• Pick n Pay chairperson Gareth Ackerman on Wednesday expressed concern about some recent government policy shifts, warning they may not have been fully thought through.
  • New provision for race-based water rights has huge potential to impact food security, he says, while new employment equity legislation could destroy many existing companies.
  • But there are some reasons for optimism as well, including a recognition by the government that it needs help from the private sector to get the economy moving again.

Pick n Pay chairperson Gareth Ackerman has warned new government policies around race-based water rights and employment equity targets could destroy successful companies and bring farms to their knees.

In an address to the company’s annual general meeting (AGM) in Cape Town on Wednesday, Ackerman said there had been a concerning trend from the state in terms of policy and legislative developments, some almost certainly unconstitutional, even if there were some reasons for more optimism as well.

“If there is a shift to a more pragmatic approach to policy making, it remains very uneven,” he said. “Evidence of this can be found in recent acts coming before Parliament, which have not been properly thought through…”

Ackerman said recent developments around government policy and legislative changes had been “disturbing”, including those around the Employment Equity Amendment Act, signed into law in April, which “threatens private employers if they fail to employ a workforce mirroring racial demographics”.

He added:

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.

 

He said the legislation tried to force on business “by decree an outcome” that most large companies were “already doing their best to achieve”. Ackerman argued that this was not being done because they had been instructed to, but “because of the growing recognition that a diverse workforce and leadership is a strategic asset”.

The act in question has sparked opposition and trade union Solidarity has launched a legal challenge against it, though some law firms have noted that it still remains illegal to fire existing employees on the basis of their race.

Ackerman said Pick n Pay, itself, had spent over R50 billion on black economic empowerment businesses during the last financial year, a “factor of eight ahead of any other retailer”.

It had also achieved level 5 BEE status. At the same time, the new provision for “race-based water rights” had “huge potential to impact food security”, with Ackerman saying there was “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”.

The government has proposed that water licences must include requirements for black shareholding, but it has said that this will only be for new licences. AgriSA, a body representing most of the country’s commercial farmers, has however said its understanding is all farmers will need to apply for new licences regardless.

Ackerman also expressed concern about load shedding, crime, the breakdown of logistics capacity, recent truck burnings and SA’s “diplomatic standoff” with its biggest trading partners over its stance on Russia, saying they had “quelled any thoughts of an early economic revival”.

Against this backdrop, he said it had been “hard to stay positive about the future of SA for a long time now”.

But Ackerman said it was important to guard against fatalism, saying there were a few hopeful signs as well that SA’s prospects were improving.┬áHe said one of the factors that made him think so was the apparent recognition by the government that it needed help from the private sector to get the economy growing 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. Another positive development was the strong growth in the pipeline of independent power projects since the lifting of the 100MW licensing cap, he added.

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.”

Source: news24.com