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ANC, labour divided over Walmart’s bid

Jan 23 2011 12:26
Mpho Sibanyoni
Johannesburg - The ANC and its alliance partner the Congress of SA Trade Unions (Cosatu) have different views on multinational retailer Walmart’s bid to take over Massmart Holdings [JSE:MSM] which could hamper future foreign investment into the country.

Earlier this week, shareholders of Massmart, owner of Game, Builders Warehouse and Makro, accepted Walmart’s offer of R16bn for 51% ownership of the local company. The deal is now subject to approval by the competition authorities.

“We support any initiative that will pump foreign direct investment into the country,” said ANC spokesperson Keith Khoza after Massmart’s shareholders gave the deal the nod.

He added: “Whoever makes an investment here is bound by the laws governing South Africa and must comply with the approval framework of the Competition Commission.”

Khoza said the takeover bid should not affect employees of Massmart negatively.

“The bid should not in any way undermine the country’s objective to create sustainable jobs and we would not like to see a situation where permanent employees are turned into temporary workers.”

In contrast, Cosatu said it was totally opposed to the bid. Spokesperson Patrick Craven said the labour federation, representing 1.8 million workers, would call for consumers to boycott Walmart products should the bid succeed.

He said: “Walmart is an anti-union employer and its procurement policies would be to the detriment of local suppliers and the country because the multinational company normally sources products from its already established network of cheapest suppliers.”

Syd Vianello, retail analyst at Nedgroup Securities, said Cosatu was misinformed about Massmart’s procurement policy because the company already bought the vast majority of non-perishable goods from overseas.

He added: “We are worried that Walmart could undercut local retailers and create a virtual monopoly.”

SA as gateway

Last year Massmart announced that it planned to cut 1 500 jobs at its Massdiscounters (Game and DionWired) unit.

Spokesperson Brian Leroni said Massmart and all its chains had no plans for retrenchments and added that 96% of their goods were procured locally.

Economist Dr Azar Jammine said: “Cosatu sees Walmart as a giant American retailer that wants to come here and screw the workers.”

It wasn’t necessarily a bad move by the federation to oppose the bid, he said. “This will put Walmart on its toes when dealing with South African labour matters, rather than taking things for granted.”

Jammine said workers on the continent might have reasons to be concerned about the takeover.

“Walmart only wants to use South Africa as a gateway to Africa and they can afford to comply with our strict labour laws because in other African countries the laws are much more relaxed.”

He also added that there was a chance the behaviour of unions could repel future direct foreign investment. “Psychologically, this will make multinationals aware that there is a strong trade-union movement in the country.”

Thami Bolani, chairperson of the National Consumer Forum, threw his weight behind the bid.

“We hope this deal will encourage more multinationals to set-up shop locally and result in more competition, innovativeness, better service standards,” he said.

“It wouldn’t also hurt if we could see retailers offer cheaper but quality products to consumers, especially considering the country’s high debt levels.”

- City Press

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