Tuesday, November 30, 2010

People of South Africa threaten to go on strike

Walmart offers R17bn for Massmart

30 November 2010

Massmart has received written notice from US firm Walmart of its firm intention to make an all-cash offer to acquire a 51 percent stake in the South African retailer.

Massmart's board said on Monday that it was "unanimous" in support of the proposed deal, which would see Walmart pay R148 per ordinary share, but that it still needed the support of a two-thirds majority of shareholders and the South African authorities.

The board said the offer from Walmart had followed a rigorous due diligence process.

"There are still a number of important conditions that need to be fulfilled before the transaction can be implemented. These include amongst others two thirds majority shareholder support (75 percent) and approval from the South African competition authorities."

"The Massmart board has considered the terms of the offer and the opinion of [bankers] Morgan Stanley, the independent advisor and is unanimous in its support for the proposed transaction. The total transaction is valued at approximately R17-billion for 51 percent of Massmart," the retailer said in a statement.

It said offers on comparable terms were being extended to the beneficiaries of the employee share trust, the Thuthukani trust and the black scarce skills trust.

"These offers will be inter-conditional with the offer to ordinary shareholders."

Strong growth potential

Massmart CEO Grant Pattison said the offer was a sign of confidence in the local economy and could create new jobs: "This is a milestone in Massmart's history and is a vote of confidence not only in Massmart and our employees, but also in the strong growth potential of South Africa and the continent," he said.

"If approved, the transaction promises to be very positive for the regional economy, facilitating job creation, providing new opportunities for small and medium businesses and improving competitiveness.

"In gaining access to Walmart's experience and capabilities, we expect to be able to offer consumers an even wider selection of products that are competitively priced and more consistently available, delivering an improved customer experience across all our stores."

Union deals 'to be honoured'

Pattison said Walmart had undertaken to respect existing agreements with trade unions, who had been opposed to the deal given the firm's reputation for being at loggerheads with labour in the United States.

"We reaffirm Walmart's commitment to honour existing union agreements and to maintain our broad-based black economic empowerment credentials, working diligently with all parties to grow skills, create jobs in the retail industry, advance transformation and further socio-economic development initiatives," he said.

Walmart's interest in acquiring a share of Massmart was announced to the market on 27 September.

The SA Commercial, Catering and Allied Workers Union had threatened to go on strike if the deal went ahead. Saccawu this month handed Pattison a set of demands pertaining to the proposed deal, including that employment conditions and agreements remain intact.

Economic Development Minister Ebrahim Patel had also set up a panel to advise the government of the likely implications of Walmart's bid.

South Africa considers its options to tackle HIV/Aids over next 20 years

A new report, commissioned by the South African government, outlines three scenarios for tackling HIV/Aids in the country over the next two decades. Political will and donor funding will determine which the government opts to pursue

HIV vaccine
A volunteer is injected with an African-produced HIV vaccine during trials in Cape Town earlier this year. Photograph: Rodger Bosch/AFP/Getty Images

There are more people living with HIV/Aids in South Africa – 5.7 million - than anywhere else in the world. It hasn't got the highest prevalence – that unfortunate title goes to Swaziland, with one in four people infected (among women that amounts to a shocking 31%, compared with 20% among men). But South Africa has a huge mountain to climb to treat its people and protect those who are not infected – half a million become HIV positive every year.

There is every sign that the South African government is going to do all it can. Gone are the doubting days of Thabo Mbeki and his lemon and garlic-advocating health minister, Manto Tshabalala-Msimang. The present government has allocated increasing amounts of money to HIV prevention and treatment and obtained some grants from the US president's emergency fund for Aids relief (Pepfar) and smaller amounts from the Global Fund to fight Aids, TB and malaria.

South Africa is a middle-income country, not poverty-stricken on the scale of much of sub-Saharan Africa. It can fund some of its own response to the epidemic, but clearly the costs could be enormous at a time when every government is struggling to make ends meet. How to tackle it and how much money to spend, not just immediately but for the future, are huge issues.

A major inquiry has now been carried out by the aids2031 South Africa project at the request of the South African government. This is an investigation by the Cape Town-based Centre for Economic Governance and Aids in Africa with the Results for Development Institute from Washington DC. South African government officials sat on the steering committee. Their report paints three different scenarios for South Africa. It's not the good, the bad and the ugly. Nothing is so simple. The options on offer here are dubbed narrow, expanded and hard choices and it takes the long view, examining what shoould happen over the next 20 years.

Essentially, the narrow option is where South Africa's current Aids plan will take it. Between now and 2031, that will cost R658bn, which is US$88bn. The number of new infections will fall, but only gradually, to about 350,000 a year.

The expanded option is ambitious and has greater focus on prevention. Male circumcision programmes would be introduced, but also behavioural change initiatives, to reduce violence against women and empower commercial sex workers. There would also be some initiatives to reduce poverty and an increase in condom distribution and voluntary HIV counselling and testing. The total cost over the 20 years could reach R765bn, or US$102bn, but new infections would fall to less than 200,000 a year.

The hard choices programme envisages the government taking the difficult decision to focus on what works best, at a time of financial austerity. Male circumcision would be rapidly scaled up, but some other interventions, for instance to help orphans and vulnerable children, would be curtailed. It's the cheapest option, at R598bn, or US$79bn, but new infections would still fall to 225,000 a year, the group says.

The expanded scenario is clearly the best. This is what the report says:

"If considerably greater political will and financial resources can be mobilised and the South African society can be motivated to adopt important social and behavioural changes... a powerful change in the epidemic could occur, with lower rates on infection and mortality.

"If the financial resources for HIV/Aids are highly constrained and political backing remains strong but more moderate than under the expanded... scenario, then the more targeted approach under the hard choices is still an attractive alternative to the status quo."

Robert Hecht, one of the authors and managing director of Results for Development, pointed out that South Africa funds 70% of the US$2bn spent on HIV/Aids in the country itself. But South Africa will need donor help to get through a substantial scale-up, and donors, in these straitened times, may feel they should be helping the poorest countries more. The report offers a powerful argument for helping South Africa too.

"They need to get through this period of rapid increase in spending need, allow the donors to feel they are addressing the most significant HIV/Aids epidemic anywhere in the world and justify to their own population that the money is well-spent," he says, adding: "We don't want this to be a report that sits on the shelf."

On the government side, Mark Blecher, acting chief director, health and social development at the Treasury, who was co-chairman of the steering committee, said he thought it was "a valuable report... it suggests we need to keep accelerating our programmes quite rapidly".

He hopes that Pepfar and the Global Fund can be encouraged to support South Africa's scale-up of treatment and prevention for the next five years. If they do, the report suggests that the epidemic may level off to a point where the South African government can find most of the resources itself.

So which scenario will the government choose? Blecher hedges. "We need more thinking on that," he says. Undoubtedly. This is about political will as well as persuading the donors to help and there are few governments that engage in policies for the long-term. Twenty years is a very long time in politics. So even thinking about it should be warmly applauded.