Big week for township business

The Competition Commission has been very busy this year uncovering anticompetitive behaviour by major retailers in various sectors of the economy.

The most important public hearings are, however, taking place this week in Pretoria, where the commission is looking into the impact of the entry of national supermarket chains into townships, peri-urban and rural areas and the informal economy.

The hearings, which began on Monday and end tomorrow, may shed some light or provide a solution to an old problem where small businesses in black areas have been forced to close shop by the entry of supermarket chains.

For the past 20 years, township entrepreneurs have been complaining that major retailers were not playing fair and they could not compete with their bulkbuying power, which meant the smaller guys could not afford to beat or match supermarket chains’ prices and still stay open.

With the current trend where malls are mushrooming all over the townships, local entrepreneurs are kept out by long-term exclusive lease agreements given to these chains.

A prime example is Pretoria businessman Noah Msibi who opened his bakery in 2010 selling more than 1 000 loaves of bread a day and employing 15 people in Saulsville township.

Today, the 33-year-old’s bakery‚ Glo Bake‚ barely sells 500 loaves a day‚ had to retrench six employees and the business is fast sinking despite his bread being the cheapest at R6.50 a loaf.

In his submission during the first day of the hearings on Monday‚ Msibi put the blame squarely on the emergence of grocery retail giants Shoprite and Pick n Pay.

He said the problem was compounded by the flooding of the market by foreign-owned shops which, he claimed, did not support local businesses.

The issue of township business falling victim to the big retail chains is a challenging one for the government, and indeed the commission, because how does a regulatory body restrict a business in an area without those restrictions being anticompetitive themselves.

It will be interesting to see if this week’s hearings will lead to a solution to save entrepreneurs in the townships.