17 of 2022`

Newsletter No 17/6 May 2022                                 

                  

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SARS/DTIC plan to donate seized apparel to flood victims

By Tony Dickson

Industry reaction ranges from caution to outright rejection

The SA Revenue Service (SARS) and the Department of Trade, Industry & Competition (DTIC) have proposed to the apparel industry that confiscated illegal imports currently held in warehouses be donated to victims of the floods in KZN last month.
Director: Leather & Footwear at the DTIC, Dr Jaywant Irkhede, said on Friday that SARS was sitting on 3 000-4 000 tons of clothing, blankets and footwear which had been seized since 2019, because it was under-invoiced, counterfeit or second-hand.
“Their warehouses are full, and it costs them to store it,” he said. “Under current regulations, it is possible to use it for social welfare.
“We had an online meeting yesterday [Thursday 28 April] with industry associations and unions, and there was agreement in principle, but that there needed to be a framework. The industry was worried that some of the goods would be sold commercially by corrupt officials.
“The essences of the agreement is to ensure transparency, goods to reach victims, oversight and to stop any potential corrupt activities.
“Government will not release any goods for donation until the framework agreement is signed off by all parties.”
He asked for feedback from industry, and specifically he asked S&V readers to give their opinions.
Michael Lawrence, executive director of the National Clothing Retail Federation of SA (NCRF), which represents most national chains, said “the first concern about any form of product that can be commercialised is that you run the risk of the wrong people getting hold of it for the wrong reasons.
“We were asked a question with no indicators that this had been thought through. These are unusual circumstances, but it is open to corruption. The concerns for me are undermining local production capacity, disrupting basic commercial activity between producers and retail – there’s a lot of retail out there without the capacity or the desire to check on the source of its goods – product that as been imported with particular branding on – store or product – which could lead to reputational damage, and so on.
“What we also have no idea of is how much businesses have already given to NGOs. The scale of disaster is not underestimated by industry, but without a clear understanding of what is needed, it’s not difficult to say no.
“A framework agreement is being constructed. Government gets to decide what it does with seized goods. As industry, we have very limited rights. At this stage we are probably not madly averse to the blankets being released. Every winter is a problem in its own way, and there are always appeals for blankets. What we don’t want is start treating disadvantaged people as disaster relief.
“We don’t think that the quantum and nature of second hand clothing is huge. We would probably be open to NGOs being able to look through second hand goods. We are quite confident about the NGOs. If we call it for disaster relief only we won’t have people queuing up to import second hand goods in anticipation of a disaster.
“However, with anything that involves new clothing, we need to be very careful. We will look at the framework. It already has the potential to be a market disruptor. it’s tough. We have declared our concerns to the government departments we have engaged with. They have appreciated our concerns. Nothing is happening yet – that’s the commitment we were given.
“Separately from this, we have started a discussion at NEDLAC about seized goods. We need smarter solutions. We need good data and analyse them in good ways.”
Paul Theron, Executive Director of Apparel Manufacturers of SA (AMSA), wrote: “There is an enormous amount of support and sympathy for those devastated by the disastrous floods and the associated consequences thereof.
“An agreement has been reached between the stakeholders at a national level to support the humanitarian crisis in KZN with a firm proviso regarding management and control of the distribution by SARS of seized goods, based on product specific needs.
“A Memorandum of Agreement between SARS and stakeholders is to be drawn up. Hopefully this process will not drag on as the need was yesterday already.
“The past performance of lack of integrity by officials at the local level is the greatest concern.
“The use of established credible private sector agents, such as Gift of the Givers, would have been a preferred channel and hopefully this could still eventuate.”
Jirka Vymĕtal, executive director of the Southern African Footwear & Leather Industries Association (SAFLIA) said “SAFLIA agrees wholeheartedly with the views expressed by the NCRF. Also, SAFLIA has at numerous SARS meetings reiterated the understanding that illegal imports of footwear will be destroyed.
“From a footwear perspective, SAFLIA has not agreed to any Memorandum of Agreement between SARS and stakeholders.”
He said SARS was “opening a can of worms here…where does one draw the line?”
He said illegal goods hadn’t been distributed to victims of disasters before, and he questioned whether this would become policy in future.
He doubted the capacity to “properly police this proposal”.
SAFLIA’s line is illegal imports must be destroyed. No grey areas. However, SAFLIA is just a small player here and we do not wish to influence the clothing/textile sector and their decision – regarding clothing and textiles -will be respected.”   S&V Publications

