A Kagiso, West Rand businessman who threw in his lot with supermarket chain Pick n Pay’s township business revitalisation plan says he initially signed up for a partnership but it turned out to be a franchise agreement that left him out of business and saddled with a R9 million debt.
On their website, Pick n Pay sells their involvement in the township economy thus: “Since 2016, Pick n Pay has led a collaborative partnership with government and other strategic partners to help revitalise small, independent township grocers to regenerate their stores and turn them into thriving neighbourhood convenience stores.”
But Phure Motshabi says this is the worst decision he’s ever made about the business that was set up by his late father. He says Pick n Pay is only in it for selfish gain, by hook or by crook.
Motshabi says Pick n Pay has access to his business bank account and was able to withdraw money without his express consent.
Asked if he was sure about this, Motshabi showed a bank statement with several tranches of money withdrawn “every transaction of which I did not approve”. For two years in a row, he got tax refunds from the South African Revenue Service (Sars).
On December 12, 2018, a Sars deposit of R427 397. 34 was made into the Phenyo business account. The following day it was withdrawn. “Pick n Pay took it,” says the flustered businessman.
It was not the only money Pick n Pay removed from his account. They also took R270 000 from Sars the next year, he says. He accuses the supermarket chain of even helping themselves to the R300 000 grant money from the Gauteng Enterprise Propeller (GEP) meant to fund small business growth in the townships.
GEP says they promote, foster and develop small enterprises in Gauteng thereby implementing the policy of the Gauteng Provincial Government for small enterprise development. Motshabi accuses them of doing anything but what they were set up to do.
Contacted for comment, Bongani Nkosi of the Gauteng Department of Economic Development – a partner in the programme, referred all questions to their agency, GEP.
GEP could easily be a man and a fax machine. Trying to get through to them proved futile.
The CEO Saki Zamxaka was on Check Point on Thursday evening and had no answers regarding whether he was aware how the Pick n Pay franchises in the townships were doing.
Motshabi mentions another R300 000 figure meant for him but that ended up with Pick n Pay. It is money from the Old Mutual Foundation, he says.
It came to a head when in October 2020, Motshabi received a notice of termination from Pick n Pay warning him of the one month’s mandatory notice, advising that the agreement will be terminated on November 12, 2020.
Through lawyer’s papers served on him, Pick n Pay is demanding R3 537 124, which came with a September 13, 2021 deadline.
Pick n Pay says: “If and when they (store owners) run into difficulties, they are given extensive support, including additional advice, and flexibility on the repayment of monies owed, without interest being charged.”
When his store was looted in the July 2021 unrest, Braamfischerville store owner Sicelo Thatukane lost everything. The only winners were Pick n Pay, who took the insurance payout into their bank account.
In an email response, a Pick n Pay executive who insisted that the response be ascribed to the company says:
“Phenyo Market is a very good example of our tireless efforts to turn the store around for months but the owner was unwilling to accept our guidance.”
“The allegations made by Phenyo Market are not true. In particular:
- We do not have the ability to withdraw money from anyone’s bank account and every financial transaction is conducted with the necessary approval and authorisation. This is the law. Authorisation is signed by the store owner for any debit order transaction.”
- We did not receive and nor retain any grant funding due to Phenyo Market. Selected market store programme partners provide grant funding for the set-up of their new store. This grant funding is paid directly from the partners to the vendors for store capital expenditure.
- We did not receive Phenyo Market payments from Sars.
- The automated stock replenishment system recommends an initial order based on similar market store sales, operating in similar communities. Once the market store becomes operational, the system tracks demand from the store’s own sales. Any store owner who does not sell the allocated stock can arrange for it to be collected from the stores, leaving no liability for the store owners. Numerous stock was picked up from Phenyo Market.
- Phenyo Market owes us a debt of under R4m in unpaid received stock. We have never added interest to this outstanding amount. We have attempted several times to work with Phure Motshabi to rectify this but this was never welcomed. When there was a mismanagement of funds within the business, the decision was finally taken to end our agreement. This was not taken lightly and after extensive proposals to help the business rectify its growing debt.
- Phenyo Market has never sourced 90% of his stock from Pick n Pay. Our agreement encourages owners to source stock from us or any of our approved suppliers. A majority of market stores order around 60% from us.
- We are always saddened when an owner isn’t able to make a success of his business, but remain encouraged by those that are operating good businesses through the programme. As a listed company we pride ourselves in the relentless adherence to all financial and governance laws.”
Some questions to Pick n Pay are only responded to in off-the-record telephone calls, like at what percentage the success rate of these township businesses are.
Motshabi says many of them, now members of a WhatsApp group, have gone bust.