15 of 2021

                               Newsletter No 15 / 30 April 2021                           

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Fashionscapes: A Living Wage highlights plight of garment workers

Fashionscapes: A Living Wage is a new short film that aims to help end poverty wages in the fashion industry. Released on 24 April 2021, on the 8th anniversary of the Rana Plaza tragedy, the documentary combines the voices of garment workers on the ground with top legal professionals who are working together to argue for the first-ever EU legislation to ensure garment workers receive a living wage.

The project has been brought to life by Andrew Morgan, director of acclaimed documentary True Cost, and Eco-Age founder Livia Firth.

The fourth and latest addition to the Fashionscapes investigative short documentary series available on Eco-Age TV, sees Morgan and Firth follow the story of the activists and change-makers calling time on the poverty wages that trap millions of garment workers in never-ending poverty. For the first time, the industry faces a coordinated, structured challenge through international law.

The film focuses on the garment workers and representatives in ‘garment hotspots’ silenced by brands. Morgan and Firth speak to the network of garment workers and activists they have maintained contact with over a decade.

They uncover a flow of evidence, carried by women from the factory gates of ‘secret’ factories to a network of female legal professionals across the world, led by lawyers in The Circle, a global NGO using the collective power of women to support the world’s most vulnerable women and girls.

“The fast fashion brands that have fobbed off civil society activists for years on living wage are being driven to change by a powerful alliance of women,” says Firth.

She adds: “This documentary brings together women who are experts in poverty, degradation and injustice because as garment workers in their supply chains they live it every day with women at the top of their international legal careers. The resulting report and strategy is borne out of mutual respect and commitment. It holds the brands and retailers who have always maintained that a living wage isn’t possible, to account.

“A string of broken promises can now be challenged on the basis of a human obligation to protect human rights. I can now see a day when we will get justice for garment workers.”

Morgan comments, “This one is personal for me. After years spent witnessing first-hand the human rights emergency that is the modern-day fashion industry, I believe this moment holds the possibility for a new and needed chapter in this story. I’m so honoured to stand in solidarity with the game changers at The Circle, my ferocious friend Livia Firth and with millions of the world’s poorest workers everywhere in demanding an end to the grotesque exploitation of the world’s poorest workers.”

Marisa Selfa, CEO North Sails says, “Simply put, an eye-opener. We’ve made it mandatory viewing at North Sails Apparel, and I believe everyone in the apparel industry should watch it as well. Some of the data is truly shocking…$6 a month for 400 hours work?!
We are honoured to be a part of this amazing project. Our hope is this helps to drive the urgent change the fashion industry is responsible for.”

Fashionscapes: A Living Wage was filmed in countries across the world, using local crews complying with Covid regulations, with the support of Pulse Films Italia. The movie has been supported by The Circle and North Sails.  Bizcommunity

Watch the documentary below:


SA must stop talking about master plans and start launching incentives

by Moeketsi Marumo

The SA economy is set to grow in 2021. A bit. Recently, Rand Merchant Bank forecast a GDP growth rate of 3.3% for 2021, not enough to compensate for the catastrophic 7% fall that occurred in Covid-ravaged 2020.

SA industry needs help. A lot of it. Yet we saw a 2021 budget in which finance minister Tito Mboweni clearly signalled his intention to scale back the most effective and direct form of industrial support: the state’s industrial incentives.

Are we following a global trend, learning from best practice elsewhere? It might be more defensible if we were, but the evidence suggests not. Most countries are still using industrial incentives to drive economic development, regional development, job creation and skills development.

A global analysis of incentives by monitoring group Wavteq shows that in the whole of North America in 2019 the value of incentives reached $7.4bn in programmes for manufacturing, especially for hi-tech, biotechnology and clean technology. The US film industry alone got $1bn in 2019.

Europe is the second-highest-spending region for incentives, spending close to $1.5bn in 2019. In the Middle East in 2019, support rose from $18m the previous year to $890m, 73% of which targeted the manufacturing sector and related activities. In Africa, the picture is far from ambitious, with just $36m being spent on these incentives in 2019 in SA, Rwanda, Kenya and Morocco.

On top of the incentives, there is other support, with March’s UK budget bringing a £26bn tax cut and job support programme, and President Joe Biden’s recently approved $1.3-trillion stimulus package for the US economy.

There was not much stimulation in Mboweni’s latest budget, though there was a welcome commitment to lower corporation tax. Unfortunately, this is something that will be of more benefit to established businesses than to the small business sector, from which almost all of the green shoots of economic growth are likely to emerge.

In SA, it might be that we tend to think incentives are not attractive enough to stimulate economic development by pulling in investment. In the US and Europe, they use them a lot more — so surely there is a need for us to maintain this form of support for industry so we can still compete for investment?

Clearly, we cannot compete with the spending muscle of the super economies, but that does not mean we should just wring our hands in despair and do nothing. So, are we seeing incentives fading in SA? Are we losing the plot?

