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
News
i100 In this video, the late actor Leonard Nimoy explains how he decided to use the gesture for his character
Arts and Entertainment
Secrets of JK Rowling's Harry Potter workings have been revealed in a new bibliography
arts + ents
News
Down-to-earth: Winstone isn't one for considering his 'legacy'
people
News
news
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA special investigation by Andy McSmith
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

Sauce Recruitment: Retail Planning Manager - Home Entertainment UK

salary equal to £40K pro-rata: Sauce Recruitment: Are you available to start a...

Ashdown Group: Front-End Developer - London - up to £40,000

£35000 - £40000 per annum: Ashdown Group: Creative Front-End Developer - Claph...

Recruitment Genius: Product Quality Assurance Technologist - Hardline & Electric

£18000 - £24000 per annum: Recruitment Genius: The role in this successful eco...

Ashdown Group: QA Tester - London - £30,000

£28000 - £30000 per annum: Ashdown Group: QA Tester - London - £30,000 QA Tes...

Day In a Page

HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

Scientists hail daily pill that protects against HIV infection

Breakthrough in battle against global scourge – but will the NHS pay for it?
How we must adjust our lifestyles to nature: Welcome to the 'Anthropocene', the human epoch

Time to play God

Welcome to the 'Anthropocene', the human epoch where we may need to redefine nature itself
MacGyver returns, but with a difference: Handyman hero of classic 1980s TV series to be recast as a woman

MacGyver returns, but with a difference

Handyman hero of classic 1980s TV series to be recast as a woman
Tunnel renaissance: Why cities are hiding roads down in the ground

Tunnel renaissance

Why cities are hiding roads underground
'Backstreet Boys - Show 'Em What You're Made Of': An affectionate look at five middle-aged men

Boys to men

The Backstreet Boys might be middle-aged, married and have dodgy knees, but a heartfelt documentary reveals they’re not going gently into pop’s good night
Crufts 2015: Should foreign dogs be allowed to compete?

Crufts 2015

Should foreign dogs be allowed to compete?
10 best projectors

How to make your home cinema more cinematic: 10 best projectors

Want to recreate the big-screen experience in your sitting room? IndyBest sizes up gadgets to form your film-watching
Manchester City 1 Barcelona 2 player ratings: Luis Suarez? Lionel Messi? Joe Hart? Who was the star man?

Manchester City vs Barcelona player ratings

Luis Suarez? Lionel Messi? Joe Hart? Who was the star man at the Etihad?
Arsenal vs Monaco: Monaco - the making of Gunners' manager Arsene Wenger

Monaco: the making of Wenger

Jack Pitt-Brooke speaks to former players and learns the Frenchman’s man-management has always been one of his best skills
Cricket World Cup 2015: Chris Gayle - the West Indies' enigma lives up to his reputation

Chris Gayle: The West Indies' enigma

Some said the game's eternal rebel was washed up. As ever, he proved he writes the scripts by producing a blistering World Cup innings
In Ukraine a dark world of hybrid warfare and murky loyalties prevails

In Ukraine a dark world of hybrid warfare

This war in the shadows has been going on since the fall of Mr Yanukovych
'Birdman' and 'Bullets Over Broadway': Homage or plagiarism?

Homage or plagiarism?

'Birdman' shares much DNA with Woody Allen's 'Bullets Over Broadway'
Broadchurch ends as damp squib not even David Tennant can revive

A damp squib not even David Tennant can revive

Broadchurch, Series 2 finale, review
A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower: inside the mansion of Germany's 'Bishop of Bling'

Inside the mansion of Germany's 'Bishop of Bling'

A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower