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Newsletter No 1/13 January 2023                              

                  

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Chairmans address – SAAA 97TH AGM – Thursday 8 December 2022

Theme: The real South Africa – Hope for the best and plan for the worst

Ekkehard Oelz

Dear Members, guests, ladies and gentlemen

It is my honour and privilege to address you for the first time as Chairman at the AGM of the Association.

I want to depart somewhat from the format of previous addresses at the AGM given the very unique and challenging environment we face both globally and domestically.

It is my considered view that organised business needs to speak more openly and frankly about the ills that constrain our business environment and more so to those who should be held to account.

The sand-glass for pussy-footing has long run dry.

Government needs to be reminded that they are public servants first and foremost and secondly that they are custodians of revenue sourced from the public and the private sector in particular.

Ladies and gentlemen, we are faced with a crisis as well as being at a cross roads in terms of taking decisive action to correct our country’s current trajectory.

On a global level I fear an ever-growing risk of runaway inflation, an unfolding debt crisis and cost of living challenges to the greater majority of consumers. The very people who are the life-line to the sustainability of our businesses.

Inflation has surged at levels not seen for several decades. This has now prompted the G20 countries to identify rising prices as the number one concern at the recent G20 meeting in Malaysia.

Whilst I am mindful that most central banks world-wide have embarked on aggressive monetary policy tightening, we must not lose sight that this goes hand in hand with the risk of tipping the global economy into a recession. I need not remind you that our domestic economy and our sector in particular, will not escape the adverse impact of such a scenario becoming a reality.

In short and despite encouraging results amongst some of our retail customers, the jury is still very much out on what the next two years have in store for our sector.

My advice to you is to hope for the best and prepare for the worst.

Why do I say this? Let me briefly share some reflections with you.

South Africa’s share of world GDP at purchasing power parity has declined steadily since 2008 and is projected to continue to do so over the next five years. In 2002 our share stood at 0.77% of world GDP. By 2021, it had dropped to 0.59%. The International Monetary Fund projects that by 2027 it will have fallen to 0.54%. This, ladies and gentlemen, is a staggering 30% decline since 2002.

A comparison of South Africa’s unemployment rates before and after Covid with that of all upper-middle income countries highlights significant differences.

While unemployment for all age groups have increased in the post-Covid period, our rates are significantly higher than the corresponding averages for middle-income countries. This is glaringly demonstrated by the following statistics.

Whereas the global average for people aged 15 to 24 years (as modelled by the ILO) rose from 14,7% in 2019 to 16,1% in 2022, South Africa’s corresponding rate increased from 57% to 61.4%.

This is nothing short of an indictment against those responsible for developmental policy formulation and implementation in a country with the highest unemployment rate in the world. I cannot be more polite than this.

This is simply not sustainable and appears to be driven by ideology and not economic reality.

I need to remind us all that our business apex employer body – BUSA – is on record that they are becoming increasingly frustrated that their policy recommendations to government seem to be ignored and side-lined with the main consequence of gathering dust in the offices of the respective Ministries.

The one area where business sees some traction relates to the privatising of energy generation. In the short term I sincerely hope that this is not going to be a case of too little too late. Business needs reliable energy generation immediately, not in two or four years time.

It would be irresponsible of me not to address the energy crisis we are confronted with in some more detail.

As South Africans, we will face near continuous load shedding for at least the next two years while 6 000 MW in planned private sector projects to generate electricity from solar and wind, are built and commissioned.

Let me be frank.

Eskom’s decline has reached what some are calling “breaking point”, with a record R12 billion spent on diesel to run the utility’s open cycle gas turbines since 1 April this year. This is eye-watering and frankly gross for a country burdened with the world’s highest level of unemployment, poverty and rapid infra-structure collapse.

Eskom’s only nuclear power station, Koeberg, is set to take one of its two 900 MW units offline for a lengthy refuelling and refurbishment outage scheduled to start in early December. It is furthermore possible this will not be online again by the time the second unit is scheduled to be taken off-line in August 2023.

This means that for the majority of at least the first half of 2023, 3 760 MW will be unavailable to Eskom, with significant budgets for diesel only likely to be made available by Treasury in the new financial year, starting on 1 April next year.

On the positive side Eskom has signed lease agreements with private sector players for four hectares of Eskom land that can be used to build renewable power sources of roughly 1 800 MW. The land made available in the initial offer for the projects was three times oversubscribed.

Again, let us hope for the best and plan for the worst.

Ladies and gentlemen, I apologise for having to burden you with such bleak sentiments on the eve of the festive season, but we must face the facts and confront reality.

Magnus Heystek (Investment Strategist at Brenthurst Wealth) recently said:

“The fact that I have been writing about and warning of the bad things for SA for more than 10 years now has always been based on facts and an interpretation of certain trends, most of them negative for SA and the JSE-linked asset management. The outflows from the JSE over 10 years now has been massive, as has the under-performance of the JSE versus the world.”

