This acquisition is one in a slew of mergers that have seen multinationals such asBut although the Pepsi acquisition and other mergers may be good for local economies in the short term, these deals can have a devastating effect on local business and, most significantly, the health of the continent in the long term.
Multinational food and beverage conglomerates have been experiencing slower growth in high-income countries due, in part, to higher competition, increased regulation and greater consumer awareness about the unhealthiness of some products. For these companies, Africa represents a growth market. Africa is undergoing a nutrition transition. This is a global phenomenon, particularly in low- and middle-income countries where people are switching from more traditional, healthy diets to highly processed foods. These foods, which are high in salt, sugar and fat, then lead to increasing rates of obesity and soaring epidemics of noncommunicable diseases such as diabetes and hypertension.
If all South African patients who needed treatment received it, it would cost R21.8-billion a year — that is, 12% of the national health budget. Worse, these costs are set to increase based on the current trajectory of the epidemic. Less wealthy African countries would be even harder hit and the effect would be devastating.
It is for this reason that many countries in Africa are at a disadvantage, in the courtroom and out of it, when fighting a large multinational. Taking on a company such as Pepsi, which would distribute unhealthy and processed food, would be no different.
The multinationals are also buying these companies at a huge discount based on the value of the rand and the current state of the South African economy.
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