Tuesday, October 27, 2020

Will SA retailers ever “fully” procure from local suppliers?

Over the past two decades, there has been a rapid expansion of South African supermarket chains into Southern Africa countries including Zimbabwe, Zambia, Swaziland and Botswana. However, recently the region has also seen the growth into South Africa and Zimbabwe of Choppies Enterprise, a supermarket chain from Botswana. The Botswana Stock Exchange and Johannesburg Stock Exchange (JSE) quoted company have opened several shops in both neighbouring countries bringing competition to the decades old South African retailers with operations in Botswana and other neighbouring countries. 

The expansion into the region by Choppies Enterprise has however put on spotlight the lack of procurement from local suppliers by South African retailers who source vast of their products from their home country.  This set up however is likely to change should the government make any regularity shift. In what perhaps seems like an anticipation from such a shift, an association representing the South African retailers have started a process to position themselves in a better corner lest market forces pushes them to close shop. 

On Wednesday, South Africa Business Forum in Botswana, in association with Business Botswana hosted a plenary workshop for South African retailers operating in the country. The workshop was also to be attended by government officials amongst them Investment, Trade and Industry Permanent Secretary ÔÇô Peggy Serame. 

Dennis Mashabela ÔÇô Executive Director at the South African Business Forum explained to journalists a few minutes before the workshop on Wednesday that key deliverables for the workshop entails amongst others thing, a framework on local procurement and market access from Botswana product and services. The workshop was also to touch base on value chain linkages to kick start Botswana based manufacturing for import substitution and export. 

Both Business Botswana and South Africa Business Forum insist that the workshop is necessary as it will pave way for the process that will ensure that the trading environment is “conducive” for the retailers to local help Small to Medium Enterprises (SMEs). 

Business Botswana Chief Executive Dr. Racious Moatshe said Wednesday that they expect the Government to share its expectations ÔÇô on increasing economic activity and how retailers can contribute. 

Both Mashabela and Moatshe cannot make a commitment on whether South African retailers intend to make a deliberate change in their procurement policies and supply chains. They emphasise the need to make the trading environment conducive for the retailers trading in the local market. However a quick look into the agenda of the workshop tells most part of the story. It is evident from the agenda that the South African retailers are worried about their future in Botswana given the proposed procurement requirements set out by the government. 

In her address to them, the South African business forum expects Serame to explain how the Botswana government will support the industry as well as foreign investors. Serame was also to talk on “simplicity, certainty and transparency in regulatory regime: work, residency and trading permits”. 

South African retailers were also to ask Serame to explain to them whether local procurement requirements will be expanded to all retailers including Botswana origin chains like Choppies Enterprise. 

In the meantime, while SA retailers seeks to cement and preserve their market share the propensity to procure goods and services from their country of origin is no doubt undermining the government’s EDD policy. A lot of money that should be revolving and sustaining the local economy continues to leave the country’s shores at alarming rates.

At the same time, despite this likelihood shift in procurement policy by South African retailers which could see a few more local suppliers joining their chain, most of them are still worried about local suppliers capacity, more especially of SMEs. As a result, procurement from local suppliers by South African retailers operating in the country has been at almost zero over the last several years. It is yet to be seen whether South African retailers will ever “fully” source atleast their raw materials from local suppliers. 

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The Telegraph October 28

Digital edition of The Telegraph, October 28, 2020.