A Nigerian university don, Uche Uwaleke, a professor of Finance at Nasarawa State University has urged Nigerians not to worry over the looming exit of Shoprite Holdings Ltd from Nigeria.
The South African retail giant said last week that it was considering reducing or selling its entire stake in the Nigerian division. Talks about selling the operations have already even started at the time the company made its position known to the public.
“Following approaches from various potential investors, and in line with our re-evaluation of the Group’s operating model in Nigeria, the Board has decided to initiate a formal process to consider the potential sale of all, or a majority stake, in Retail Supermarkets Nigeria Limited, a subsidiary of Shoprite International Limited, the statement reads.
“As such, Retail Supermarkets Nigeria Limited may be classified as a discontinued operation when Shoprite reports its results for the year. Any further updates will be provided to the market at the appropriate time, the statement from the management read in part.
But while wondering what the net contribution of the continent’s largest food retailer is to the Nigerian economy, a university don said that Shoprite should not be a source of worry to Nigerians despite that Nigeria is in dire need of foreign direct investment.
Prof Uche Uwaleke, regretted that despite crowding on local competitors, the operations of Shoprite Holding Ltd in Nigeria have also contributed to dwindling foreign reserves through imports that serve to satisfy the appetite of wealthy Nigerians for foreign goods.
According to the analysis of the university don, who is a finance expert, mentioned that the right post-COVID-19 business opportunity Nigeria needs now is foreign direct investments (FDIs) in manufacturing, agriculture value chain, telecoms and IT and not businesses that promote the consumption of foreign goods and perpetually leave Nigeria as an import-dependent country.
Shoprite Holdings Ltd has recently struggled with supply-chain disruptions and faced challenges in getting money out of the country. Delays in clearing goods from Nigerian seaports, traffic congestion, and poor road accessibility have made it difficult for the Cape Town-based supermarket operator to get stock onto shelves. Nigeria’s economy is being ravaged by a slump in oil prices that have dried up dollar supplies and a naira that was devalued earlier this year.
After opening their shop in Lagos Nigeria in December 2005, the largest supermarket chain on the continent which had planned in early 2012 to eventually increase Nigeria number of stores to about 800 outlets – the number of retails outlet it has in Shoprite, is shutting down their shops in Nigeria unbelievably after managing 25 local corporate stores compared to South Africa’s 1,957.
An intelligence report from Lagos indicated that Shoprite was voting with its feet as the Nigerian business environment becomes more toxic, the middle class shrinking and the government harassing businesses to fill dwindling cash reserve. The actual size of Nigeria’s addressable middle-class market remains questionable, especially in the backdrop of the reality that nearly half of the country lives in abject poverty.
Shoprite Holdings Ltd, the owner of supermarket chains such as Checkers and U-Save opened its first outlet in Nigeria in 2005 and has been growing in 15 countries outside South Africa to become a continent-wide superpower with 2,319 corporate-owned food and liquor retail stores.
Woolworths Holdings Ltd, the South African seller of designer clothing and organic food, quit Nigeria in 2013, apparel retailer Truworths International Ltd, closed its last two Nigerian stores in 2016 and Mr. Price Group Ltd, said in June it was also leaving. MTN, Stanbic IBTC, and DSTV are other South African businesses operating smoothly in Nigeria.