Is the world's retail giant about to swallow Africa?

The decision to allow Wal-Mart to enter South Africa will threaten hundreds of smaller, local competitors, claim critics of the move

Pavement trader Babalwa Ngcolo makes a "fair living" selling tomatoes at one rand apiece (8p) from a board laid out on two plastic crates near Cape Town railway station. "Of course, there is competition," she says glancing at the woman to her left with identical stock, "but if she has a good day today, I may have a good day tomorrow".

Mrs Ngcolo cannot imagine any of the large stores ever threatening her small business. But according to trade unions, the landmark decision on Tuesday by the South African Competition Tribunal to allow US retailer Wal-Mart to enter the African continent is bad news for Mrs Ngcolo and millions like her.

Eight months after the world's biggest store group made its first offer to buy warehouse retailer Massmart, the Pretoria-based tribunal allowed the purchase of 51 per cent of the South African group for £1.5bn.

"We're pleased that the competition authorities have recognised the benefits that our investment in Massmart can deliver," Wal-Mart International chief executive Doug McMillon said. Massmart chief executive Grant Pattison greeted the news with a pledge to create 3,000 jobs in 200 new stores in the next three years.

But Mike Abrahams, spokesman for the South African Commercial, Catering and Allied Workers Union said the tribunal's decision was a "disappointment". "The tribunal disregarded our evidence about the broad public impact of the takeover. They completely failed to consider that when you talk about Wal-Mart you are talking about a whole different history and scale than in any other takeover situation."

The Arkansas-based group has 4,000 stores in the US and as many outside. It trades in 14 countries and, until this week, had a presence on every continent except Africa. It is the biggest retail group in the world. Its buying power makes competitors tremble and the company has notched up hundreds of court appearances on four continents for union-bashing, discrimination and price-fixing. The group's annual sales are three times the South African national budget. If Wal-Mart were a country, it would be listed among the world's 30 top economies.

Massmart, which was set up in 1990 by entrepreneur Mark Lamberti, is South Africa's biggest food and general goods retailer with 288 stores in 14 African countries. The company last year shed 1,500 jobs and has been accused of doing so in preparation for the deal with Wal-Mart. Its revenue last year was 47bn Rands (£4.1bn), the latest in a series of 10 per cent year-on-year increases.

Massmart's target customers are the growing Southern African middle class who, like professionals everywhere, drive cars and enjoy topping up their weekly shop with a bargain garden table or kitchen appliance. South Africa is the continent's most vibrant consumer market and forecasters say that the 59 million Africans who earn at least £5,000 a year will have doubled in number by 2014.

Proponents of the Massmart takeover see it as crucial to investor confidence in South Africa where the influential trade union confederation, Cosatu, is part of the African National Congress governing alliance. Those backing Wal-Mart's arrival also claim it will create jobs: "All new employment is worth having in our country where up to 60 per cent of the population doesn't enjoy the dignity of having a formal job," said Johannesburg-based economist Mike Schüssler.

Tuesday's tribunal ruling followed months of talks and discomfort in the ANC alliance which accommodates strongly pro-market forces alongside apartheid-struggle comrades from the unions and the communist party. In December, Economic Development Minister Ebrahim Patel put in place an expert panel to consider the offer and his department and two others – Agriculture and Trade and Industry – came out against the deal.

Among their claims was that if Wal-Mart shifts Massmart's local procurement policies by as little as 1 per cent, as many as 4,000 jobs will be lost. In their evidence to the tribunal, the unions cited a German study suggesting that for every two jobs Wal-Mart creates when it opens stores, three are destroyed as competitors go out of business.

While the tribunal said it would release its full reasons for the judgment only on 29 June, Mr Abrahams said the decision seemed to mark a complete "capitulation" by the respected competition body. Indeed, while the judgment included a short list of conditions – including no sackings at Massmart for two years, a pledge to recognise collective bargaining agreements for three years and the creation of a 100m Rand support programme for local suppliers – the very same "demands" had been contained among sweeteners offered by Wal-Mart at the tribunal's hearing in March.

But experts in competition law said South Africa had been left with little choice than to open the door to Wal-Mart. As a member of the World Trade Organisation and signatory of the General Agreement on Tariffs and Trade, South Africa would not have been permitted to demand, for example, that Wal-Mart should buy domestic products.

"If Wal-Mart's entry into the South African market had been denied, South Africa would have been breaching its international commitments," said Paul Kruger, a researcher at the Trade Law Centre for Southern Africa.

Outside Cape Town station yesterday, Mrs Ngcolo declared herself happy with the business of the day. She had never heard of Wal-Mart. Neither had she ever set foot in the nearby Massmart-owned Game store. "Game is too expensive for me," she explained, "and it is too expensive for all the people who buy tomatoes from me. I am not too worried."

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Account Manager

£20000 - £35000 per annum: Recruitment Genius: This full service social media ...

Recruitment Genius: Data Analyst - Online Marketing

£24000 - £35000 per annum: Recruitment Genius: We are 'Changemakers in retail'...

Austen Lloyd: Senior Residential Conveyancer

Very Competitive: Austen Lloyd: Senior Conveyancer - South West We are see...

Austen Lloyd: Residential / Commercial Property Solicitor

Excellent Salary: Austen Lloyd: DORSET MARKET TOWN - SENIOR PROPERTY SOLICITOR...

Day In a Page

Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all
The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there