Leila Fourie, CEO of the JSE, was quoted on a financial website recently saying she “was losing sleep at night” about the outflow of capital from the Johannesburg Stock Exchange.

Over the past 12 months, not only has the outflow continued, but has increased year on year thus far in 2022. Figures from the JSE show combined outflows from the equity and bond markets now exceeding R260bn. This to my knowledge, is the largest outflow on record.

What makes the situation even worse is that the cumulative combined outflow of money from the JSE since January 2018, when the ANC administration under Cyril Ramaphosa commenced, now exceeds R1 trillion rand.

This leaves me with the question on what our representatives and the industry structures they serve on are doing to address these harsh realities and bring some relief to the membership. I am regularly asked this question and have consequently had many occasions to reflect on it.

Your business life-line, ladies and gentlemen, I am afraid, lies first and foremost in your very own hands.

Make sure you have the best team and the best possible key skills in your business.

Ensure you don’t stagnate.

Guard against complacency.

Embrace international best practice in your business.

Reject mediocrity in staff performance.

Constantly strive to innovate and improve.

Ladies and Gentlemen, we must not rely on government or the NBC or the DTIC or the Master Plan to take ownership of and deliver on these crucial elements of our respective businesses.

Yes, they have a roll, but it can only be of a facilitative and supportive nature.

Having said this it is my view that our representatives on the key Master Plan structures, myself, the Director, Graham Choice, Marthie Raphael and Sean Kirby need to ensure that more transparency is achieved in the work of the R-CTFL Master Plan implementation programs, not least of which is regular reporting on how our retail partners are measuring up to their Master Plan localization commitments.

This was discussed at a recent office bearer’s meeting of the Association and a firm commitment was made to ensure this is operationalized in 2023.

Ladies and gentlemen, I will not burden you with reports on the wage negotiations, the activities of the NBC, Compliance Enforcement etc. These were all reported on at the NBC AGM recently and those reports have been circulated to the membership via the office of the Executive Director.

This leaves me to thank you for your support and confidence, particularly for entrusting myself and the Director to manage the annual wage negotiations to a final conclusion, based on a trust mandate.

I can assure you that this mandate greatly assisted the process of securing a fair and reasonable settlement over 2 years without having to inflict labour disruption and strike action on the industry.

I want to thank the Office Bearers for their support and specifically Graham Choice and Sean Kirby for their work in the structures of the Master Plan. Thank you to Marthie Raphael for her time in serving a further term as Chairperson of the NBC.

Thank you to Johann, our Executive Director for his support and dedication during the year and to Edith for running the SAAA office.

Finally, thank you for your attendance and may you and your loved ones enjoy a peaceful and well-earned rest over the festive season.

Thank You.

Ekkehard Oelz

Chairman

Possible counterfeit shoes bust worth R3-million in total

Tshwane, 21 December 2022 – Customs officers of the South African Revenue Service (SARS) have seized possible counterfeit shoes (sneakers and sandals) with an estimated value of R3-milliion this past weekend.

The Customs Detector Dog Unit (DDU) at the Lebombo border post with Mozambique searched a truck with two trailers entering South Africa. The DDU found 5237 pairs of various branded (possibly counterfeit) shoes and sandals. The items were found loaded in the back of the trailers of the truck.

The shoes were handed over to the South African Customs State Warehouse for further processing and engagement with the relevant brand holders for confirmation of the authenticity of the items.

SARS Commissioner Edward Kieswetter praised the Customs officers and the DDU for their vigilance in preventing illicit and counterfeit goods from entering the country. “The lawful production of clothing and textile industry in the country needs to be supported and SARS has shown once again that it is playing its part to foster industrial growth and job creation.”

Mr Kieswetter added that SARS is determined to give meaning to its strategic objectives of making non-compliance hard and costly for any person who transgresses the law. “While we have made it easy and simple to comply, we will not tolerate criminals and syndicates that impede the economic prosperity of our country and the well-being of our citizens”

For more information contact Sarsmedia@sars.gov.za

SA fashion brands lean into sustainable textile innovation

Source: Sealand

Sealand, the premium outdoor brand produced in Cape Town, and intimates label Jockey South Africa, which is manufactured in South Africa, have incorporated sustainable textiles Econyl and Modal respectively into their product ranges.

Fashion and apparel companies have been urged to use more recycled materials and environmentally-friendly textiles from natural regenerative sources to help combat the scourge of plastic waste.

Experts recently called for the United Nations to set a global target of zero new plastic pollution by 2040, and at the COP27 conference delegates also agreed that the management of plastic waste should be a core element of combatting carbon emissions and tackling climate change. Because most plastics are derived from fossil sources, they contribute to global warming throughout their production, consumption and disposal lifetime, as well as being a massive contributing source of ocean and land pollution.

