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Permit Mzansi Mega Retailers

David Magang
VIEW FROM MANA HOUSE
 
Recently, Trade, Industry, and Investment Minister Honourable Vincent Seretse reiterated his stance that he was not going to buckle to spirited entreaties and grant South African chain store magnates a waiver to widen their footprint in the country by opening new outlets. Unless they partnered Batswana and gave them a controlling 51 percent stake in their businesses in the interests of citizen economic empowerment, he simply would not budge.  

Now, hang on folks: only a few months ago, President Ian Khama was quoted as saying Government was not going to dictate equity terms of engagement to investors lest they be scared off at a time when we desperately needed them. As such, I am at a loss as to which of the two pronouncements takes precedence over the other.

If we were to go by what the Trade Act provides for, then Honourable Seretse is spot-on. But the Act is not a single-track proviso: it allows the minister discretion to act as he sees fit. It does not oblige him to religiously adhere to the Act’s every canon.  In the past in fact, the minister even has had to overrule a High Court decision that the law as laid down be strictly enforced.  In the 80s, I was part of a supermarket establishment called Tsogang Investment (Pty) Ltd.

When the then Trade & Industry Minister Honourable Mout Nwako moved to relax the Trade Act and allow unqualified participation by chain stores domiciled in South Africa, we litigated against the gesture and the High Court ruled in our favour.  The minister countered by invoking his administrative powers and stuck to the status quo. In the event, the High Court decision did not come to bear.

So, should Honourable Seretse have his way or must the President intervene by issuing an “Open Sesame” directive?

THE ECONOMIC VOLKSTAAT

Let us first recognise that the retail industry is foreign dominated. This state of affairs I too have decried in my book, Delusions of Grandeur Vol. 2, the eighth chapter of which I have titled Foreign Retailers Run Riot in Botswana in revulsion.  The last time I checked, over 60 percent of the retail business in Botswana was in the hands of chain stores emanating from across the Limpopo.  That is an economic volkstaat in a sovereign country.      

Even the swashbuckling home-grown Choppies offers very little solace: it is preponderantly foreign-owned folks.  According to its 2015 annual report, 96 shareholders out of a total of 8,277 own 92.34 percent of the blue chip grocery titan.

The overwhelming majority of these are institutional shareholders all of whom hail either from South Africa (e.g. Sanlaam) or across the Atlantic (e.g. Citibank). Of the top ten shareholders, who account for 72.3 percent of the total stock, only Farouk Ishmael, with a stake of 14.6 percent, is Motswana. Choppies may command 35 percent of the local retail market but that should not be interpreted to mean the citizenry controls 35 percent of the same market.

In the normal way of things, sectors such as retail should be an arena in which the citizenry ought to rise and shine. It should be the means by which breakout citizen entrepreneurs escalate to higher economic heights over time so that they can strut their stuff alongside the Pick & Pays and Pep Stores of this world.

In Botswana, on the contrary, the retail sector is a virtual killing field: venture into this minefield as a citizen, and you will be instantly blown to smithereens.  Mzansi retail behemoths rule the roost and so sinewy and muscle-bound are they you will be turfed out with little more than a sardonic jerk of the thumb.  

Ours is a classic case of what Haris Bijoor calls “Retail Darwinism” – where the fittest endure, the fittest in terms of “offerings, deep pockets to survive wafer-thin margins, and the fittest in terms of the tenacity to fight competition that is irrational in its attack”.

Why have we booby-trapped our own economic cause? Well, the index finger should stiffly and angrily point in the direction of the Government enclave. For donkeys’ years, Government has been so suicidally lax in enforcing the Trade Act that we’re now toast to the mercantile impis from down south.  

WRONG TIME FOR REDRESS

Yet as much as we would love to tip the scale of proprietorship in the retail sector in favour of the citizenry, it is advisable that we tread with caution. A Chinese proverb that I like to quote says, “A journey of a thousand miles begins with the first step”. That should be our catchphrase too. Rash and impetuous measures are invariably counterproductive in the long term. We should be wary that we do not compromise overall macroeconomic salubriety by resorting to mercantile actions that play to the gallery of populist impulses.

