Pick n Pay chairman, Gareth Ackerman, has denounced South Africa’s government’s apparent reluctance to fix the ongoing energy crisis. The cost of food prices skyrocketed in April, with food inflation at its peak since 2007. Rising irrigation and additional expenditure on diesel are among the drivers, as retailers risk spoilage if they do not have an alternative source of electricity. The issue extends far beyond wasted stock, as the energy crisis disrupted work hours and pushed the cost onto businesses. Ackerman accused the government of harmful rhetoric that diverted blame from the ongoing energy crisis and placed it onto retailers. In this report, we contrast Ackerman’s rhetoric with that of the government and explore the implications of this blame-shifting.
Government officials placed the blame for this inflation squarely on the shoulders of retailers and have implied that companies are making “unjustifiable profits.” According to government insiders, food prices are “highly suspect,” showing a lack of moderation following the annual festive season rush. These accusations come despite Ackerman revealing that Pick n Pay had borne the brunt of cost inflation and absorbed the costs of basic commodities because of increased irrigation costs. The scale of the investment needed to keep the power running and business open appeared not to be a concern for government officials. Ackerman revealed that his company had spent R60 million per month on diesel, but despite the retail industry’s request, the government had yet to place them on the diesel rebate package.
Given that the government has failed to support or provide a workable solution, many companies struggle to absorb the costs indefinitely. It has forced a rethink of energy solutions, and there has been a rush by businesses to protect themselves via renewable energy solutions. Yet, that transition is not easy and takes time and investment, which is why the lack of urgency on the government’s part has left many business leaders frustrated and seeking change.
Ackerman also commented on what he believed was the government’s weak stance on the Russia/Ukraine conflict. The geopolitical tension has put pressure on many global markets. Some officials assert that the position of the South African government on this issue threatens the Just Energy Transition Programme’s vast investment. Ackerman emphasized that the agenda must include growth-oriented policy changes and certainty, not confusing politics with policy.
In responding to Ackerman’s comments, Cas Coovadia, CEO of Business Unity SA, stated that the government has placed enormous inhibitions on businesses, with ongoing load shedding, additional diesel costs, and logistics concerns escalating as costs rose. The breakdown in law and order and reputational risks have all added to the difficulty business owners face. He further stressed that the government must consider the economic implications of political decisions on foreign policy, adding that his organization was broadly in agreement with Ackerman. Andrew Bahlmann, Deal Leaders International CEO, agreed that companies that solved South Africa’s problems should step up to the plate and make their voices heard.
The government’s current stance highlights a larger systemic problem, with the government presenting ideas that seem incompatible with business development. Rhetoric from the government seemingly proposes a willingness to support businesses in anticipation of a more favorable business landscape. Ultimately, the retail industry wants to focus on the necessary changes that ensure lower costs without compromising the satisfaction of their customers. With pressure increasing for renewable solutions, the government needs to focus on workable energy solutions instead of blaming the retail sector for their own failings.