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Picture courtesy: (Shell) Oil giant Shell consider to leave South Africa’s business market.
(The Post News)– South Africa faces a potential economic setback as global oil giant Shell considers exiting the market amid a dispute with its Broad-Based Black Economic Empowerment (B-BBEE) partner, Thebe Investment Corporation. This move could worsen the country’s already dire unemployment situation, which President Cyril Ramaphosa highlighted as a critical issue at the recent Black Business Council gala dinner.
Shell, which has been operating in South Africa for over 120 years, is embroiled in a dispute with its long-term BEE partner, Thebe Investment Corporation, over a R3.7 billion stake in Shell Downstream South Africa (SDSA). The disagreement began in 2022 when Thebe communicated its intention to activate its “opt-out” provision and sell its shares to reinvest in expanding the company.
Thebe Investment Corporation assessed its 28% stake at $200 million (R3.7 billion), based on figures provided by Shell. After an eight-month silence, Shell responded by allegedly reversing its position on the valuation, claiming Thebe’s stake held no value. Shell has issued a statement regarding the dispute, maintaining a stance of non-disclosure due to the sensitivity of shareholder agreements. “As a matter of policy and principle, Shell Downstream SA distances itself from speculation or rumours, particularly about confidential shareholder agreements and relationships. Out of respect for our partners and these agreements, we’re unable to provide any further comment currently,” the statement read.
The potential exit of Shell raises concerns about the impact on the country’s workforce. With approximately 94,000 employees globally, a significant presence in Africa, and over 600 petrol stations, the implications for South African workers are profound as the country grapples with a 32.1% unemployment rate as of the fourth quarter of 2023. The oil giant’s withdrawal could lead to a rise in unemployment, further straining a nation grappling with job scarcity. President Ramaphosa’s address at the Black Business Council underscored the importance of investment and job creation for economic transformation.
“The scourge of unemployment threatens to roll back our hard-won gains under democracy,” he stated. “I want to call on black business and on black industrialists, in particular, to be part of the effort to rebuild our economy. Without investment, there can be no jobs, and without job creation on a large scale, our prospects for achieving full economic transformation are diminished.” The potential withdrawal of Shell from South Africa raises questions about the future of job security and economic stability in the region.
It also highlights the delicate balance between corporate interests and the empowerment of historically disadvantaged groups through initiatives like B-BBEE. As the country awaits the next developments, the words of President Ramaphosa resonate with a sense of urgency and a call for solidarity among South African businesses. As the country navigates this challenging period, the resolution of the Shell-Thebe dispute will be closely watched for its broader implications for the economy and the livelihoods of millions of South Africans.
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