News July 11, 2011 at 12:00 am

Walmart To Launch in South Africa: Analysis and Impact

Adanna Uwazurike July 11, 2011 at 12:00 am

July 11, 2011 at 12:00 am | News

 It's the age-old story we hear time and time again: a huge multi-billion dollar company opens up a shop in a small town, forcing the competition out of business due to the lower prices the corporation is able to offer. 

We hear about similar incidents occurring in little towns across the United States, but now that Wal-Mart has decided to expand its reach to Africa, this may no longer be an American issue alone. 

After acquiring Massmart, a Johannesburg chain that operates in 13 African countries, problems immediately rose to the surface. Many South Africans feel that the merger should be subject to strict conditions or rejected altogether in order to protect the jobs that could be at stake in a nation that suffers from 25% unemployment.

Many worry that because Massmart currently buys 60% of its goods from South African farmers and manufacturers, this could drastically change, as part of what makes Wal-Mart the powerhouse that it is, is the company’s ability to distribute goods from one place to another.

This allows Wal-Mart to serve more as a distributor rather than as a retailer.  It is estimated by a government-commissioned analysis that every one percent shift from domestic to overseas suppliers could cost the country 4,000 jobs.

However, there have been agreements made between the unions and Wal-Mart, such as a two-year ban on lay-offs and the creation of a 100 million rand fund to nurture local suppliers. Wal-Mart also agreed to continue to recognize the South African Commercial, Catering and Allied Workers Union as the firms’ main bargaining partner for at least three years. 

However, some still do not see these concessions as enough, stating that the tribunal has not done enough to ensure that Wal-Mart will actually comply with all the agreements. It seems as though only time will tell exactly how Wal-Mart will impact Africa, but for now, citizens speculate that the situation seems bleak.

 

Photo credit: csmonitor.com

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