Wal-Mart welcome to SA, but...

2010-10-02 10:19

The announcement of Wal-Mart’s ­proposed R28 billion investment deal in South Africa should have come as good news for a country telling the world it is open for serious business.

If it goes through it will be the single biggest US direct investment in South Africa.

It will also be a sign that the global business ­giants are beginning to recognise Africa’s potential as a worthy investment destination.

But the announcement has not come as good news to everyone.

Labour unions and some investment analysts have warned of the negative consequences of the purchase of Massmart, South Africa’ third-largest supermarket group, by the world’s biggest retailer.

Some argue that Wal-Mart, which a few years ago flew into trouble in South Korea and Germany, where it was forced to pull out, comes to South Africa with a lot of baggage – including ­alleged human rights abuses – and will negatively affect the local retail business, including spaza shops and tuckshops, which may be pushed out of business.

Labour federation Cosatu and the SA Commercial, Catering and Allied Workers’ Union see Wal-Mart’s ARRIVAL as a hostile takeover and claim it will put the final nail in the coffin of the struggling manufacturing industry.

 Wal-Mart, they argue, has a history of bad labour and procurement practices.

These fears are not unfounded.

In 2005 Wal-Mart was fined $135 540 (about R946 200) in the US for child labour law violations and the same year was forced to pay $7.5  million to a disabled former worker who complained that the company had unfairly reassigned him.

The company was ­also hauled over the coals for allegedly using ­illegal immigrants.

But while analysts caution and labour fights to stop the deal we should find a balance between inviting international giants to bring in much-needed direct foreign investment to our country and protecting our own economy.

It’s a difficult balancing act but one that is necessary as we continue to grow into a global economy that can compete with the best in the world.

The positives are that Wal-Mart’s arrival will be good for competition and will see consumers paying less for products.

And once it has succeeded in South Africa the global giant will then expand into the rest of Africa, resulting in the entire continent benefiting.

South Africa is therefore the gateway to the continent, which is in dire need of direct foreign investment.

Similar concerns were raised in August over Nedbank’s deal with the UK’s HSBC but with more and more international businesses focusing on South Africa – and the rest of Africa – as their next real growth areas, they should find us strong and ready to do business.

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