More than a decade ago, Walmart spent $2.4 billion to buy a controlling stake in South African retailer Massmart, which also had operations in a dozen other sub-Saharan countries. At the time, executives in Bentonville, Ark., hailed the acquisition as Walmart’s entry into the world’s youngest continent and one of its fastest-growing consumer markets, which was booming amid record commodity prices.

But Walmart hasn’t been able to cash in. First the 2014 commodities crash, then the pandemic and now the fallout from the war in Ukraine—including high inflation and plunging local currencies—have stopped African consumers from spending big. Massmart closed its stores in Nigeria, Ghana, Tanzania and Uganda last year and shuttered an underperforming electronics chain in March 2020.

After years of lackluster sales, in mid-2022, Massmart’s shares had plummeted by about three-quarters from 2011, and it was far underperforming its peers in the South African retail sector.

Despite these setbacks, Walmart chose to go all in. Late last year, it bought the 47% of the retailer that it didn’t already own for 6.4 billion South African rand, then equivalent to about $358 million, a fraction of what it shelled out for the initial stake. The retail behemoth also delisted Massmart from the Johannesburg Stock Exchange.

Walmart’s renewed bet on Africa comes after a string of disappointing forays into international markets. In 2020, Walmart threw in the towel on Japan after 18 years, agreeing to sell most of its stake in a local supermarket chain, resulting in a loss of about $2.1 billion. That same year, Walmart agreed to sell U.K. grocery-store chain Asda to a private investment group, resulting in a $5.7 billion loss. The company also sold its retail operations in Argentina, recording a $1 billion loss.

Walmart has said these were deliberate choices to focus on businesses that showed the highest growth and return potential in the long term.

Walmart has operations in 19 countries, including the U.S. Walmart International recorded net sales of $101 billion for the year ended Jan. 31, flat from the same period a year earlier and down 17% from fiscal 2021. International stores accounted for 17% of Walmart’s net sales of $606 billion in fiscal 2023.

Joe Feldman, a research analyst at New York-based brokerage Telsey Advisory Group, said Walmart has a good record in developing markets with a growing middle class, pointing to Mexico, Latin America, India and China as countries where the retail giant is doing well.

“The African market, that makes sense to me,” he said. “By owning Massmart fully, it allows them to have more control and get a little more aggressive in accelerating change.”

In January 2020, Massmart launched a turnaround plan that included selling some assets to a larger local competitor and exiting the fresh food business. Still, Walmart injected 4 billion South African rand into Massmart during the pandemic and after the country’s worst rioting since the end of apartheid, as waves of lockdowns pummeled South Africa’s fragile economy. 

Walmart has installed its own executives into key roles in an effort to boost Massmart’s fledgling online sales. Sylvester John, Massmart’s head of e-commerce, joined in 2020. He formerly oversaw last-mile delivery at Walmart U.S. Jonathan Collins moved over from Walmart’s Indian e-commerce giant Flipkart to become financial chief in August. 

Massmart’s e-commerce sales comprise just 3.7% of overall sales. In the U.S., Walmart’s e-commerce sales make up 13% of total net sales, while e-commerce comprises 20% of total international net sales.

Analysts and retail executives say some of the challenges in Africa include the relatively high cost of mobile data when most people only access the internet via their phones, as well as constraints on last-mile delivery to much of the continent because of a lack of basic infrastructure. In addition, the South African retail market is quite competitive, with numerous established players, analysts say.

Massmart now has nearly 300 full-time tech specialists—up from 28 in 2021—who specialize in areas such as software development, product operations and analytics, at Walmart’s tech hub in Bangalore, India, to help build out the company’s e-commerce platform. In October, the company started using Walmart’s proprietary software, which digitizes and optimizes the picking, packing, staging and distribution of online orders, at its Makro chain of wholesale stores. The app was built by Walmart and adapted for Massmart.

“We feel we’ve got a lot of different pieces of the puzzle,” said Kieran Shanahan, formerly regional chief executive for Walmart International, who worked closely with Massmart on strategy and performance. In August, he took up the role of chief operating officer at Walmart U.S. 

Shanahan is another e-commerce specialist: As vice president for online grocery in the U.S., he pioneered Walmart’s online grocery pickup and delivery service. “The challenges [in Africa], I think we can overcome,” he said. 

In 2011, Walmart paid 148 South African rand a share for its initial stake. Last year, it paid 62 rand a share for the rest, a premium of more than 50% to where shares were trading when it made the offer. Analysts say the precipitous slide in the value of the South African rand, which drastically reduced the cost in U.S. dollars, made the move a no-brainer. 

“Although the money spent is relatively small in Walmart’s greater business, walking away today would’ve meant losing all that local knowledge and probably never coming back to Africa again,” said Philip Short, global equity analyst at Flagship Asset Management in Cape Town, South Africa.