We may be, for instance with research & development (R&D). We talk about the fourth industrial revolution, and we want SA manufacturing companies to play in the global market, but our investment in R&D is not supportive of that. There is some talk that we will soon be a significant manufacturer of vaccines, but as both Aspen and Johnson & Johnson are established in SA, why is there no capability to manufacture such vaccines on a serious scale?

The best we seem to be able to do is assembly and packaging. Is there a lack of support from the government, a slow response in helping ensure people have the capacity to do trials and so on? Or is it that not enough had been put in place to ensure we support hi-tech R&D? Surely we still need to stimulate investment in manufacturing, to encourage R&D, to ensure we open up opportunities for new players in the manufacturing space?

The department of trade, industry & competition’s focus is on “master plans” for specific industries — sugar, automotive, poultry, steel, textiles and clothing, and so on. The auto sector is the most developed and the most incentivised. It is often described as an industrial success story, with some merit.

However, with such tight control on spending, how do we ensure we don’t put what limited state support there is into the wrong areas? How do you select those industries that merit support and have a future? How do you prioritise?

We need to focus on areas where we have a clear advantage — such as agriculture and mining. Not returning to a third-world, commodities-led economy, but acting on a far larger scale to process those commodities on home soil.

We hear endless lip service from politicians about beneficiation, which should mean it is happening everywhere. It isn’t. Instead of growing SA’s industrial base rapidly through the beneficiation of our abundant resources, the foundations have been crumbling, with manufacturing’s share of GDP having dropped from well over 20% in 2000 to about 14% today.

Meanwhile, it becomes increasingly hard to create manufacturing jobs as many modern industries become less labour intensive. This is why much of the automotive master plan emphasises supplier development, as smaller businesses are the ones that are best at job creation.

The agro-processing sector offers promising beneficiation and employment creation opportunities, but the existing draft master plan for this sector needs to reflect this as it is not yet delivering on its promise. The incentives need to increase in this sector so we can have the same kind of growth we expect from the auto industry.

One gets the feeling that SA is excellent at setting up committees and consultation groups, but we do not always produce logical road maps, and this is especially a concern with industrial policy. We need fewer speeches and more action.

If, as is happening, state funds for industrial support are shrinking or at best stagnant, serious thought is needed — and serious reform of the entire incentive strategy — if we are to make real progress in growing our industrial base to boost beneficiation.

We must improve how we do things, and not slam the door on firms that seek and need incentive support. Get it wrong and our industrial competitors will show us no mercy. Business Day

Footwear industry commits to skills transfer, rebuilding capacity

By Simone Liedtke

Stakeholders in the footwear and leather sector have committed themselves to transferring skills and rebuilding capacity.


The commitment emanated from two site visits by the Trade, Industry and Competition Deputy Minister Nomalungelo Gina at Planets Events Shoes and Neptun Boot, in KwaZulu-Natal, on April 22.

Stakeholders committed and agreed to promote localisation, sourcing and buying local materials, transferring skills and working towards removing red tape that will hinder the future of the sector.

Gina said the ease of doing business locally must be prioritised so that it is easier for investors to view the sector as lucrative.

“If we do not support and manufacture our products in the country, we have nothing to offer to our neighbours and the rest of the world. We need to mobilise the whole sector and have a frank conversation about steps that need to be taken to revive and rebuild the sector to make it even more lucrative like it was in the past,” she said.

According to Gina, introspection must start with government and all agencies that are responsible for setting standards and verification.

She also committed to tackling red tape issues raised by the sector.

South African Footwear and Leather Export Council executive director Narisha Jairaj, meanwhile, said the council has over 200 members of which 86% are black economic empowerment and previously disadvantaged individual companies that are fully transformed from board to staff and suppliers.

“We hope to engage other government departments to find common ground for the best use of resources for maximum benefit to small business. And also, to work towards eradicating the red tape that still impacts our sector in a negative way,” said Jairaj, who pleaded with government to give due attention to the handbag and leather goods sector which “has suffered great calamity” as a result of Covid-19.  EN

Pepkor – trading statement

Pepkor increased revenue from continuing operations by 8.1% to R36.5 billion for the six months ended 31 March 2021 (the “period”). This is in context of the comparable six months period ended 31 March 2020 (the “comparable period”) which was largely unaffected by the Coronavirus pandemic (“COVID-19”).

Conservative credit granting across all credit books in addition to lower interest rates, negatively impacted growth in revenue earned from the Tenacity, Connect and Capfin credit books. When revenue from these credit books is excluded, revenue growth of 9.9% was achieved.

Strong trading and continued market share gains in nearly all retail brands (according to Retailers’ Liaison Committee data) supported performance despite volatile operating conditions. The period under review included restrictions imposed to deal with the second wave of COVID-19 and the delayed start to the academic school year. From a group perspective, cash sales increased by 10.7% while credit sales decreased by 3.8%. The credit contribution to total group sales reduced to 7% for the period from 8% in the comparable period. Credit book collections during the period were at similar levels to those achieved in the comparable pre-COVID-19 period.

