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American retail giant Walmart made a bet on Africa in 2011 by buying a majority stake in South African retailer Massmart in what many investors saw as a step towards dominating the continent’s vast untapped market.

More than a decade later, Massmart’s balance sheet is burdened with debt, its books are deep in losses and it’s drowning in lease obligations on commercial properties.

From its late entry into e-commerce to an ill-fated foray into fresh foods, Walmart’s African journey over the last decade has been a string of missteps, compounded by economic headwinds and the Covid-19 pandemic.

Walmart plans to bring its entire e-commerce enterprise and expertise into Massmart.

But instead of walking away, as it has from failures in Britain and Germany, Walmart is doubling down with a plan to take full control of its African problem child, which it unveiled in August.

The strategy — according to nine analysts, investors and sources with direct knowledge of Walmart’s plans — is firstly to build Massmart into a force able to see off its brick and mortar rivals and then win a looming battle against Amazon for the future of African e-commerce.

“Walmart plans to bring its entire e-commerce enterprise and expertise into Massmart,” said a source close to the buyout plan. “Big investment is required to keep it relevant.”

Delisting, the source said, will allow Walmart to make direct capital injections and swallow more losses without pressure from impatient Massmart shareholders, who have not received dividends in three years.

The prize: the world’s last, largely untapped retail market, boasting a billion consumers and growing household spending.

“We continue to see opportunity in Massmart and the impact the business can have, providing people across the region with greater access to goods and services they want,” Walmart International president Judith McKenna said in response to e-mailed questions this month. She did not provide further details on the company’s strategy in Africa.

“Walmart’s entry was going to be a new paradigm for African consumers,” said the source close to the buyout. “But that didn’t happen.”

Instead, Massmart’s units outside South Africa struggled with foreign exchange risk, tricky regulatory environments and macroeconomic volatility.

In South Africa, meanwhile, competitors upped their game, said Jean Pierre Verster of Protea Capital Management, which manages funds with exposure to Massmart shares.

“Walmart realised that other retailers in South Africa — the likes of Shoprite, Pick n Pay, etc — are very astute retailers and they can’t just push them over,” he said.

Game, Massmart’s underperforming general merchandise business, which sells everything from furniture to cellphones, was slow to develop an e-commerce offering, leaving it unprepared for a pandemic-induced boom in online shopping. And supermarket rivals handily fended off its push into fresh and frozen food.

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