Aug 2, 2011
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S.Africa says Wal-Mart's supplier fund not enough

Aug 2, 2011

Aug 2 (Reuters) - Wal-Mart's planned $15 million fund to develop South African local manufacturers is not enough, South Africa's government said on Tuesday, a sign the country may want bigger concessions from the world's top retailer.


While legal experts have said the government has little legal room to overturn a completed transaction, it was not immediately clear if South Africa could re-negotiate conditions of the deal.

South Africa's anti-trust regulator approved Wal-Mart's $2.4 billion bid for control of local retailer Massmart in May with minimal conditions that include the creation of a 100 million rand ($15 million) to develop local suppliers.

The three government departments that have appealed the transactions, said on Tuesday the fund was not sufficient to offset Wal-Mart's impact on Africa's largest economy.

"A 100 million rand supplier development fund could pale into insignificance given the likely impact of substantial shift to imports by the merged entity," the departments of economic development, trade and industry and forestry and fisheries said in a joint statement.

The government wants Wal-Mart to increase the fund to 500 million rand, Business Report newspaper said last week, citing a government source.

Wal-Mart and Massmart have said the current appeals will have no impact their on-going implementation of the transaction.

The deal has been seen as a test for foreign investment in Africa's biggest economy, which is home to both the continent's most developed economy and some of its most militant labour unions.

($1 = 6.724 South African Rand)
(Reporting by Tiisetso Motsoeneng, Writing by David Dolan; Editing by Marius Bosch)

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