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Apr 9, 2014
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South Africa's Massmart to enter Angola with two stores

Apr 9, 2014

Johannesburg, South Africa - Massmart, South Africa's No.4 retailer by market value, plans to enter oil-rich Angola with two stores by 2015, a senior executive said, as the unit of Wal-Mart expands on a continent that is still largely an informal retail market.

Speaking at the Reuters Africa Investment Summit in Johannesburg, Mark Turner, Massmart's Africa director, said one store would open in the first quarter of next year and the other in the third quarter.

"We've got two deals that are coming off the ground in Angola, which is a country on the southern part of Africa that we're not represented (in)," Turner told the summit.

Another two stores would be opened in Angola in 2017.

Massmart, which operates in 11 sub-Saharan countries such Nigeria, Tanzania and Ghana, has been pushing further into the rest of the continent that is forecast to be home to 2 billion people by 2050, to offset slowing growth at home.

Turner also said the company - 51 percent owned by Wal-Mart Stores Inc - was building its first store in Kenya after failing to clinch unspecified acquisitions that would have given it a substantial footprint in east Africa's biggest economy.

The low margin, high volume retailer that sells everything from electronics products to food is also scanning French-speaking countries such as Senegal and Cameroon for opportunities.

Although lucrative, Ethiopia was out of the question because laws there do not allow for foreign retailers, Turner said.

Even though African per capita incomes are among the lowest in the world, a decade of robust economic growth and rapid population expansion have attracted the attention of retail and services executives around the world.

Coupled with relative political stability, a rising middle class, rapid urbanization, and slower growth in Europe and South Africa, the logic of setting up shop elsewhere in Africa is not in doubt - provided companies do their homework.

"Going into Africa is not cookie cutter, if it was more cookie cutter we could roll out a lot quicker, but it's not," Turner said. "It's really getting into those markets and understanding them."

Massmart's rival Woolworths pulled the plug on its Nigerian business late last year, citing poor supply chain infrastructure, high rents and duties and the difficulty of marketing to consumers.

Turner said it could take at least two months for imported goods to reach shelves in many east African countries, highlighting ports congestion, compared with up to eight days in southern African countries.

Massmart imports about 20 percent of its products to Nigeria, which on Sunday surpassed South Africa as the continent's biggest economy after a rebasing calculation.

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