At this point in time, we’re developing the Central Business District (CBD), potentially the country’s largest commercial centre, in the capital Gaborone. Dozens of supermarkets and shopping emporiums will soon arise there.  If the entrepreneurs who are putting up structures at CBD using hefty bank loans have to make a return on their investment, they will need well-resourced tenants from across the border. Otherwise, the structures are certain to be white elephants and the banks will not hesitate to foreclose.

The entrepreneurs who acquired plots at CBD and borrowed millions to develop them were counting on take-up by the likes of Game and Woolworths.  Maybe Government did not make an express undertaking to them that it would exercise flexibility on the Trade Act but they did trust to its sense of judiciousness. It would therefore be unfair and insensitive on the part of Government to now dictate terms that are certain to torpedo prospects of recouping their investment.

Their fate is similar to that of citizens who heavily invested in tertiary educational infrastructure – the Raja Ram’s and Odirile Gabasiane’s of this world: they did so in the belief that Government would enrol students in their institutions. If Honourable Unity Dow now was to say she would restrict student bursaries to Government-run institutions, it would spell disaster for them.  

Progressive Government policy should not be unilateral and arbitrary: it has to take account of the likely impact of that policy on those bound to be adversely affected. Thus, whilst Honourable Seretse’s stance is laudable as it is long overdue, the timing, regrettably, is most inauspicious.  

LET’S ADMIT THEM WITH STRINGS

Since at this juncture we need the big-bucks foreign retailers in view of the clothing and grocery infrastructure we’re mass-constructing, I would recommend that we fling the doors open for them. Let them have total ownership but with preconditions that will proportionately compensate for denying the citizenry a slice of the total stake. Exactly what must these be?

South Africa and India offer a little food for thought.   

India’s retail market generates annual revenues of about $600 billion according to the 2015 statistics. Until 2012, the market was closed to foreign participation. Then in November 2011, cabinet enacted a law that allowed foreign ownership ranging from 51 to 100 percent depending on whether the venture was multi-brand or single-brand. But several conditions were spelt out to prospective foreign investors.

Among these was that 50 percent of the stipulated minimum investment was to be set aside to assist in the development of back-end infrastructure (e.g.  storage, warehousing, distribution, and agricultural produce) in order to nurture an efficient supply chain. Another was that 30 percent of overall operational expenditure was to be devoted to sourcing produce from SMMEs whose plant and infrastructural development was less than $1 million.  That way, foreign investment into the retail sector would be a win-win situation for foreigners and locals alike.

In May 2011, Walmart, the US retail giant, acquired a majority stake in South Africa’s Massmart for $2.4 billion. Before the South African Competition Commission gave the nod to the take-over, it pronounced that Walmart orient R100 million toward a special fund for developing local suppliers in the next three years amongst other conditionalities. Surely, there’s no reason why that should not happen in Botswana.

There are multiple ways in which a nation could gain from compromising in one way or the other with the wishes of the foreign investor. What you lose in one respect you could subtly gain in another for as long as you do your math properly.  For example, if foreign chain stores were to be prohibited from vertically integrating, whereby they keep a stranglehold on the entire supply chain including horticulture, warehousing, and transportation, that would open up a host of highly lucrative business opportunities for the citizenry.      

CEDA SHOULD NURTURE MARKET COUP

Meanwhile, Government should put in place a viable strategy to spawn citizen retail entrepreneurs of the scale of the Wharton’s, the owners of Walmart, using CEDA as the primary lever. A benchmark that immediately comes to mind in this regard is Singapore.

The government of Singapore lent substantial technical and financial assistance to prospective local retail entrepreneurs, a far cry from the pittance our CEDA extends. The entrepreneurs were encouraged to band together and form their own franchises and cooperatives so that they could benefit from the economies of bulk purchases of stock-in-trade.

