Comment and Analysis

Buying the idea of SA consumers

Staff Reporter

South Africa may not be invited to the Bric party, but it looks like we're welcome in Uncle Sam's club.

South Africa may not be invited to the Bric party, but it looks like we’re welcome in Uncle Sam’s club—and that may say more important things about the country and the region.

Walmart’s R32-billion offer for Massmart (which runs Game, Dion, Makro and Builder’s Warehouse, among other chains) has already excited all kinds of obvious reaction. Local unions are unhappy that a company famous for its hard-line attitude to labour organisation at its American branches could take control of such an important player. Financial market commentators and mainstream economists, on the other hand, are cock-a-hoop about Walmart’s “vote of confidence” in South Africa.

Of course the real story is much bigger than either boosters or critics of the deal suggest. It is the story of a dramatically changing world order, one in which cash is flowing ever faster out of developed economies towards the opportunities offered by emerging markets.

Walmart figured this out earlier than most. As the influential journal Foreign Policy pointed out a year ago, apropos of the company’s advent in India: “Walmart’s debut in a country is a bellwether for future growth. Indeed, Wal-Mart has started operations in 15 countries since 1991, and 13 of them have had boom economies, with an average of 4.4% annual growth since Walmart arrived. Over the last five years, the economies of Walmart countries outside the United States have grown 40% faster than the world average.”

Countries such as China, Brazil and Mexico are now crucial to the ongoing profitability of the company as the deep economic funk in the US continues.

Walmart is buying 232 South African stores and 24 more across the continent, as well as the serious expertise of Massmart’s management. But what it is really buying is the idea of a South African, and an African, middle class.

It is buying the idea of Africans as consumers of goods and services rather than recipients of aid. That is a big deal, very much to be celebrated, and not just for symbolic reasons. For starters, it refocuses interest in Africa away from the resource plays that continue to dominate inward investment and towards the continent’s people.

If Walmart’s record elsewhere is anything to go by, it also promises to bring truly savage retail competition to this country and the region.

This has to be a good thing. South African consumers get better deals and more choice than their northern neighbours, but we still lack pricing power in a market that seems to be tidily carved up between big local chains. Elsewhere in the region consumers pay way over the odds, and must contend with limited selection and often dismal quality.

As for the company’s image as a destroyer of diversity, it is not as if the arrival of a big foreign player is going to decimate a thriving high-street culture, as Walmart has done in some US towns. We simply don’t have one. Our retail landscape is almost entirely given over to big chains already.

So although we want very much to say snarky things about the advent of Uncle Sam (Walton) we’re really just hoping that the men from Arkansas are right again, and that despite a rudderless economic policy, we’re on track to join the fast-growth club.

Beware the zombie state
Today, October 1, Nigeria celebrates 50 years of independence. For many the party will feel like a wake.

Despite billions in oil revenue, and the extraordinary energy and creativity of its people, Nigeria offers a terrifying image of what a truly predatory elite can achieve when it gets to work. The state is a hollowed-out shell, replete with feeding perches for corrupt officials and politicians who are interested principally in securing their own comfort. Certainly those oil dollars haven’t bought much outside the boutiques of London and Paris.

The health system is prohibitively expensive. Polio, a disease eradicated in much poorer countries, remains a serious threat. Despite good soil and plentiful water, Nigeria is a net importer of food, which is probably why Olesegun Obasanjo welcomed the expertise of white farmers expelled from Zimbabwe. Road and rail infrastructure is disastrous. Blackouts are so frequent that generators are a basic operating requirement for any business, and the National Electric Power Authority was long ago renamed Never Expect Power Always.

Individually, of course, Nigerians continue to shine on the world stage as athletes, musicians and writers. But deep ethnic and religious fractures don’t seem to be ameliorated by a capacity for the making of cultural meaning almost as rich as the oil wells.

Nigeria is not a failed state like Somalia, nor is it as contested as Sudan or the DRC. It is more like a zombie state, and therein lies the lesson for the rest of us.

Corruption and bad policies have left the forms of governance intact, but have destroyed the capacity of the state to deliver on any kind of contract with its citizens. It is not apocalypse that threatens development for countries that tolerate bad leadership, so much as a kind of living death. Crank up some Fela Kuti tonight, but listen to the words:
Zombie no go go, unless you tell am to go (Zombie)
Zombie no go stop, unless you tell am to stop (Zombie)
Zombie no go turn, unless you tell am to turn (Zombie)
Zombie no go think, unless you tell am to think (Zombie)

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