Sunday, July 12, 2020

New act requires regional stores to use pula currency in adverts

The party is well and truly over for South African mega-chain stores that have taken Botswana consumers for a ride for decades.

In terms of Section 11 of the new Consumer Protection Act, which has gone into effect, it is now compulsory to use the pula currency when advertising goods and services. That effectively closes a revenue stream that brought in extra cash for some South African stores that have been carrying on business outside the norm.

As a regional power, South Africa has business presence in most SADC states. Going back decades, most of these businesses have disregarded the pula-rand rate of exchange when selling goods in Botswana. Megastores typically produce generic promotional materials which, until not too long ago, quoted prices in the rand currency. That was not a problem for Namibia, Lesotho, eSwatini whose currencies are pegged to the rand but was a big problem for Botswana whose currency is not. With the pula being the strongest currency in SADC, this basically meant that Botswana consumers were paying more for the same goods that they would otherwise get at much cheaper prices in South Africa. As a matter of fact, that is one of the reasons why some Batswana still prefer to do their shopping across the border.

Both consumers and legislators complained about this unethical practice, with the latter (themselves consumers) asking questions in parliament about it. They hoped that the Ministry of Investment, Trade and Industry would take appropriate action. However, no action was taken and the South African stores themselves chose to turn a deaf ear. When the complaints rose to a crescendo, the stores responded with deception – leaving out the rand currency sign but retaining the rand value of goods. That is what is currently happening and effectively means that there has been no change in the situation – the same goods that one finds at these stores cost more in Botswana because the pula is still stronger than the rand.

There is no doubt that the government let these stores take advantage of Botswana consumers for a long time but to its credit, it has finally taken corrective action. Section 11 (1) (a) of the new Consumer Protection Act states prices shall be displayed in the pula currency. Failure to do so will result in a penalty of P500 000 or in imprisonment to a term not exceeding three years or subjection to both penalties. Every commercial enterprise will be required to comply with this clause but there can be no doubt that it was motivated by the practices of South African megastores which dominate Botswana’s retail sector.

The enforcement of the Act is being preceded by a public education campaign that the Competition and Consumer Authority – formerly the Competition Authority – will be embarking on soon. Thereafter, all businesses will be required to comply with the law. If they don’t, they risk having to continually pay hefty fines.

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Sunday Standard July 5 – 11

Digital copy of Sunday Standard issue of July 5 - 11, 2020.