The Singapore government established enterprise promotional centres to impart entrepreneurial competence. It ran special training programmes that focussed on a productive and efficient mindset for employer and employee alike. A highlight of this training was exposure to requisite cutting edge technology, which included appropriate hardware and software.

Finally, the Singapore government made available business premises and sold it to the entrepreneurs in sectional titles which made it possible for them to steer clear of steep rentals private developers typically imposed.

China pretty much replicated the Singaporean approach. The strategy has paid off: of China’s top ten retailers today, only Walmart is foreign-owned.

In our case, CEDA has been reported to reject over 95 percent of applications from the retail sector on the pretext that the market is saturated. It isn’t at all. The 2014 Africa Retail Development Index says retail saturation in Botswana amounts to a mere 17 percent. The AT Kearney Global Retail Development in fact asserts that Botswana is the most promising retail market on the continent of Africa. A market is hardly ever fully saturated. For example, it is always said the South African retail market has virtually no room for new entrants but Choppies made the leap into the market anyway with highly promising results reportedly.

For citizens to stand toe to toe and trade blow for blow with a Game or Pick & Pay, they need funding in tens of millions of Pula and not the SMME-size sums CEDA routinely doles out. Otherewise, they would never progress from selling “magwinya for breakfast and seswa and paleche for lunch” as Professor Roman Grynberg aptly lamented in an op-ed piece.   

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Export Processing Zones: How to Get SEZA to Sizzle

23rd September 2020
Export Processing Zone (EPZ) factory in Kenya

In 2005, the Business & Economic Advisory Council (BEAC) pitched the idea of the establishment of Special Economic Zones (SEZs) to the Mogae Administration.

It took five years before the SEZ policy was formulated, another five years before the relevant law was enacted, and a full three years before the Special Economic Zones Authority (SEZA) became operational.

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Egypt Bagged Again

23rd September 2020
Samson

… courtesy of infiltration stratagem by Jehovah-Enlil’s clan

With the passing of Joshua’s generation, General Atiku, the promised peace and prosperity of a land flowing with milk and honey disappeared, giving way to chaos and confusion.

Maybe Joshua himself was to blame for this shambolic state of affairs. He had failed to mentor a successor in the manner Moses had mentored him. He had left the nation without a central government or a human head of state but as a confederacy of twelve independent tribes without any unifying force except their Anunnaki gods.

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‘RO, ‘RO ‘RO YOUR ‘BOT

23rd September 2020

If I say the word ‘robot’ to you,  I can guess what would immediately spring to mind –  a cute little Android or animal-like creature with human or pet animal characteristics and a ‘heart’, that is to say to say a battery, of gold, the sort we’ve all seen in various movies and  tv shows.  Think R2D2 or 3CPO in Star Wars, Wall-E in the movie of the same name,  Sonny in I Robot, loveable rogue Bender in Futurama,  Johnny 5 in Short Circuit…

Of course there are the evil ones too, the sort that want to rise up and eliminate us  inferior humans – Roy Batty in Blade Runner, Schwarzenegger’s T-800 in The Terminator,  Box in Logan’s Run,  Police robots in Elysium and  Otomo in Robocop.

And that’s to name but a few.  As a general rule of thumb, the closer the robot is to human form, the more dangerous it is and of course the ultimate threat in any Sci-Fi movie is that the robots will turn the tables and become the masters, not the mechanical slaves.  And whilst we are in reality a long way from robotic domination, there are an increasing number of examples of  robotics in the workplace.

ROBOT BLOODHOUNDS Sometimes by the time that one of us smells something the damage has already begun – the smell of burning rubber or even worse, the smell of deadly gas. Thank goodness for a robot capable of quickly detecting and analyzing a smell from our very own footprint.

A*Library Bot The A*Star (Singapore) developed library bot which when books are equipped with RFID location chips, can scan shelves quickly seeking out-of-place titles.  It manoeuvres with ease around corners, enhances the sorting and searching of books, and can self-navigate the library facility during non-open hours.

