Walmart’s Massmart takeover sparks US interest in Africa

NORTH American investors have seen the successful takeover of South African retailer Massmart by US giant Walmart as a signal that investing in Africa is a valuable proposition.

Africa is seen as a major investment frontier because of its young population, untapped resources and economic instability in other regions such as the European Union, African Venture Capital Association CEO Michelle Essomé said in an interview on Friday.

The North American interest in African businesses had only developed recently.

Ms Essomé said this did not mean that investors would be flocking to Africa. "It takes time, but African leaders are starting to communicate better with investors.

"We have noticed express interest from American companies since the Walmart purchase of Massmart."

The South African government had initially expressed reservations about the $2.4bn takeover, saying in 2011 that it would destroy jobs and lead to a decline in local manufacturing and production. But the deal went ahead with conditions.

One of the conditions was that the government and the merging companies should set up a study on how smaller companies could participate in Walmart’s supply chain.

Massmart corporate affairs executive Brian Leroni said he could not comment in detail on how Walmart had influenced Massmart’s performance as it was in a closed period.

But Mr Leroni did say there had been a positive effect. "There are numerous benefits associated with the merger with Walmart, which include benefiting from Walmart expertise as we develop our new retail food supply chain."

Further, Massmart had benefited from adopting Walmart’s supplier planning processes to improve merchandise availability and the local farmer development programme to improve fresh food supply chain efficiency.

Innovative product promotions were another benefit Massmart had enjoyed. An example of this was the ten-week extended price cut promotions that generated in excess of R300m savings for consumer savings.

Ms Essomé said various American companies were interested in developing infrastructure and working in various sectors in Africa, especially in oil and gas. But investors from developed countries still believed there could still be too much state interference in business affairs on the continent.

http://www.bdlive.co.za/world/africa/2013/02/15/walmarts-massmart-takeover-sparks-us-interest-in-africa

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Foresight Africa: Top Priorities for the Continent in 2013

Africa starts 2013 with hope and optimism. Africa has dropped its mantle as a “doomed continent” and has weathered several global economic crises fairly well. Today, the continent is a land of opportunity both for Africans and international investors. Many now see the region as “emerging Africa” because of the positive changes that have taken place and continue to take place across the continent.

Africa has changed, moving from economic stagnation to above 5 percent GDP growth on average. The continent is now home to some of the fastest growing economies in the world: Ethiopia, Ghana, Mozambique and Tanzania. This growth has helped build a burgeoning middle class, which has created new markets for goods and services. Investors focused on tapping into these new markets in Africa are likely to find it easier to do business there than ever before as African governments are working to reduce transaction costs. In addition to growing consumer markets, African countries have discovered additional natural resources. If managed properly, these resources could help spur further economic growth and development for the region and improve the lives of millions.

Such an optimistic outlook for the continent means that African and global policymakers must get ahead of the challenges and opportunities for an important year of decision-making. Since 2010, the Brookings Africa Growth Initiative (AGI) has asked its scholars to assess the top priorities for Africa in the coming year. This year, AGI experts and colleagues have identified what they consider to be the key issues for 2013 and ways to leverage opportunities so that Africa can continue its “emerging” momentum. The following briefs in the Foresight Africa collection are meant to create a dialogue on what matters in Africa for 2013, and it is our hope that this dialogue will continue through the year.

Download the full 2013 Foresight Africa report » 

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