Online Annual Report 2009

African operations

Local citizens are well represented within our store management structures, but we need to do more to establish minimum social and environmental accountability standards.

African operations scorecard as at June 2009

Local employees as % of total headcount
Local management as % of total managers
Local executive store managers as % of total executive store managers
HIV/Aids prevalence as % of total headcount
Productivity lost to malaria as % of total workdays
Local procurement as % of total procurement
Corporate social investment as % of PAT
Customer Satisfaction Index
Purchased electricity consumption
Penalties for legal non-compliance (No. of incidents)
1 Missing a
tax deadline

Scorecard commentary

This year is the first that Massmart is formally reporting sustainability performance in our African operations. Our main goal is to fully implement, in other countries, sustainability policies that set minimum social and environmental accountability standards. We’ve been slower at doing this than we would have liked and, for example, our tracking of HIV/Aids prevalence among staff in our African operations is poor. In addition we’ve missed the target we set ourselves for investing 1% of profit after tax in social upliftment initiatives.

We are also concerned that we don’t have a comprehensively researched understanding of the impact that our stores have on the social and economic fabric of the countries in which we operate. This inhibits our ability to find opportunities to minimise negative and optimise positive impacts.

These failures are of great concern to us because they could potentially exacerbate established negative perspectives that some stakeholders in host countries have about the conduct of South African companies operating within their borders. We’re therefore aiming to identify and correct our shortcomings so that we achieve a better understanding of the impact of our stores, as well as full compliance with agreed minimum standards in all foreign operations by 30 June 2010.

While we are dissatisfied with our overall performance, we have enjoyed some modest successes. One of these has been an embryonic initiative to improve local suppliers’ ability to enter into supply contracts with Game stores. As a result of our extension of preferable payment terms to emerging local suppliers, procurement within foreign African operations has increased from 11% in June 2008 to 19% in June this year. Our goal is to achieve 25% by June 2011.

We’re also making in-roads in securing local people for management positions in our stores. Of all managers in our foreign African operations, 86% have been recruited from local communities. In addition 50% of all executive store managers have been sourced from local communities, although we feel that we can do better in this area through an improved succession planning process, which is currently being developed.

In terms of carbon reporting although we track energy consumption, we have been unable to make an accurate assessment of our energy intensity in some regions. This is mainly due to difficulty in accessing power consumption data in countries such as Ghana, Tanzania, Botswana and Zambia. Our annual energy intensity in the rest of our foreign African countries is approximately 218 kWh/m2. Encouragingly, our Malawian and Mozambique electrical power requirements, accounting for around 991 kWh/m2, are being provided by ‘green’ hydroelectric sources.

Massmart is committed to:

Increase local procurement to 25% of total procurement by June 2011.

Increase local executive store managers to 75% of total executive store managers by June 2011.