Companies could move out of SA due to service delivery issues, says Hudaco financial director

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Huge potholes filled with dirty water. PHOTO: UNATHI OBOSE
Huge potholes filled with dirty water. PHOTO: UNATHI OBOSE
  • Importer Hudaco has raised concerns about poor state service delivery, warning that it could result in companies moving municipalities, or out of the country altogether. 
  • Astral’s issues in Standerton and Clover’s recent move of its cheese factory from the North West to Durban highlight these concerns
  • However President Cyril Ramphosa’s announcement that private users can now generate up to 100 megawatts of electricity has been lauded



Importer Hudaco Industries has raised concerns about poor state of South Africa’s municipal service delivery and electricity supply issues, warning that it could result in companies leaving the country altogether. 

The company’s concerns come as criticism against the country’s failing municipalities grows. Along with residents, companies pay the price of regular interruptions of services like water and electricity.

In its presentation of its interim results for the six months ended 31 May 2021, Hudaco’s chairman Stephen Connelly on Friday highlighted electricity supply and the degradation of municipal infrastructure as a threat to the country’s economy, along with the third wave of Covid-19 and port delays. 

Hudaco imports branded industrial, electronic and electrical products, such as bearings, specialised steel, thermoplastic fittings and automotive aftermarket products, from international manufacturers and some local manufacturers. The company then sells the products in a number of industries, such as alcohol production, mining and manufacturers.

The products are used in factory production and in appliances like washing machines.

Clifford Amoils, Hudaco’s financial director, said although the group could keep its businesses active by using generators and having a contingency plan in place when load shedding hits, their concern was that their customers may stop operating. 

"We need economic activity and a lot of that runs on electricity, so that’s the one issue … we need our customers to be active and they will then buy product from us," said Connelly.

On municipal degradation, he said the government can’t expect the economy to thrive on infrastructure that is falling apart. Companies will eventually move their operations to other parts of the country or even out of the country as a result, impacting employment.

He cited Astral’s issues in Standerton and Clover’s recent move of its cheese factory, from the North West to Durban as an example of the impact poor service delivery has on businesses.

"We all need for things to work smoothly, to run efficiently, for people to able to operate and manufacture and for that, you need a competent municipal infrastructure," he said.

However he lauded President Cyril Ramphosa’s announcement that private users can now generate up to 100 megawatts of electricity each, saying that it would allow users to keep going.

Hudaco’s revenue increased by 28.3% to R3.3 billion, from R2.6 billion in the six months ended 31 May 2020. The company also declared an interim dividend of R2.40 cents per share.

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