Africa
3:21 am
Wed October 26, 2011

South Africa Reconsiders Walmart's Bid For Retailer

Originally published on Wed October 26, 2011 11:40 am

In May, the South African government approved Walmart's bid to buy Massmart for more than $2 billion. Massmart is the largest retail chain in southern Africa, operating in 14 countries. But now the government is reconsidering that ruling.

Workers' unions have long opposed the plan because of concerns that the deal could lead to significant job losses, and the government has worries of its own in a time of high unemployment.

Outside the Cape Town High Court, a higher-level regional court, a large group of protesters gathers on the sidewalk holding red and white signs and wearing T-shirts that say "The Anti-Walmart Coalition."

"We are here to protest against Walmart," Jamil Jacobs says amid singing demonstrators. Jacobs has worked at a grocery store in Cape Town for the past 25 years.

Walmart is hoping to use Massmart to reach Africa's rapidly growing consumer markets. But Mike Abrahams, a spokesperson for the South African Commercial, Catering and Allied Workers Union, says unions are opposed to the merger.

"We know from our experience and international relations that even in the U.S. workers are not allowed to join unions within Walmart," Abrahams says. "We know from our experience internationally that where they have moved, they systematically eroded workers rights and things like that. We don't want them here."

Keeping Manufacturing In The Country

Inside the courthouse, a slightly different case is being made. The government has grown concerned that Walmart will buy too many of its goods from other parts of the world, and this will hurt South Africa's manufacturing sector.

"The concern is that linking into Walmart's global supply chains might reduce the number of products bought in South [Africa] and southern Africa," says Andries Bezuidenhout, a professor of industrial sociology at the University of Pretoria.

Massmart gets roughly 90 percent of its products from South Africa and Bezuidenhout says that percentage could be reduced once Walmart takes over. That, in turn, could work against the government's strategy to create new jobs — a major concern in a country with unemployment levels near 40 percent.

"There's a very, very strong drive by the South African government to strengthen the manufacturing industry due to extremely high unemployment levels," Bezuidenhout says. "For Africa to develop in the long run, you really have to strengthen its manufacturing and industrial capacity."

'We Create Great Retail Jobs'

Walmart lawyers say there is no evidence the deal will weaken South Africa's manufacturing base. And Doug McMillon, the chief executive officer of Walmart International, says on a website created to explain the merger that Walmart's arrival in South Africa will create jobs.

"As we sell more merchandise, build more stores, we create great retail jobs," McMillon says.

Paul Theron, chief executive officer of a South African fund management company, says that Walmart's low prices will also help consumers and strengthen the South African economy.

"It's important for our economy that we welcome foreign players into the market, that we have more competition, and companies like Walmart and Massmart together can build our economy through making cheap goods available to us, all of us, at a more competitive price," Theron says.

With arguments concluded, the three presiding judges must now decide if the deal will stand, be amended, or be sent back for further review. It's a decision that could have profound economic effects on South Africa and on the entire African continent.

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Transcript

RENEE MONTAGNE, HOST:

And in South Africa, unions are trying to block Wal-Mart from taking over a local retailer. Earlier this year, the South Africa's government approved Wal-Mart's bid to buy Massmart. Now it's reconsidering that ruling. From Cape Town, Anders Kelto sent this report.

(SOUNDBITE OF SINGING)

ANDERS KELTO, BYLINE: Outside the Cape Town High court, a large group of protesters gathers on the sidewalk. They hold red and white signs and wear T-shirts that say: The Anti-Wal-Mart Coalition. And, because this is a South African protest, they sing.

(SOUNDBITE OF SINGING AND CLAPPING)

KELTO: Jamil Jacobs has worked at a grocery store here in Cape Town for the past 25 years.

JAMIL JACOBS: Well, we are here to protest against Wal-Mart.

KELTO: Wal-Mart has agreed to purchase Massmart for more than $2 billion. They're hoping to use the retail chain, which operates in 14 African countries, to reach Africa's rapidly growing consumer markets. But Mike Abrahams, a spokesperson for the South African Commercial, Catering and Allied Workers Union, says unions are opposed to the merger.

MIKE ABRAHAMS: Now, we know from our experience and international relations that even in the U.S., workers are not allowed to join unions within Wal-Mart. We know from our experience internationally that where they have moved, they systematically eroded workers' rights and things like that. We don't want them here.

KELTO: Inside the courthouse, a slightly different case is being made. The government has grown concerned that Wal-Mart will buy too many of its goods from other parts of the world, and this will hurt South Africa's manufacturing sector.

ANDRIES BEZUIDENHOUT: The concern is that linking into Wal-Mart's global supply chains might reduce the number of products bought in South and Southern Africa.

KELTO: That's Andries Bezuidenhout, a professor of industrial sociology at the University of Pretoria. Massmart gets roughly 90 percent of its products from South Africa, and Bezuidenhout says that percentage could be reduced once Wal-Mart takes over. And that, in turn, could work against the government's strategy to create new jobs - a major concern in a country with unemployment levels near 40 percent.

BEZUIDENHOUT: There's a very, very strong drive by the South African government to strengthen the manufacturing industry, due to extremely high unemployment levels. And for Africa to develop in the long run, you really have to strengthen its manufacturing and industrial capacity.

KELTO: Wal-Mart lawyers say there is no evidence the deal will weaken South Africa's manufacturing base. And Doug McMillon, the CEO of Wal-Mart International, says on a website created to explain the merger that Wal-Mart's arrival in South Africa will create jobs.

DOUG MCMILLON: So, as we sell more merchandise, build more stores, we create great retail jobs.

KELTO: Paul Theron, CEO of a South African fund management company, says that Wal-Mart's low prices will also help consumers and strengthen the South African economy.

PAUL THERON: It's important for our economy that we welcome foreign players into the market, that we have more competition, and companies like Wal-Mart and Massmart together can build our economy through making cheap goods available to us, all of us, at a more competitive price.

KELTO: With arguments concluded, the three presiding judges must now decide if the deal will stand, be amended or be sent back for further review. It's a decision that could have profound economic effects on South Africa, and on the entire African continent. For NPR News, I'm Anders Kelto in Cape Town, South Africa. Transcript provided by NPR, Copyright NPR.