There’s one in every state but what happens when Wal-Mart casts their eyes to Africa? Well, it seems South Africa will be the first nation on the continent to find out.

Wal-Mart, the world’s biggest retailer, has put in a $2.3 billion dollar bid to buy out 51% of shares in the regional chain Massmart.

If the deal is completed, it could help to assure South Africa’s position as the entry point for future mega-multilateral deals, a position the country’s government has been adamant to secure.

The proposed takeover is being met with strong resistance from many in South Africa’s civil society, including some of South Africa’s most powerful labor unions who say Wal-mart’s entry into the country’s markets would ultimately cost its workers and economy the most.

According to Bloomberg’s Business Day:

As many as 4,000 jobs could be lost by Massmart shifting as little as 1 percent of procurement from local to imported sources, the Johannesburg-based newspaper said, citing government documents posted on the website of the Competition Tribunal.

Prominent members of the South African Commercial, Catering and Allied Workers Union (SACCAWU) are already preparing themselves to fight Wal-Mart’s take over of Massmart. Tyotyo James, a senior official at Cosatu, the country’s largest labor federation, told the Financial Times that he and his organization “will organize a mother of all boycotts” against the deal.

However, South Africa’s labor threats do not seem to have analysts moved.  As Syd Vianello, retail analyst at Nedbank Capital, told FT.com:

“It’s the usual bluster. They are threatening a boycott (but) boycotts in this country have never really worked.”

The deal is the subject of a week-long hearing that kicked off Monday and while financial analysts say it is all but a sure bet, the deal is still pending approval. If it does go through, the Wal-Mart take over of Massmart would be one of the biggest merger and acquisitions for South Africa’s retail industry.

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  • Clara

    Steers is dead! Java went and killed them with better food and better service.

  • mikael

    In the whole debate the bigger picture is forgotten. The increased competition on the SA market might lead to lower prices. But at what cost? Lower prices doesnt come by itself. Its either you pay ur workers less (i.e. do not increase salaries the way you should), or you mechanise the production further which will lead to loss of jobs, or you import from outside the country and continent – from a country where thye workers are really paid peanuts and treated like sh**. Any of these or all of them will of course happen when wal-mart enter the SA market with sheap (low quality) stuff.

    But the picture needs to be broaden. The increased import of sheap stuff by wal-mart and the retailers trying to “defend” their market in SA means further transport of goods and foods from around the globe. This have implications on the environment, including climate change. To be even more specific – the apple and pear industry in SA is already affected by cimate change. Adding more transport and thus emmisions of green house gases of course contribute to climate change. But maby that is ok – because then we can import the fruits from (e.g.) Asia…

    Read the book: “The wal-mart effect” and you will get to know what SA can expect.

    Mikael