In DepthThe QuestionIs Walmart good news for Africa?


Posted on Monday, 02 May 2011 16:12

Is Walmart good news for Africa?

The giant US conglomerate Walmart is bidding for a $2.3bn controlling stake in South Africa’s Massmart, the continent’s third-biggest retailer. The South African government and unions fear the deal will lead to job losses and an unfair advantage. The Competition Commission takes its decision mid-May

Have your say below on Walmart's arrival in Africa.


Christy Hoffman, deputy general secretary of UNI Global Union, a Swiss-based trade union movement representing 4 million skilled workers around the world

With annual sales of more than $400bn, if Walmart were a country, it would be the world’s 25th-largest economy. Its annual sales are nearly double the size of South Africa’s annual GDP of $227bn. As the world’s biggest company, Walmart single-handedly sets the standard for retail practices worldwide. Its business model is based on ever-lower prices. While low prices sound welcome, when those prices come at the expense of suppliers, workers and communities, the cost is just too high.

Walmart’s global sourcing model would force African suppliers to match the prices of companies with low-cost, low-standard labour from countries like China and Bangladesh. While some South African suppliers may see volume go up, their profit margins will go down because of Walmart’s low-cost demands. The South African government has voiced concerns that the company does not intend to back up its public pledges with real commitments. Walmart has already threatened to sue Namibia’s Competition Commission for placing conditions on Walmart operations in that country. The “Walmartisation” of communities around the world has depressed working conditions for all retail workers. With that history, Africa cannot afford to trust its future to Walmart.


Mncane Mthunzi, CEO, Consumer Goods Council of South Africa

If Walmart’s record elsewhere is anything to go by, this deal promises a very competitive retail industry to this country and the region. Walmart’s prominence on quality products and its well-proven strategies to achieve reasonable prices surely favour South African consumers. In 2002, McKinsey reported that Walmart’s tried and tested innovations and technology have led to increasing productivity levels and have become industry standards in many countries. The more productive and efficient our industries are, the better the country will be able to attract foreign investors.

One also expects the Walmart deal to benefit employees. Walmart has consistently stated that it will honour pre-existing union agreements and abide by South Africa’s labour laws. In Mexico, research has shown Walmex to be paying wages slightly above the industry average and that of its competitors. The majority of Walmart’s workers are reported to be working full time. Accusations that Walmart will add to unemployment in South Africa need to be carefully looked at. As long as our labour-law frameworks are consistent, Walmart will be expected to comply.

Last Updated on Thursday, 16 February 2012 10:36

Gemma Ware

Gemma Ware

Gemma Ware is business editor of The Africa Report magazine, where she has worked since 2008. She coordinates the magazine's business pages and writes on a range of subjects from the continent's telecoms revolution, to private equity and African stock markets.

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