Reduce corporate tax for better wages: Eswatini textile-garment firms

Some firms in Eswatini’s textile and apparel industry have called for a reduction in corporate tax from 25 per cent to 10 per cent—similarly to that in Lesotho—to raise salaries. Salary negotiations fell through as employers and government apparently voted for 7.25 per cent increment, while the Amalgamated Trade Union of Swaziland (ATUSWA) demanded a 15 per cent hike.

Some companies are also in the process of seeking unpaid layoffs from the office of the labour commissioner following unprecedented torrential rains in the KwaZulu-Natal Province, South Africa, where raw materials were destroyed.

The province is critical to the country’s economy as it has a major port used for exports and imports of items in and out of Eswatini to international clients.

The companies said the domestic industry has faced massive challenges in recent years due to opening multiple factories in Newcastle, South Africa, which offers them a new rebate policy.

They said the political environment in Lesotho, Botswana and Namibia could also make them to look for new factories there. The ongoing political challenges in Eswatini also posed a great threat to the sector.

They said the drastic fuel price increase had created a perfect storm that was sending them further into a downward spiral, according to a report in a local English-language daily.

Nigerian minister seeks collaboration to revive cotton sector

Nigerian agriculture minister Malam Mohammad Abubakar recently called for collaboration among stakeholders to resuscitate the domestic cotton industry to boost economic development when delegates of the National Association of Cotton and Textile Producers in Nigeria (NACOTAN) met him.

He said President Muhammadu Buhari will do something if such a proposal is presented to him.

“My ministry, the various departments and the seed council will collaborate with you to bring this industry back to life to be vibrant and better than before,” Abubakar was quoted as saying by Nigerian media reports.  F2F

Mad for Mantua

By Nokubonga Thusi

Mantua Silkwear A/W 2023.

The woman-owned brand founded by Juandi Andrag, is blazing a trail for local design.

South African woman-owned brand Mantua Silkwear, founded by Juandi Andrag, is blazing a trail for local design. Recently invited by Flying Solo, New York, to showcase at a group fashion show at Paris Fashion Week A/W 2023, the brand draws on the spirited, colourful heartbeat of the African continent while honouring the Eastern origins of silk. The runway highlighted limited-edition, trans-seasonal, and timeless scarves, slip dresses, and kaftans that played up the luminosity of silk with watercolour-art prints. The brand not only celebrates art and silk craftsmanship but is also socially responsible, manufacturing locally, supporting and developing local craftswomen, and donating profits from selected campaigns to charities in aid of abused women.  

SAPS face mask supplier found guilty of excessive pricing, fined R3,4M by competition tribunal

The Competition Tribunal (“the Tribunal”) has found that Tsutsumani Business Enterprises CC (“Tsutsumani”) charged the South African Police Service (“SAPS”) excessive prices for the urgent supply of 500 000 face masks during the COVID-19 pandemic, in April 2020 – and has ordered the supplier to pay a R3.4 million administrative penalty.

In its order, the Tribunal has found that Tsutsumani contravened section 8(1)(a) of the Competition Act (“the Act”) read with Regulation 4 of the Consumer and Customer Protection and National Disaster Management Regulations and Directions in Government (“the Consumer Protection Regulations”), during the period 5 April 2020 to 29 April 2020.

In addition, the Tribunal has ordered that Tsutsumani must pay the administrative penalty totalling R3 441 689.10 (three million four hundred and forty-one thousand six hundred and eighty-nine Rands and ten cents) within 30 business days.

