Wyngaardt
Creamer Media Contributing Editor Online

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