Regenerated nylon from waste

Sealand recently launched its first range of gear made from Econyl nylon, marking the first time that a company in Africa will be using this innovative material in bags and outdoor gear.

Econyl is regenerated nylon that is made from collected nylon waste that would otherwise pollute the earth, including fishing nets, fabric and industrial carpet scraps, and industrial plastic. This nylon waste then goes through a regeneration and purification process that creates a new nylon product that is exactly the same as brand-new, fossil-based nylon. It can be recycled, recreated and remolded repeatedly.

Speaking about the new range, Sealand co-founder Jasper Eales explained: “Sealand was built around our love for the sea and the land that we live on. Our mission is to protect nature and the outdoors that we love, and to ensure that every decision that we make keeps the planet and its people front and centre. All of our bags and apparel are made from upcycled or recycled waste, or from responsibly and carefully sourced materials.”

“The launch of the product range made with Econyl is the biggest product and material progression that Sealand has made to date, and it takes our commitment to the planet one step further. It’s said that up to a million tonnes of lost and discarded – or ‘ghost’ – fishing nets enter the ocean every year, causing untold damage to marine life and habitats. To be able to use a fabric that can create value out of waste such as this, and which can play a role – however small – in removing it from our natural environment, is incredibly important to us,” he continues.

Econyl has been used globally in collections by leading global fashion names including Stella Mccartney, Gucci and Louis Vuitton.

“This is a premium material, which is also incredibly durable and functional. It has a water retardant built into it, so it is also water-resistant. Our products are built for adventurous high-performance lifestyles, so these are a natural extension to our range,” continues Eales.

The new range made with Econyl includes four products – the Buddy S backpack, Rowlie backpack, Moon cross body bag and the Dune M duffle bag – in three colours.

Bio-based fibre from beech tree pulp

Jockey South Africa aims to contribute towards the ‘greening’ of the local fashion industry by introducing garments and upcoming ranges that use bio-based fabric Modal.

Deriving its origin from sustainably harvested Beech tree pulp, Modal is a soft textile is a natural semi-synthetic material made by transforming the liquid found in the Beech tree bark using an environmentally-friendly process.

Source: Jockey South Africa

General manager for Jockey South Africa, Bruce McMurray explains, “As a company we pride ourselves on being at the forefront of innovation to give our customers the best possible quality products that they love. Part of this innovation is ensuring that our products adhere to the strictest quality controls, as well as incorporating sustainable production methods in our factories. These measures have resulted in massive savings in electricity, water usage and wastage.

“We are introducing in our garment ranges the use of Lenzing Modal, a trademark brand that specialises in sustainable and environmentally-friendly production processes. Lenzing reuses and recycles about 80% of solvents used in the production process and converts them into non-toxic goods such as cleaning products. The emphasis is on clean manufacturing and sustainable harvesting.”

The textile has been used in Jockey South Africa’s latest underwear range ‘For Me’, which launched on 13 December. Aimed at South African women, this new environmentally-friendly collection utilises Modal as the main fabric.

Especially soft to the touch, Modal fibre is lightweight and flexible yet durable, preventing rigidity after washing. Modal yarn is also naturally breathable and 50% more water-absorbent than cotton. The benefit to this is that it keeps the wearer of the garment cool throughout the day and night and prevents sweating and moisture from being trapped which can cause skin irritation. Furthermore, it won’t shrink like 100% cotton products, giving the wearer peace of mind that their garment won’t lose shape.

“There are so many benefits to using Modal to create an underwear range, which also includes allowing for all-day comfort because this fiber is naturally breathable and 50% more water absorbent than cotton. So, our shoppers will be kept cool and happy over the hot festive season while the modal fabric helps to prevent sweating and moves away from the skin which can cause unwanted skin irritation,” adds McMurray.

According to Jockey, added benefits of this breakthrough fibre are its superior durability over yarns such as viscose and rayon which are also created from wood pulp. However, they are not sourced from a specific tree type. With its ability to hold dye more easily, it will keep colours vibrant even after multiple washes. Modal can also be blended with other fibres such as cotton and spandex for extra strength.

The style of underwear available within Jockey’s ‘For Me’ range features thong, boyleg, brazilian, midi hipster and bikini silhouettes in six colours.

Fast Fashion Facts You Might Not Know

The Average Person Only Wears 20% of Their Clothes 80% of the Time

The modern shopping model – which relies on rapid production and cheap deals – encourages excessive consumption as people are inherently attracted to low-priced goods. For individual buyers, it is also easier and more economic to snatch up cheap clothes that have short lifespans compared to splurging on high-quality, long-lasting pieces that will very shortly fall out of popularity. Yet, despite owning large quantities of fashion items, studies show that most people wear the same things over and over, while in most cases at least 50% of their wardrobe is left untouched.

 

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