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A wage dispute at Shoprite’s loss-making Tanzanian business was continuing, but staff had returned to work following a one day illegal strike, Whitey Basson, the chief executive, said yesterday.

July 31, 2008

By Tom Robbins

Cape Town – A wage dispute at Shoprite’s loss-making Tanzanian business was continuing, but staff had returned to work following a one day illegal strike, Whitey Basson, the chief executive, said yesterday.

Basson said staff returned to work on Friday after a court had ruled that the strike was illegal, but negotiations over pay were continuing.

Shrinkage and competition from smuggled goods made trading tough there, despite some recent progress.

Although the retailer has a muted outlook on its five stores in Tanzania, it has coped with the challenges of operating elsewhere on the continent and was producing its strongest sales growth there.

The group has 100 stores outside South Africa. In the year to June Shoprite sales outside South Africa were 38.3 percent higher, outpacing a 22.3 percent rise in total group sales.

The Tanzania Union of Industrial and Commercial Workers has also complained that foreigners employed by the supermarket group in Tanzania were paid more than locals. Basson dismissed this charge, saying it was “a storm in a teacup”.

Only three out of 410 staff were foreign and none of them were workers or middle managers. These senior staff were a South African general manager, a Zambian financial director and a Zambian buyer.

Shoprite staff were paid according to their skills, he said. Expatriates were more expensive to hire, as they expected additional benefits, such as housing.

Nevertheless, the allegation underlies a vulnerability to criticism that big South African corporates face from labour, businesses and governments in other African countries.

The Times of Zambia recently reported a government official’s appeal to Shoprite to buy more produce locally for stores in that country, as an incentive to develop the farming sector there.

Denny Lumbama, the permanent secretary of the North Western province, said this included pineapples, beans and honey. Produce was being exported to Europe and therefore was good enough for Shoprite, Lumbama reportedly said.

But Basson said that from both a price and supply efficiency point of view, Shoprite preferred local suppliers and was supporting this sector, which was underdeveloped.

Supply lines to Zambia, while faster than to some other countries, remained slow.

Following previous criticism from the government that the retailer did not source bananas locally, Basson said he had met with the president and the issue had been resolved.

He said that in general, co-operation with other African governments had been “excellent”, adding that the higher tax revenues that came with formalising retail were attractive to governments.

Neuma Grobbelaar, the head of the business in Africa programme at the SA Institute of International Affairs, said that generally governments welcomed South African investment.

Even Kenya, traditionally a less welcoming administration, had softened, she said.

The biggest opposition usually came from local businesses, which feared losing out to South African firms.

South African firms had learnt to develop a good understanding of local dynamics before investing, she said.

They generally had a good track record of hiring and training staff from investment destination countries. There were cost benefits to hiring locals, who understood their own markets better.