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.