Group retail space declined by 1.8% year-on-year. During the period 108 new stores were opened and 180 stores closed, including 111 John Craig stores which were disposed of. Store openings were focused in the most robust and proven retail brands in the group.

Clothing and general merchandise
The clothing and general merchandise segment increased revenue by 8.1% to R26.3 billion for the period. Performance in Pep and Ackermans was underpinned by the leadership of these two retail brands in the discount and value segments of the market. Pep and Ackermans in aggregate increased sales by 8.8% and like-for-like sales increased by 6.9%. Both Pep and Ackermans continued to grow market share in a declining apparel retail market.

Retail space expansion in Pep and Ackermans amounted to 2.6% year-on-year. This included the opening of 65 new stores during the period.

Pep Africa increased constant currency sales by 7.1% while like-for-like sales increased by 13.1%. In South African Rand terms, sales declined by 12.1% due to the weakening of local currencies and strengthening of the Rand.

The Speciality business benefited from consumer demand for casual wear and branded footwear in the value segment. Sales increased by 11.3% including John Craig which was disposed of in February 2021. Excluding John Craig, sales increased by 16.6% and like-for-like sales increased by 13.5%.

The Tenacity gross credit book, which facilitates sales in Ackermans and Speciality, increased to R3.2 billion at 31 March 2021 from R3.1 billion at 31 March 2020. Similar collection levels were achieved to those in the comparable period. In Ackermans, strong growth in cash sales resulted in the credit sales mix reducing to 17% from 18% in the comparable period.

Furniture, appliances and electronics
The furniture, appliances and electronics segment increased revenue by 12.8% to R5.7 billion for the period. Sales of merchandise increased by 16.4% and like-for-like sales increased by 18.1% as consumers continue to upgrade technology to support working or studying remotely and investing in their homes in terms of furniture and appliances.

Performance was underpinned by strong growth in cash sales during the period and this, in addition to prudent credit granting, resulted in the total credit sales mix reducing to 9% from 17% in the comparable period.

The Connect gross credit book, which facilitates credit sales in JD Group, reduced to R1.5 billion from R1.8 billion at 31 March 2020. Collections were at similar levels to that achieved in the comparable period.

The Fintech segment increased revenue by 3.1% to R4.5 billion for the period. Revenue growth momentum in the FLASH business continued at double-digits as it invests in new products, channels and geographies. Reduced credit granting and lower interest rates impacted revenue growth in the Capfin unsecured lending business. The gross Capfin credit book reduced to R1.9 billion from R2.6 billion at 31 March 2020 with collections improving marginally on the comparable period.

Discontinued operations – The Building Company
The Building Company increased sales by 9.6% with like-for-like sales growth of 11.7%. The disposal of The Building Company, as previously announced, remains in process as South African Competition authorities consider the transaction.

Balance sheet and liquidity
Strong cash generation during the period facilitated reduction in net debt to R6.1 billion at 31 March 2021 compared to R14.1 billion at 31 March 2020 (including discontinued operations). This included settlement of the last remaining preference share funding of R2.0 billion during the period.

Trading statement
In terms of the JSE Ltd. (“JSE”) Listings Requirements (the “Requirements”), a listed company is required to publish a trading statement as soon as it becomes aware that a reasonable degree of certainty exists that the financial results for the financial period to be reported on next will differ by at least 20% from the financial results for the previous corresponding period.

Pepkor hereby advises shareholders and noteholders that a reasonable degree of certainty exists that its earnings per share (“EPS”) and headline earnings per share (“HEPS”) for the six months ended 31 March 2021 will increase by at least 20% as set out below. Both EPS and HEPS in the comparable period have been adjusted to reflect The Building Company as a discontinued operation.

EPS and HEPS – continuing operations:
– EPS is expected to increase by at least 8.8 cents (20%) when compared to the EPS of 43.8 cents reported for the comparable period; and
– HEPS is expected to increase by at least 9.1 cents (20%) when compared to the HEPS of 45.6 cents reported for the comparable period.

EPS and HEPS – including discontinued operations:
– EPS is expected to increase by at least 8.5 cents (20%) when compared to the EPS of 42.6 cents reported for the comparable period; and
– HEPS is expected to increase by at least 8.9 cents (20%) when compared to the HEPS of 44.5 cents reported for the comparable period.

The increase in EPS and HEPS is attributed to strong trading performance in addition to the marked reduction in net debt and related finance costs during the period. Further guidance of the likely increase in EPS and HEPS will be provided once the required degree of certainty in terms of the Requirements has been established.

Publication of results
Pepkor’s results for the six months ending 31 March 2021 will be published on SENS on Thursday, 27 May 2021. A live webcast of the results presentation will be broadcast at 12:00pm (SAST). The webcast registration link will be made available closer to the time on the Pepkor website: www.pepkor.co.za

Did you know……..

Fashion accounts for 20 to 35 percent of microplastic flows into the ocean. The State of Fashion, McKinsey 2020

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