'Probably unconstitutional': PnP's Ackerman warns SA's race policy shifts could have consequences

‘Probably unconstitutional’: PnP’s Ackerman warns SA’s race policy shifts could have consequences

Pick n Pay President Gareth Ackerman.

Pick n Pay President Gareth Ackerman.

  • Pick n Pay chairman Gareth Ackerman on Wednesday expressed concern about some of the government’s recent policy shifts, warning that they may not have been fully thought through.
  • He says a new race-based water rights provision has huge potential to affect food security, while new employment equity legislation could destroy many existing businesses.
  • But there are some reasons for optimism, too, including the government’s acknowledgment that it needs help from the private sector to get the economy moving again.
  • For more financial news, go to News24 Business front page.

Gareth Ackerman, president of Pick n Pay, warned that new government policies around race-based water rights and employment equality goals could destroy successful businesses and bring farms to their knees.

In a speech to the company’s annual general meeting (AGM) in Cape Town on Wednesday, Ackermann said there had been a worrying trend from the country in terms of political and legislative developments, some almost unconstitutional, even if there were some reasons for more optimism as well.

“If there has been a shift to a more pragmatic approach to policy making, it remains very uneven,” he said. “Evidence of this may be found in recent actions before Parliament, which have not been properly contemplated by…”

Ackerman said recent developments around government policy and legislative changes have been “disturbing,” including those related to the Employment Equity Amendment Act, which was signed into law in April, which “threatens private sector employers if they fail to hire a workforce that reflects the makeup ethnic population.

he added:

This would put large numbers of eligible people out of work and replace them with unqualified people. It is very likely unconstitutional, and could destroy many of the producing companies and foreign investments on which the economy depends.

He said the legislation attempted to impose on businesses “by decree an outcome” that most large corporations were “really trying their best to achieve.” Ackerman argued that this was not done because they were instructed to do so, but “because of the growing recognition that a diverse workforce and leadership is a strategic asset”.

The law sparked opposition, and union Solidarity launched a lawsuit against it, although some law firms indicated that it is still illegal to fire current employees based on their race.

Read | New energy efficiency targets cannot be used to fire or lay off employees, a leading law firm says

Pick n Pay itself has spent more than R50 billion on black economic empowerment business over the past financial year, Ackerman said, which is “eight times more than any other retailer”.

She has also achieved a level 5 BEE. At the same time, the new provision on “race-based water rights” had “enormous potential to affect food security,” with Ackerman saying that “there is no line of potential black contributors with the capital needed to purchase these needed shares in the farms.”

“This could destroy or close many of our farms and erode the value of all existing farms, thus creating a banking crisis.”

The government has suggested that water licenses include black stock ownership requirements, but said this would only be for new licenses. AgriSA, a body that represents most commercial farmers in the country, said its understanding is that all farmers will need to apply for new licenses regardless.

Read | The government insists that race-based water licenses are only for new applicants — but farmers disagree

Ackerman also expressed concern about load shedding, crime, collapsing logistical capacities, burning of the last trucks and a “diplomatic standoff” between South Africa and its largest trading partner over its stance on Russia, saying they had “suppressed any ideas of an early economic revival”.

Against this backdrop, he said it had been “difficult to stay positive about SA’s future for so long now”.

But Ackerman said it’s important to guard against fatalism, saying there are also some hopeful signs that SA’s prospects are improving. He said one of the factors that made him think so was the clear recognition by the government that it needed help from the private sector to get the economy going again.

“If this is a real shift in attitude toward the private sector and away from heavy state control, there is reason to believe that some of the most pressing challenges in energy, logistics, safety and security could be quickly turned around.” He added that another positive development is the strong growth in the pipeline of independent power projects since the licensing cap of 100 megawatts was raised.

More than 4,300 MW, the equivalent of four load shedding phases, is set to come on the grid in the next two years.

“This does not even include the impact of accelerating domestic and private investment in small-scale solar power generation, supported by tax incentives, and local government initiatives to buy power independently of Eskom. The consequences of this will ripple through the economy for years to come.”

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