Retailers could face Christmas 'drought' of imported goods

Cape Town – South African retailers could face a shortage of imported goods in their stores over the Christmas shopping period, as the authority that permits imported goods to hit the shelves has a backlog of over 5 000 authorisations. 

The chief executive of a large importing company who spoke to Fin24 on condition of anonymity for fear of being victimised, said there’s a “huge bottleneck” at the National Regulator for Compulsory Specifications (NRCS), which causes a delay in the delivery of electrical goods to retailers. 

“The products sit in our warehouses because, unless it has approval from the NRCS, it cannot be sold to the public.” 

The NRCS was established in 2008 to protect South African consumers from potentially unsafe products by issuing so-called letters of authorisation (LOAs) that must accompany every single imported item before it can be sold to retailers. 

It falls under the auspices of Trade and Industry Minister Rob Davies.

120 days process period

The NRCS is supposed to process the applications from importing companies and large retailers within 120 calendar days (four months), but in reality it takes up to eight months for an LOA to be issued, the source told Fin24.  

The NRCS appeared before Parliament’s portfolio committee on trade and industry on Tuesday, admitting that it faces a backlog of applications that amounts to 5 231 outstanding authorisations, which will only be dealt with by March 2017. 

READ: Stable rand vital for affordable imports - Ramaphosa 

Dean Macpherson, Democratic Alliance MP who is also a member of the portfolio committee on trade and industry, said the duration it will take to clear the backlog is “unacceptable”. 

“The NRCS previously undertook to have the backlog cleared by November 14, but that date has come and gone. In the meantime, retailers won’t be able to import things like fridges, stoves, air-conditioners and other electrical goods.” 

Dampening effect on economy 

Macpherson is deeply concerned over the net effect this shortage could have on retailers’ bottom lines – especially since the Christmas period is the busiest season in the retail calendar. 

“It can result in a significant loss of turnover for the fiscus, as import tax and VAT payments are not collected.” 

It could also have a dampening effect on employment. The Christmas period is usually the time when retailers employ significantly more people to deal with longer opening hours and more customers. 

“This isn’t just about a turnover loss,” said the source, “but it’s also costing jobs.” 

“We have lots of products, waiting to be sold, and we want to employee people to do this, but possible employees are in limbo because the LOAs are being delayed,” he told Fin24. 

Macpherson said the current backlog the NRCS faces amounts to a crisis. “The NRCS is basically going to ruin Christmas for the retailers,” he said. 

READ: Retail's role in saving SA economy 

Parliament heard this week that the body only has five inspectors to issue LOAs. “How are they going to deal with a backlog of over 5 200?” Macpherson asked. 

According to Macpherson he has told Davies “for the past two and half years” that a crisis is looming at the NRCS. “But Rob Davies has steadfastly ignored this and didn’t want to implement reforms.” 

At the time of publication, Fin24 could neither get hold of the Department of Trade and Industry nor the NRCS to get comment on the matter. The story will be updated as soon as their comment has been received.