GARETH ACKERMAN: Deaf to business, government is crippling retail trade, especially in liquor
Limits imposed on weekend sales are causing job losses, a drop in GDP and increasing the social burden
President Cyril Ramaphosa made several promises in his annual state of the nation address about how to revive and reconstruct the SA economy. Among these was the need to accelerate local production of goods, which will not only create employment but also make SA exports globally competitive. The consumer goods manufacturing and retail sector is already participating in a pilot project in which 20 products have been identified for the localisation drive based on proposals the sector made to the government.
The question is how we can ensure delivery. There have been many discussions with business, labour and other social partners on how to move SA forward. However, suggestions made in good faith by the business sector have fallen on deaf ears, without any explanation from the government on the implementation of policies and regulations that threaten livelihoods.
We have made several proposals to help revive the clothing industry, create jobs and help the localisation issue, but the government has not progressed with its proposals. We have agreed to participate in the Sugar Master Plan to grow the sector and protect it from imported competition, despite our view that the plan itself was not competitive. Our concern was and remains that the government failed to consider the consequences of its decision to introduce the sugar tax, particularly on job creation and employment.
The consumer goods sector has supported and implemented every measure put forward by the government in response to the outbreak and impact of Covid-19. We even offered to help with the vaccine rollout and were snubbed!
Where we have not always agreed with government — for example, over the ban on the sale of liquor — we have engaged in pursuit of common ground. However, the current rules on liquor are eroding confidence in government’s approach. Retailers selling liquor for responsible consumption at home are restricted to operating from Monday to Thursday. However, those selling liquor for on-site consumption, such as bars and taverns, can trade a full seven days. This makes no sense for a sector that accounts for only 30% of the total liquor throughput.
The liquor retail industry — particularly small and independent traders — is in extreme distress, with enormous and far-reaching implications for many jobs and the whole value chain, farmers, liquor production, warehousing and logistics, to construction of new retail outlets. The sales restrictions are no longer financially sustainable and are now threatening the survival of retail liquor outlets and jobs in the sector. The sector is losing 50%-60% of its liquor sales volumes in the Friday-Saturday period and 10%-18% on Sundays every week.
It is pertinent to note that 60% of the liquor retailers are SMEs that rely heavily on weekend trade, and many are already retrenching because the four-day trade cannot sustain their businesses. The irony of this situation is that the fiscus is directly losing PAYE, excise duty and VAT, and there are several other revenue losses via the multiplier effect such as Unemployment Insurance Fund claims and social grant claims. The restriction of off-site liquor is further fuelling the already entrenched illicit trade in liquor, which is costing the fiscus billions every year. The law enforcement agencies are too over-stretched to react to infringements and enforcement of the rules against illicit alcohol and tobacco.
The sector is engaging the government to re-examine its regulatory regime to create an environment that considers both the health and the socio-economic effects of its containment decisions. Despite these engagements, it is baffling that the government continues to impose unjustifiable decisions. We therefore call on the government to implement parity and allow retail liquor traders to operate as optimally as possible.
The government needs to put this right quickly if business confidence is not to be further eroded. Yet there is no evidence of the urgency required to achieve this. The economy desperately needs to grow. Ramaphosa wrote recently that companies will need to be innovative in driving methods and processes that secure sustainability and profitability, while ensuring job retention and creation. We agree with him. But it will not happen as long as the government ignores rational advice from the business sector and pays only lip service to its commitment to implement policies that help in reviving and restoring economic growth.
What is urgently required is a policy direction that balances the health considerations of saving lives with avoiding a poverty pandemic that puts pressure on the sustainability of businesses and adds to the social burden facing the fiscus. The economic crisis facing SA needs action, and now. Already the IMF has warned that unless urgent structural reforms are implemented SA risks further economic downturns. The consumer goods sector, one of the largest employers of labour and a key contributor to GDP growth, rose to the occasion during Covid-19 and is committed to partnering with the government. But this must be based on genuine dialogue, and policy must be based on evidence and genuine consultation.
It is time for honest, committed collaboration. The consumer goods sector has never been more ready to contribute to lasting solutions that bring economic relief to the sector and complement national efforts to revive the economy. We want to play our part in efforts to achieve inclusive, job-creating and poverty-alleviating growth while limiting inflation, which is already trending upward in this time of increasing consumer hardship.
• Ackerman is chair of Pick n Pay. This article is written in his capacity as co-chair of the Consumer Goods Council of SA.
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