From gleaming shopping malls in downtown Nairobi to gold mines buried deep in the Congolese jungle, South Africa is flexing its corporate muscle on the world’s poorest continent.
South African shopping chains Shoprite and Pick ‘n Pay bring choice and price stability to African market places, while millions have made their first phone call thanks to cellular operators MTN and Vodacom.
Mining giants like Anglo American from South Africa — which accounts for a third of the continent’s gross domestic product — create thousands of jobs, spurring small African economies and boosting government tax revenues.
But despite all this, Africans are increasingly accusing South Africa’s corporate juggernauts of exploiting their resources, abusing their workforces and behaving just like the Western colonial powers before them.
”Some people are already talking about South African [corporate] imperialists,” said Francis Ikome, senior researcher at South Africa’s Institute for Global Dialogue.
”There is a perception that South African companies are abrasive and exploitative…there are perceptions of arrogance, as though they are doing the rest of the continent a favour.”
Locals struggle to compete
Zambian grocer John Mwanza is a case in point.
Shoppers in Lusaka who once had to traipse between ramshackle market stalls can now snap up a range of household goods at South Africa’s Game — owned by Massmart — or a week’s worth of groceries at Shoprite’s Checkers supermarket.
Shopping at these stores is cheap and convenient, and the choice of goods is rich. But it’s bad news for local traders like Mwanza.
”The coming of Shoprite to Zambia has disadvantaged us because [customers] buy goods directly from producers while we purchase ours from wholesalers,” said Mwanza, who owns a grocery shop in a Lusaka suburb where Shoprite has an outlet. ”This tends to make our prices higher … which puts us out of business.”
Another common complaint is that South African companies procure goods from home instead of from local suppliers, undermining the local manufacturing base.
”Tanzanian companies want things to be sourced locally so that there’s a link between small and medium enterprises and these major organisations,” Elvis Musiba, president of Tanzania Chamber of Commerce, Industry and Agriculture, told Reuters.
Corporate bullies?
At least 92 of South Africa’s top 100 listed companies do business in Africa, investing R32,3-billion ($4,17-billion) in 2003, compared to R8-billion in 1996, according the Reserve Bank.
Analysts say South African companies do more good in Africa — in terms of creating jobs, bringing new skills and improving quality of goods — than bad.
South African brewing giant SAB Miller, for example, increased government tax revenues sevenfold in 2003 just by taking over three breweries. But two recent studies by South African research institutes found the country’s companies are nevertheless perceived as bullies on the continent.
South African firms are not alone in fostering resentment in Africa — Zambian copper miners rioted earlier this year over Chinese labour practices. But the fact South Africa does not sweeten business dealings with aid dollars — unlike Europe, China or the United States — makes bad behaviour tougher to stomach.
”We need to make it clear that South African companies can’t just waltz into Africa and do what they want,” said Neuma Grobbelaar, who heads a research project on business in Africa at the South African Institute of International Affairs.
Some African governments have introduced their own rules to ensure the fruits of foreign investment trickle down to local people.
In Botswana and Namibia, foreign companies who want to do business with the government must sell a stake in their domestic operations to local investors.
South African IT firm Dimension Data this year sold 49% of its Botswana business to local players while insurer Old Mutual sold part of its Namibian unit to black Namibian investors.
Ikome, of South Africa’s Institute for Global Dialogue, supports these measures on race grounds. While South African firms focus on drafting black executives and investors at home to meet government quotas, they often fail to do the same elsewhere.
”Most are white,” he said of the executives of South African firms working in other African countries. ”They are fighting a racial imbalance at home but exporting it abroad.”
But Grobbelaar said more rules could deter investors — who must already circumvent unwieldy red tape and logistics. And she reckons South African companies will increasingly team up with local players as they settle into their new markets, purely because it makes good business sense.
Mobile operator Vodacom, joint owned by Telkom and Vodafone, said local knowledge was key when it launched networks in Tanzania and Democratic Republic of Congo and helped defuse resentment over South African ”colonialism”.
”You need local partners and local shareholders,” chief operating officer Pieter Uys said in a telephone interview. ”If you don’t then you are lost — you don’t understand the local culture and you don’t know who’s who in the zoo.” – Reuters