Tribunal’s determinations

The Tribunal has concluded that Tsutsumani enjoyed market power during the complaint period and was dominant in the market for the emergency procurement of masks by SAPS from suppliers registered on National Treasury’s Central Supplier Database who were able to satisfy the requirements of SAPS’ Request For Quotations (“RFQ’s”), to supply the masks within a very short time period. Tsutsumani accordingly acted in contravention of section 8(1)(a) of the Act, read with Regulation 4 of Consumer Protection Regulations as alleged by the Competition Commission (“the Commission”) in its complaint referral.

The Tribunal’s reasons will be publicly available in due course.

A case of firsts

This case is the first excessive pricing case referred to the Tribunal by the Commission in the context of a tender process during the pandemic.

It is also the first case that falls to be determined under the Consumer Protection Regulations, read with section 8(1)(a) of the Act. This is because while the Tribunal and the Competition Appeal Court previously considered excessive pricing in the context of a national disaster in the Babelegi decisions, the Consumer Protection Regulations were not yet in force at the time of Babelegi’s conduct.

Background

Tsutsumani was accused by the Commission of charging the SAPS excessive prices for the urgent supply of 500 000 3-ply surgical face masks during April 2020. Tsutsumani was responding to a RFQ issued by the SAPS, for the urgent procurement of personal protective equipment (“PPEs”) from various suppliers. This was necessitated by the COVID-19 pandemic and the National State of Disaster which required all SAPS staff to wear masks. SAPS required nine million masks per month for use by its staff in the frontline of combating the coronavirus during the lockdown.

Tsutsumani denied the excessive pricing allegations.

Pepkor – trading statement

Shareholders and noteholders are hereby advised that a reasonable degree of certainty exists that the group’s statutory earnings per share (“EPS”) and headline earnings per share (“HEPS”) for the six months ended 31 March 2022, when compared to the previous corresponding period, are expected to increase within the ranges reflected in the table below.

EPS
Six months ended 31 March 2021 – 71.4 cents**
Six months ended 31 March 2022 – 85.7 cents-92.7 cents
Expected change(%) – 20.1%-29.8%

HEPS
Six months ended 31 March 2021 – 71.3 cents**
Six months ended 31 March 2022 – 87.2 cents-94.1cents
Expected change(%) – 22.3%-31.9%

The increase in EPS and HEPS is attributed to improved operational performance and the recovery of Pepkor’s exposure to the management investment company, Business Venture Investments 1499 (RF) (Pty) Ltd. (“BVI”), as first reported in 2018. BVI was invested in Steinhoff International N.V. (“Steinhoff”) shares and Pepkor fully provided for its exposure to a financial guarantee on behalf of BVI and associated loans. This follows the successful implementation of the Steinhoff global settlement and included the settlement of all claims and litigation of former Tekkie Town owners and management against Steinhoff and Pepkor.

The Pepkor board is of the view that this is a very positive conclusion for Pepkor. The company is therefore able to honour its commitment made to shareholders in 2018 to recover the funds.

The financial information on which this trading statement is based, has not been reviewed or reported on by the company’s external auditors.

Publication of results
Pepkor’s results for the six months ending 31 March 2022 will be published on the Stock Exchange News Service (“SENS”) on Friday, 27 May 2022.

A live webcast of the results presentation will be broadcast at 10:00am (SAST) and the webcast registration link will be made available closer to the time on the Pepkor website: www.pepkor.co.za

** EPS and HEPS for the six months ended 31 March 2021 were remeasured and restated to reclassify The Building Company as continuing operations following the termination of the transaction to dispose of the business as announced on 12 August 2021 on SENS. As a result, the reported EPS of 66.7 cents and HEPS of 74.0 cents were restated as reflected in the table above.

Classifieds:-

Vacancy for:  Pattermaker/Markermaker

Experienced marker making required with patternmaking skills.

Please send cv to admin@dynacco.co.za

Walter Orthmann still holds his managerial post, at 100 years old and counting.

Walter Orthmann, a 100-year-old man from Brazil set the Guinness world record for holding down the same job at one company for 84 years and nine days.

Orthmann may be celebrating his centenary in 2022, but he is not yet ready to down tools and retire. The 100-year-old has been working for a textiles company, Industrias Renaux S.A, for a whopping 84 years

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