Culture

Africa Money: Wal-Mart Pays the Cost of Doing Business in Africa

Reuters:

Johannesburg – The biggest barrier to tapping into sub-Saharan Africa’s blockbuster growth may be in Pretoria — just ask Wal-Mart.

Competition authorities are hearing testimony until Monday in South Africa’s capital on whether to allow Wal-Mart Stores Inc to proceed with its $2.4 billion bid for control of local retailer Massmart.

South Africa’s government and powerful unions fear the takeover could lead to job cuts and a flood of cheap Asian imports, and are pressing for guarantees on job cuts and local procurement.

Home to the continent’s largest economy and its deepest capital markets, South Africa is seen as the top starting point for African expansion.

But the government’s drawn-out deliberation over the Wal-Mart deal — which was first announced in September — coupled with the onerous conditions foisted on Japan’s Kansai Paint in a deal earlier this year, show foreigners should expect plenty of hurdles.

“South Africa can put up these high hurdles, but every investor has a tipping point and at some point investors will say ‘It’s not worth it,'” said Adrian Saville, chief investment officer of Cannon Asset Managers in Johannesburg.

“It does beg a bigger question, which is: Is this inherent in the South African landscape? How easy is it to do business with South Africa?”

Read on here.

And believe you me, Wal-Mart is really struggling to get a foot in the door here in SA.

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