Walmart Goes All In on Africa
JOHANNESBURG—Walmart’s investment in Africa tanked. It is responding by doubling down. More than a decade ago, Walmart spent $2.4 billion to buy a controlling stake in South African retailer Massmart, which also had operations in a dozen other sub-Saharan countries.
At the time, executives in Bentonville, Ark., hailed the acquisition as Walmart’s entry into the world’s youngest continent and one of its fastest-growing consumer markets, which was booming amid record commodity prices. But Walmart hasn’t been able to cash in. First the 2014 commodities crash, then the pandemic and now the fallout from the war in Ukraine—including high inflation and plunging local currencies—have stopped African consumers from spending big.
Massmart closed its stores in Nigeria, Ghana, Tanzania and Uganda last year and shuttered an underperforming electronics chain in March 2020. After years of lackluster sales, in mid-2022, Massmart’s shares had plummeted by about three-quarters from 2011, and it was far underperforming its peers in the South African retail sector. Despite these setbacks, Walmart chose to go all in.
Late last year, it bought the 47% of the retailer that it didn’t already own for 6.4 billion South African rand, then equivalent to about $358 million, a fraction of what it shelled out for the initial stake. The retail behemoth also delisted Massmart from the Johannesburg Stock Exchange. Walmart’s renewed bet on Africa comes after a string of disappointing forays into international markets.
In 2020, Walmart threw in the towel on Japan after 18 years, agreeing to sell most of its stake in a local supermarket chain, resulting in a loss of about $2.1 billion. That same year, Walmart agreed to sell U.K. grocery-store chain Asda to
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