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Africa in the News: "Wal-Mart sets sights on Africa in

Wal-Mart sets sights on Africa in £2.9bn bid for Massmart

http://www.guardian.co.uk/business/2010/sep/27/wal-mart-bid-massmart-south-africa

The world’s largest corporation, Wal-Mart, is in negotiations to move into Sub-Saharan Africa through a £2.9bn takeover of Massmart, a South African based chain of superstores. Massmart currently consists of 290 stores in 13 Africa countries such as Ghana, Nigeria, Tanzania and Zimbabwe under a variety of brand names. This deal is Wal-Mart’s first attempt to gain access to African markets which it deemed as a “’compelling’ growth opportunity.” Many within the region see Wal-Mart’s desire for business as a vote of confidence in their economies.

However, the takeover may prove complicated for Wal-Mart, particularly in the case of Zimbabwe, as the U.S. is still enforcing targeted sanctions due to its disapproval of Robert Mugabe’s regime which has been accused of “ongoing human rights violations, land seizures and intimidation of political participants.” Things could also get complicated for the company within South Africa in the midst of ongoing strikes across industries for wage increases. Wal-Mart’s reputation ‘for being anti-union and for a ruthless approach in keeping down wages,” leads Michael Bride, deputy organizing director for global strategies at America’s UFCW union, to speculate that “The company may very well adopt a policy of racing to the bottom in terms of wages and salaries and then denying workers a voice." Opposition to the takeover has already been voiced by the Congress of South African Trade Unions.


 

ADDITIONAL INFORMATION

A Forbes article on reactions of South Africans over the proposed take over: http://www.forbes.com/2010/09/28/walmart-takeover-labor-union-opposition-equities.html?boxes=Homepagechannels

A short South African News Report on the Issue: http://english.ntdtv.com/ntdtv_en/ns_me/2010-09-29/500195547382.html

Overview of U.S. sanctions against Zimbabwe: http://www.ustreas.gov/offices/enforcement/ofac/programs/zimbabwe/zimb.pdf

An article from Africa Recovery on “Africa’s untapped investment potential”: http://www.un.org/ecosocdev/geninfo/afrec/subjindx/132inves.htm

 

DISCUSSION QUESTIONS

1. Do you believe this type of investment in African economies is positive? What might be some of the negative/positive side effects?

2. Do you think Wal-Mart’s desire to move into African markets is a good indicator of economic growth on the continent?

3. What may be some cultural implications of a large U.S. corporation entering Sub-Saharan African markets?

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sarah little