Pick n Pay's 'buy Zim' a losing battle

2013-08-25 10:00

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Critics say move by Pick n Pay could add to the deindustrialisation of the country

South African retail investments in Zimbabwe are not being welcomed by all and could add to the deindustrialisation of the country, say critics of recent moves by Pick n Pay.

Pick n Pay, South Africa’s second-largest supermarket chain store, announced a R250?million investment into the Zimbabwean retail industry earlier this year through its partnership with Zimbabwe’s TM Supermarkets, owned by Meikles Limited, in line with indigenisation laws.

The cash injection will be used to rebrand shops in Zimbabwe to standards in South Africa as well as build new shops.

Pick n Pay’s reliance on South African produce caused a storm last year.

The retailer came into Zimbabwe at a time when local manufacturers were struggling to survive and so could not meet demands in the retail sector.

Zimbabwean retailers had to rely on importing basic commodities from South Africa.

“It made business sense for Pick n Pay to come into Zimbabwe. They have the money, expertise and affordable products. They also saved retail jobs and that on its own is good for the economy. But there are shortcomings too. It spells doom for local manufacturers,” said Stevenson Dlamini, a Zimbabwean economist at the National University of Science and Technology.

But some say Zimbabwe does not need foreign direct investment in the retail sector as such sector should be reserved for indigenous people.

Some lobbyists have since formed an association that promotes the selling of Zimbabwean products ahead of imports. The campaign is called Buy Zimbabwe – a “competitiveness and empowerment driver whose mandate is to unlock the country’s potential through a structured aggressive support of the production and consumption of local goods and services”.

“Pick n Pay is following South Africa’s export agenda. To uplift the Zimbabwean economy, retail and wholesale should have been reserved for the indigenous population,” said outgoing indigenisation minister Savior Kasukuwere.

Pick n Pay stocks more than 4?000 South African-manufactured products that range from groceries to electrical appliances in all their shops in Zimbabwe.

Other players in the industry, however, also import a bulk of their products from South Africa, the reason being local manufacturers are struggling to satisfy the local market and their products are more expensive compared with imports.

For an economy with more than 60% of the population said to be poor, cheaper is better.

According to Zimbabwean economist Eric Bloch, Zimbabwean products are more expensive because “of outdated machinery” that is prone to breaking down.

“There is also the factor of labour. With older machines, you have more people on the production line who have to be paid.

“So when the products hit the shelves, even if they are better quality, they won’t move because of the pricing regime,” he said.

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