Walmart

Ademola Adegbamigbe.

The Federation of Informal Workers’ Organizations of Nigeria (FIWON), representing millions of working people in the informal sectors of the Nigerian economy, has asked Walmart, the global retail trade giant, not to come and invest in Nigeria. Despite the optimism by many, the workers argued that ordinary people will suffer in the long run. The workers, in an open letter to President Muhammadu Buhari and Governor Akinwumi Ambode of Lagos State, signed by Gbenga Komolafe, General Secretary, said they are concerned because millions of retail businesses including street and market vendors, some of who happen to be their members face the threat of being displaced from business by this global behemoth.

Shelley Broader, President and Chief Executive Officer of Walmart Incorporated Europe, Middle East, Africa and Canada recently paid a visit to Governor Ambode in a quest to establish business presence in Nigeria starting with Lagos. Ambode welcomed the Walmart executives while pledging his commitment to create “an enabling environment” for the global retail company because “the presence of the brand in Lagos will go a long way not only to create jobs for our teeming youths, but also to boost the economy of the state…”

However, the workers disagreed. According to them: “As it is, millions of jobs have been lost in Nigeria in the last two decades as a result of Nigeria’s extreme open market policy which has turned the country to a dumping ground of, very often, fake, sub-substandard goods from all over the world especially, in recent years, China. Given Nigeria’s well known infrastructural deficiencies, Nigerian manufactured goods stood no chance as hundreds of factories closed down, rendering millions of Nigerians jobless or with low paying work in the informal sectors of the economy.”

Shelley Broader, President and Chief Executive Officer of Walmart Incorporated Europe, Middle East, Africa and Canada

They added that today, in a city like Lagos, easily Nigeria’s most industrialized enclave, over 80% of the working population scrape subsistence in the informal economy, a significant percentage of this, in retail trade in the neighbourhoods and the communities. Walmart, renowned for its dismal record of systematically easing out small time retailers in the communities because of its extremely low wage, undercutting low pricing policy which is made possible by its slave camp manufacturing plants in South East Asia, will, as the workers argued, easily uproot local retailers and neighbourhood markets in Lagos.

They said they were sure of the outcome because of Walmart’s bad records in the United States of America and also across so many other countries it operates in. Studies after studies have shown that while Walmart offers some low paying jobs, it actually uproots several more people from their retail business, than it offers its poverty wage jobs, the workers revealed.
They quoted Professor Richard Freeman of Economic Intelligence Weekly who, in an article “Walmart Collapses U.S. Cities and Towns” wrote that Walmart pays its American workers “sweat-shop wages, and enforces a worldwide system of concentration camp production plants, where some workers are literally kept as indentured servants.”

They cited David Merriman et al, in “The Impact of an Urban Walmart Store on Area Businesses: The Chicago Case,” who also wrote: “No matter which direction you go from Walmart, there’s a very high rate of business closures in the immediate vicinity, and the further away you get, there’s less and less.”

The workers presented a scientific study of Walmart’s impact on retail business, local economies and the overall negative economic externalities, conducted by Bill de Blassio, the Public Advocate for the City of New York, published in December 2013, entitled, WalMart Means Fewer Jobs, Less Small Businesses, More Burden on Taxpayers.
Below are key elements in the research:

“-Walmart store openings kill three local jobs for every two they create by reducing retail employment by an average of 2.7 percent in every county they enter.

-Walmart’s entry into a new market does not increase overall retail activity or employment opportunities. Research from Chicago shows retail employment did not increase in Walmart’s zip code, and fell significantly in those adjacent.

-WalMart’s entry into a new market has a strongly negative effect on existing retailers. Supermarkets and discount variety stores are the most adversely effected sectors, suffering sales declines of 10 to 40% after Wal-Mart moves in.

-Stores near a new Walmart are at increased risk of going out of business. After a single Walmart opened in Chicago in September 2006, 82 of the 306 small businesses in the surrounding neighborhood had gone out of business by March 2008.

-The value of Walmart to the economy will likely be less than the value of the jobs and businesses it replaces. A study looking at the estimating the future impact of Walmart on the grocery industry in California found that, “the full economic impact of those lost wages and benefits throughout southern California could approach $2.8 billion per year.”

-Chain stores, like Walmart send most of their revenues out of the community, while local businesses keep more consumer dollars in local economy: for every $100 spent in locally owned businesses, $68 stayed in the local economy while chain stores only left $43 to re-circulate locally.

-Walmart has thousands of associates (workers) who qualify for Medicaid and other publicly subsidized care, leaving taxpayers to foot the bill. For instance in Ohio Walmart has more associates and associate dependents on Medicaid than any other employer, costing taxpayers $44.8 million in 2009.

-According to estimates, Walmart likely avoided paying $245 million in taxes 2008 by paying rent to itself and then deducting that rent from its taxable income.

-Walmart has admitted a failure to pay $2.95 billion in taxes for fiscal year 2009.

-Walmart’s low paying jobs contribute to the decline of the Middle Class. Median household income declined by 1.8% nationally and 4.1% in New York City in 2009. This decline will be exacerbated by low paying Wal-Mart jobs.

-Walmart’s average annual pay of $20,774 is below the Federal Poverty Level for a family of four.

-A Walmart spokesperson publicly acknowledged in 2004 that, “More than two thirds of our people… are not trying to support a family. That’s who our jobs are designed for.”

-Walmart’s 2010 health care offerings have a high annual deductible of $4,400 which means a family would have to spend $5,102 of their own money on health care before Wal-Mart’s insurance pays anything. Based on the average salary of a Walmart employee, this payment represents almost 25% of their annual income.”

With these facts, the Nigerian workers argued that no wonder, till date, “Walmart is not allowed to operate in the state of New York while it had several issues operating in such countries as Brazil, Russia, India, South Korea etc.”

If Walmart impacts so negatively on an advanced economy like the US, what chance do we have in Nigeria? The workers asked. While acknowledging the need for government to utilize every avenue to create jobs for Nigeria’s teeming unemployed youths, the workers strongly hold that such a laudable desire when not carefully thought out could create unintended consequences that vitiate the noble intentions.

“It is in this light that we call on President Mohammadu Buhari and Governor Akinwunmi Ambode to seriously consider allowing Walmart in Lagos. At the very least, we urge Governor Ambode to do what the Public Advocate of New York did two years ago when faced with the pressure to allow Walmart enter New York, that is, conduct a comprehensive impact assessment of what will be the effect on local retail business if Walmart enters Lagos,” the workers said.