Thursday, October 22, 2020

Business discusses issue of licensing to SA retailers

Several months after government’s indication to offer exemptions and licensing to South African retailers reserved for citizens, no concrete solution has been reached yet 

Those who are party to this discussion offered their views to the matter last week Wednesday at the Stanbic Bank stakeholder engagement on the subject of harnessing the consumer value chain. 
Representing the Ministry of Investment, Trade and Industry was Banusi Mbaakanyi who works in the Economic Diversification Drive (EDD) Unit as Chief Commercial Officer. Mbaakanyi expressed that presently the Minister, Vincent Seretse, does not have a solid proposition from the private sector to reconsider the licensing policy. The licensing policy deliberately supports the involvement of citizens in retailing activities, with possibility of a partnership with non-citizens. 

The rationale of the policy is among others to assist local producers to increase their firms’ output particularly in farming, processing and manufacturing which tend to rely heavily on supermarkets as a source of market. The benefits of this policy include the trickle down effects such as employment and local enterprise development, which given the urgency with which the economy needs to avail jobs seems to offer a more apt case than what is presented by those who challenge the policy.          

“It is not necessarily in my view that the Minister wants to force partnerships at the level of company joint ventures. To my mind joint ventures are a marriage; you cannot just be forced to marry somebody you don’t want to marry. The take-off from joint ventures are very minimal, it will be based on dividends. It is very important that we work out a capacity development programme availing market access,” she said. 

When adding to the discussion Business Botswana (BB) Chief Executive Officer, Dr. Racious Moatshe said that his organisation together with the South African Business Forum in Botswana , an association that comprises 10 South African companies operating in Botswana, are currently engaging retailers on the issues at hand. The founder-member companies include Stanbic, Woolworths, Pep Stores, Distell, Murray & Roberts, CA Sales, Dimension Data, PPC, Liberty Life and Global Holdings. He said that they had gathered sufficient data and tangible, bankable propositions they will present to the Minister. 

“The position that we have taken regarding the licenses is that the 51 percent that was thought of is not feasible and as far as empowerment and unemployment is concerned, it will not help to bring the expected results,” he said. 

Moatshe proposed looking into other options that can address the concerns, giving examples that South African retailers can reconsider their strategies of procurement to source from local suppliers and coming up with ways in which local suppliers can work together with South African retailers to meet the quality standard demanded.  

Dennis Mashabela, Co-Founder and Executive Director of SA Business Forum in Botswana, which was launched in April 2016, advanced that the licensing policy is not a foreign requirement for South African companies, citing a similar requirement that was demanded in South Africa of supporting historically disadvantaged black owned enterprises. 

“They have now built a level of expertise on how they should go about that,” he said. 
According to a 2009 research paper by R Emongor and J Kirsten on the impact of South African supermarkets on Agricultural Development in the SADC: a case study in Zambia, Namibia and Botswana 
the entrance of South African supermarkets (Shoprite, Spar, Pick ‘n Pay, MetCash and Woolworths) pushed out some of the smaller stores. 

“Notwithstanding the gain by consumers, supermarkets’ importation of food and other industrial products may depress production in host countries as locally produced goods have to compete with high-quality, low-cost goods produced in South Africa and the rest ofthe world. Increased production will be stimulated in exporting countries whereas output in host nations may decline. Owing to competition from imports, some domestic firms that are not able to compete may go out of production, leading to the stifling of various industries such as agriculture, food processing and manufacturing,” cites the paper. 

The paper validates the issues raised by local retailers in their lamentations that South African retailers have failed to support local production and processes. The paper cites that 80 percent of all processed food products in Botswana, Namibia and Zambia were imported from South Africa, the reason given being that the retailers prefer to procure from large suppliers who can supply all their outlets with a consistent product in terms of quality and quantity. Deducing from the current issues, this strategy by South Africa retailers is being challenged.

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