South Africa has without doubt, become a nanny state. The Brits believe the UK falls into the same category. But some of our government ‘initiatives’ (serendipitous oxymoron) are having the effect of putting people out of business and accelerating the flight of intellectual capital from the country. I haven’t heard those two particular accusations being laid at the door of number 10 Downing Street. But then we are unique in many respects.
At the end of this month, my friendly family pharmacist leaves South Africa. For many years he ran a small, efficient, innovative, courteous and utterly service-orientated business. His staff complement which included his charming wife was about a half dozen in total. Being an owner-pharmacist business, it enjoyed an ethos of caring, sincerity and integrity-based customer care and the ‘added mile’ service ethic, so desperately sought by large retailers, was the norm in his business.
The National Minister of Health, Dr. Manto Tshabalala-Msimang, has implemented non-negotiable legislation throughout the pharmaceutical industry – ostensibly designed to bring affordable healthcare to all South Africans. A laudable objective had it been considered and implemented with greater circumspection. The effect of single exit pricing from pharmaceutical manufacturers and a ministerially-mandated fixed dispensing fee has had a dreadful impact on most small pharmacies. They aren’t geared size-wise to operating a high volume low profit margin business. Often located in shopping centres or retail malls, they pay the same (usually exorbitant) going rate per square metre as other tenants, but are hobbled by governmental interference in terms of the service and dispensing mark-up they can charge. An interesting economic model if ever there was one: in which you bear the costs and risk of running the business, but the state defines your modus operandi and therefore effectively, your financial viability.
But back to my friendly pharmacist. I feel as awful about him going away as if I were losing a family member to emigration – which is precisely what’s happening. He was aggressively recruited by American head hunters many months ago. Invited to a get-together of similarly endangered pharmacists in a leading Johannesburg hotel, he was offered an ‘out’ that seems like a utopian lifeline. However he doesn’t particularly want to live in America and nor does his small family. But the choices are not great: give up your pharmacy profession and re-invent yourself or go somewhere where your skills can be applied, they will be appreciated and where the state will keep its meddlesome fingers out of your business.
As bad as the loss of my pharmacist, is the loss of his pharmacy itself. Nobody wants to go into small retail pharmacy any longer unless it’s part of a large chain because of the uncertainty and predictably poor viability. So he can’t sell his business on. It closes at month-end. No doubt the large American-style chain drugstore located elsewhere in the same complex is jumping up and down with glee. But they won’t be getting my business. I’ll have to get scripts re-issued and I’ll then take them to one of the rapidly diminishing small pharmacies left in my neighbourhood.
I suppose the minister will finally wake up when there’s a full-blown crisis. Like the deputy president Phumzile Mlambo-Ngcuka has just done with regard to the paucity of skills availability in South Africa. Now ain’t that a no-brainer for you? Government is cooking up a recipe which is long-term, going to have major negative consequences for many sectors. One only needs to look at the functionally irreparable state of our Keystone Cops department of home affairs that can’t even keep adequate passport book paper in stock. That’s just a rather public symptom of similar examples of staggering ineptitude in many ministries. Largely I believe because there was too abrupt a clean sweep from the civil service of white Afrikaners who were capable of doing a good job. I’d have waited for skills transfer to take place before easing ’em out of the system if that had to be done at all.
Cartels or price collusion have always been anathema to the spirit of competition and free enterprise. Government has in place a plethora of mechanisms to prevent the private sector from engaging in such disadvantageous-to-the-consumer practices. And yet, through its own nanny-state meddling, it’s effectively created precisely such a scenario in the pharmaceutical industry. And in the process sent many small businesses and their owners down the tubes – or out of the country. Maybe the deputy Prez and the Minister of health should find time to take tea together? It could just be in the national interest.
Related Tags: Business failure, Emigration, Pharmacy, Retail
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