Before Wal-Mart Comes to Nigeria

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Recently, the Governor of Lagos, Nigeria’s most cosmopolitan State, was full of smiles and excitement as he hosted regional executives of America’s global retail chain, Wal-Mart. Governor Akinwunmi Ambode rolled out the red carpet and literally gave the Wal-Mart envoys a blank cheque of support from the Lagos State Government for the anticipated anchoring of Wal-Mart’s ship on Lagos and, definitely, Nigeria’s shores. The Governor made an obvious argument regarding the status of Lagos as Africa’s most populous city and viable market. He also showed excitement at the prospect of employment opportunities for Nigerians that will come from Wal-Mart’s imminent joining of other burgeoning global and regional retail chains already in Lagos.

The vastly reported news of Wal-Mart’s plan to branch into Nigeria – Africa’s largest economy – through Nigeria’s commercial hub of Lagos is a game changer for all actors in Nigeria’s retail landscape. But beyond the obvious, the reception accorded to Wal-Mart and the support that has been pledged to it is typical of Africa’s race to the bottom in the search for foreign direct investments (FDIs). Wal-Mart will naturally revel in the over-advertised trump card of the transnational corporate establishment as a mega employment generator. African governments have been known to not interrogate or scrutinize these assurances, which they often habitually over compensate to the detriment of national interest. And foreign direct investors expectedly play the script well since they are regularly courted across the continent in a zero sum competition game. It is simple: “If you do not make it ‘conducive’ for us to invest in your country, we will go elsewhere. After all, we are in a globalized economy”.

But more constructive engagement is necessary for Nigeria and particularly Lagos in this case. If not for anything, for the very obvious – Nigeria has a distinctive factor endowment as Africa’s largest economy and arguably the continent’s largest skilled middle class. Wal-Mart comes with a negative and not-so-negative reputation. On the face of it, the Wal-Mart brand has incredible, value-chain development potential. But Wal-Mart does not have an enviable profile in regard to its dealings with the desk-end employees it habitually confines to minimum wage. That is also the unwritten argument that such jobs are not for life. This is the reason Wal-Mart remains the contemporary global face of historic tension between capital and labour.

In a country, where the labour laws exist mainly on the books, will Wal-Mart exploit Nigeria’s situation or rise to the challenge of corporate responsibility and international best practices? The argument of job creation recalls the same arguments of transnational agricultural corporations that grab vast agricultural land across the African continent. As soon as they displace subsistent farmers from their ancestral lands, the only jobs created are those for a handful uniform-wearing, walkie-talkie-clutching security men, a few tractor drivers, and hordes of cleaners, chauffeurs and domestic aides. The ceding governments often have no plan for absorbing the displaced informal agricultural communities, especially women!

Yet it is possible to engage Wal-Mart and similar travelers on the FDI highway. In specific regard to Wal-Mart, Nigeria’s nook and cranny can serve as viable supply chain for Wal-Mart’s wares in contrast to the retail giant’s excessive dependence on China-made goods. Looking inwards is a win-win that would ultimately support qualitative employment and local entrepreneurship. Beyond allotting Wal-Mart privileged real estate in Lagos and other urban centers, in addition to extra juicy inducements of FDI, governments should insist upon qualitative quid pro quo arrangements through creative expatriate quota laws and indigenous-friendly regulatory regime.  They should demand from Wal-Mart a strategy for developing and grounding their supply chain within the host country. From Oron, Amazano, Elele, Ntigha, Umunede, Ijebu Igbo, Otta, Ikire, Effon-Alaiye, Iseyin, Kafanchan and Malunfasi to all parts of Nigeria’s hinterlands. There is youthful energy for agriculture and various aspects of local entrepreneurship can key into Wal-Mart’s supply and value chain. This suggestion has greater economic ramification for Nigeria than Wal-Mart’s addiction to China as the supplier of its wares. With its global network and expertise, Wal-Mart can put itself in a position where it will bridge the gap in packaging, transportation and preservation of goods from Nigeria’s hinterlands to its cosmopolitan centers.

Within that confluence of manufacturing, distribution and retail, Wal-Mart can creatively be a catalyst for authentic and empowering job creation in Nigeria. But that will not be the case if all it has to offer are ‘T’ shirts from Indonesia or India, belts and handbags from China, apples from Annapolis Valley, bananas from Dominican Republic, pistachios from California, coconuts from Jamaica, etc.  Let the Wal-Mart in Nigeria be a Nigerian Wal-Mart. That desire neither belies the reality of globalized retail market nor does it underestimate Nigerians’ taste for all things foreign. Rather, it reinforces Nigeria’s comparative advantage in the manufacturing and supply of specific items for integration into the global retailer’s supply chain with opportunity for blending Nigerian branded products and even services into Wal-Mart’s global reach.

Another peculiarity of a Nigerian Wal-Mart is that it would inevitably diverge from the brand’s low price and egalitarian customer appeal. In Nigeria, Wal-Mart will be for the urban middle and upper class. Perhaps, rightly so; in the light of the incredible gulf between the rich and poor in Nigeria for which Wal-Mart’s wares and services would be priced out of the reach of the poorest of the poor. Add to that, the inaccessibility of slum dwellers to the retailer’s predictably choicy locations in increasingly segregated Nigerian mega urban centers. Like other game changers, Wal-Mart would be a disruptive influence on Nigeria’s informal retail landscape and the country’s informal economic hinterlands. For as long as our governments are incapable of providing solution to mitigate such disruptions, let Wal-Mart remain in Lagos, Port Harcourt, Abuja and Kano.

Nigerian governments and regulators should ensure they do not allow Wal-Mart and its ilk to play into the long-held but skewed philosophy of American monopolists: “that strength gives the strong in the market the right to destroy its neighbor,” those that are weaker. Wal-Mart in Africa must be prepared to operate with a commitment to balance wealth with the commonwealth, a lesson long lost to corporate America, but which must form a foundation for the new corporate-driven, commercial, and economic transformation happening across Africa.

In : Lagos

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