DRUG-COMPOUNDING ROBOT Automated medicine distribution system, connected to the hospital prescription system. It’s goal? To manipulate a large variety of objects (i.e.: drug vials, syringes, and IV bags) normally used in the manual process of drugs compounding to facilitate stronger standardisation, create higher levels of patient safety, and lower the risk of hospital staff exposed to toxic substances.

AUTOMOTIVE INDUSTRY ROBOTS Applications include screw-driving, assembling, painting, trimming/cutting, pouring hazardous substances, labelling, welding, handling, quality control applications as well as tasks that require extreme precision,

AGRICULTURAL ROBOTS Ecrobotix, a Swiss technology firm has a solar-controlled ‘bot that not only can identify weeds but thereafter can treat them. Naio Technologies based in southwestern France has developed a robot with the ability to weed, hoe, and assist during harvesting. Energid Technologies has developed a citrus picking system that retrieves one piece of fruit every 2-3 seconds and Spain-based Agrobot has taken the treachery out of strawberry picking. Meanwhile, Blue River Technology has developed the LettuceBot2 that attaches itself to a tractor to thin out lettuce fields as well as prevent herbicide-resistant weeds. And that’s only scratching the finely-tilled soil.

INDUSTRIAL FLOOR SCRUBBERS The Global Automatic Floor Scrubber Machine boasts a 1.6HP motor that offers 113″ water lift, 180 RPM and a coverage rate of 17,000 sq. ft. per hour

These examples all come from the aptly-named site www.willrobotstakemyjob.com    because while these functions are labour-saving and ripe for automation, the increasing use of artificial intelligence in the workplace will undoubtedly lead to increasing reliance on machines and a resulting swathe of human redundancies in a broad spectrum of industries and services.

This process has been greatly boosted by the global pandemic due to a combination of a workforce on furlough, whether by decree or by choice, and the obvious advantages of using virus-free machines – I don’t think computer viruses count!  For example, it was suggested recently that their use might have a beneficial effect in care homes for the elderly, solving short staffing issues and cheering up the old folks with the novelty of having their tea, coffee and medicines delivered by glorified model cars.  It’s a theory, at any rate.

Already, customers at the South-Korean  fast-food chain No Brand Burger can avoid any interaction with a human server during the pandemic.  The chain is using robots to take orders, prepare food and bring meals out to diners.  Customers order and pay via touchscreen, then their request is sent to the kitchen where a cooking machine heats up the buns and patties. When it’s ready, a robot ‘waiter’ brings out their takeout bag.   

‘This is the first time I’ve actually seen such robots, so they are really amazing and fun,’ Shin Hyun Soo, an office worker at No Brand in Seoul for the first time, told the AP. 

Human workers add toppings to the burgers and wrap them up in takeout bags before passing them over to yellow-and-black serving robots, which have been compared to Minions. 

Also in Korea, the Italian restaurant chain Mad for Garlic is using serving robots even for sit-down customers. Using 3D space mapping and other technology, the electronic ‘waiter,’ known as Aglio Kim, navigates between tables with up to five orders.  Mad for Garlic manager Lee Young-ho said kids especially like the robots, which can carry up to 66lbs in their trays.

These catering robots look nothing like their human counterparts – in fact they are nothing more than glorified food trolleys so using our thumb rule from the movies, mankind is safe from imminent takeover but clearly  Korean hospitality sector workers’ jobs are not.

And right there is the dichotomy – replacement by stealth.  Remote-controlled robotic waiters and waitresses don’t need to be paid, they don’t go on strike and they don’t spread disease so it’s a sure bet their army is already on the march.

But there may be more redundancies on the way as well.  Have you noticed how AI designers have an inability to use words of more than one syllable?  So ‘robot’ has become ‘bot’ and ‘android’ simply ‘droid?  Well, guys, if you continue to build machines ultimately smarter than yourselves you ‘rons  may find yourself surplus to requirements too – that’s ‘moron’ to us polysyllabic humans”!

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