Massmart will not hand over shares

The major retail store operation Massmart is still adamantly against foreign governments that demand that companies hand over a proportion of their shareholding to local owners. This followed CEO Grant Pattison having given a stern warning to Zimbabwean authorities two weeks ago that a proposed law compelling all companies to hand over 51% equity to local owners would force the retail giant to pull out. It runs Makro warehouse stores in Harare, the capital, and Bulawayo, the country’s second-largest city. “The thing we need from Zimbabwe is for them to agree whether it’s law or not,” Pattison said. “I would say, ultimately for Massmart, if the Indigenisation Act is left where it is, we will have to pull out.” In his comments about warnings for doing business in Africa, Pattison said a further consideration was the security offered over property rights. “We use property as the benchmark as to whether the country is ready for us. If we can’t negotiate commercial terms, if there aren’t locals prepared to put money into their own property, don’t go there,” he said. However, his threat to exit at a time when other SA companies are moving back into Zimbabwe was tempered with a heavy dose of pragmatism, according to an SA newsaper, pointing out that the company was already planning to sell its Zimbabwean operation, and had been made an offer back in July by an unnamed purchaser. This did not detract from the Massmart stance about any law compelling all companies to hand over 51% (or any other share of) equity to local owners, a spokesman told FTW. “We have a policy that we prefer 100% control of assets in foreign territories,” he added. “As a company we will not do business in any country that demanded a level of local ownership from foreign investors.” He also named the business with which Massmart has been having dealings on the sale of its Zimbabwe operation. “It’s OK Zimbabwe,” he confirmed.