South Africa's firms trigger backlash in region

South African firms have been unable to avoid accusations of arrogance and exploitation – especially in retail, where some local businesses struggle to compete with more organized South African competition.

"We do create employment, and we do improve infrastructure and we do lower prices," argues David Robins, deputy chairman of Pick n' Pay, a Cape Town-based grocery retailer operating in Botswana, Namibia, and Zimbabwe. But, Mr. Robins acknowledges, "It's a perception thing.... [South African firms] have kind of moved in with a significant amount of brute force on the African continent."

While companies like Game and SAB-Miller have created thousands of well-paying jobs in countries with largely informal economies, Zambian unions grumble that South African companies often refuse to give workers the same benefits they would back home and often bring in expatriates as managers. Plus, a handful of firms took advantage of Zambian tax incentives for foreign investors but then left town.

Local businesses contend that some South African firms simply take their profits without partnering with local producers or investing in local infrastructure. "We're the ones with the property," notes Andrea Petsas, longtime general manager of Melissa Supermarket, a popular Zambian grocery store chain.

Politicians acknowledge these concerns. "It's not enough– there's still a lot being imported ... from South Africa," says Dipak Patel, who has worked to attract South African firms as Zambia's minister of trade and industry. And Zambia's parliament recently debated legislation encouraging greater participation by Zambian investors in foreign-owned enterprises.

Politics and long memories also color perceptions, however. Some Zambians who aided the antiapartheid movement are bitter that the South African government will not police its firms abroad – or send development aid along with corporate investment.

South African President Thabo Mbeki has walked a fine line, espousing lofty regional development goals but also quietly using initiatives like the New Economic Partnership for Africa's Development (NEPAD) to facilitate the expansion of South African firms and state-owned entities like power utility Eskom, analysts say.

Ultimately, South Africa's businesses will be crucial for regional development, says Ohene Nyanin, World Bank representative in Zambia. But they must acknowledge local sensibilities, he adds. "You need to manage perceptions."

The perceptions are pervasive enough that some South African lawmakers, academics, and business leaders are increasingly scrutinizing the behavior of South African firms in the region and asking whether their conduct – or at least their public relations efforts – can be improved.

Indeed, many firms are already working to improve perceptions. Cape Town-based Protea Hotels requires each of its hotels to implement a project that gives back to the host community, director Bernard Cassar stresses. He adds that Protea also builds the capacity of local management.

The University of Stellenbosch's Coetzee says the latter will be even more important, and pushes firms to establish local partnerships. "If South Africa is reaping the benefits of the private sector moving into the continent, what are we plowing back?" he asks.

And some South African politicians are saying that the government may need to weigh in with firms, lest accusations of corporate colonialism undermine their foreign relations throughout the continent.

"When we go out into Africa," Fatima Hajaig, a member of Parliament, argued at an Aug. 16 committee hearing in Cape Town, "we do have some sort of responsibility and so does the corporate sector."

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