Shoprite Exit: South Africans, Nigerians React, Say ‘SA Companies Seeing Flames Everywhere’
The planned exit of South Africa retail giant, Shoprite, from Nigeria has sparked reactions on social media from South Africans and Nigerians, among others.
Shoprite Holdings Limited had on Monday announced that it may close shop in Nigeria despite recording 6.4% overall increase in sales of merchandise (R156.9billion) in the last 52 weeks.
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“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. As such, Retail Supermarkets Nigeria Limited may be classified as a discontinued operation when Shoprite reports its results for the year.,” read a report issued by the company.
The company, which operates a chain of over 2,900 stores in 15 countries across Africa and the Indian Ocean Islands, said it may discontinue its Nigeria operation, “following approaches from various potential investors, and in line with our re-evaluation of the group’s operating model in Nigeria.”
The move came as a surprise to many South Africans and Nigerians who took to social media to give different interpretations to the retail giant’s planned exit from the country.
A tweet by South Africa-based financial analyst, Koshiek Karan, had ignited the debate on probable reasons for Shoprite’s decision to shut down in Nigeria.
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Kara (@iamkoshiek) had suggested that Shoprite’s decision was a testimony that South African-listed companies find it challenging to do business in Nigeria.
But a Nigerian chartered accountant and founder of The Money Africa, Oluwatosin Olaseinde, disagreed with Karan and noted that other South Afriacan businesses such as MTN Nigeria were doing well in the country.
Olaseinde noted that between January and June, 2020, MTN Nigeria made N638 billion, adding that, “that’s 12.5% higher than the N566 billion it made from January to June 2019.”
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Some who tried to explain the reason for Shoprite’s exit from Nigeria tied it to the company’s challenge in repatriating its revenue to South Africa amidst “the continual devaluation of the Naira.”
Others, who also reacted to Karan’s tweet, suggested that the purchasing power of the middle class in Nigeria was dwindling at a very fast rate, thereby decreasing residents’ patronage of supermarkets.
Others however believe that the coronavirus (COVID-19) pandemic and lockdown of borders may have prompted the company’s decision, as it allegedly prevented the retailer from moving goods from one region to the other. Below are Twitter reactions specifically from South Africans:
@Pheladimohlala1: “It’s not about finding it difficult, Nigeria is notoriously corrupt. A few years ago they fined MTN $5bill US for not meeting Rica deadlines. Who does that? You can see gore they just want to milk foreign investors for everything they have. That’s not how you do business.”
@Vusi0077: “But South African companies have been seeing flames everywhere in the globe except here at home. There’s a reason for that. These companies here are scamming black people with the help of @MYANC @GovernmentZA, not doing business. They pay nothing to black employees.
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@DennisMashabela: “There’s no brain surgery needed here… see the graveyard of SA business across Australia, America, Africa & Europe… 1 word Arrogance & (ok make that 2) Ignorance writ large”
@Makhanip: “Yes, SA companies have received a beating from the UK, US and Australia, I guess those are matured markets. But in Angola, Zim and Nigeria, there is a big problem of Repatriation of profits, what’s the point, then poor infrastructure, lack of refrigeration, bribes to get Clearance at the ports, unreliable electricity grid, reliance on Generators, etc
The problems are massive.
@Real_Liberty_SM: “Bad news given how big the Nigerian market is. SA firms have been doing well in rest of Africa. Bad news for people in South Africa too. With the SA economy already struggling in terms of growth and investment, this ain’t okay.”
@JackPhata: “Good move by shoprite. Just because they’re overpopulated doesn’t mean a higher number of customers. It can also mean a whole of shit”
@Charles_tshwane: “Seems South African companies are strategically exiting the Nigerian market, seems the plan is to invest and plant more stores in the lucrative rural and township areas in South Africa. Disinvestment is a loss of confidence in the Nigerian market. There is no much prospect of growth. The 2nd economy retail market in South Africa (which is still very much informal)is much more lucrative market for South Africa. The funds are highly likely to be diverted this way
@veveraf: “I have told my executive about this over and over…. SA markets are not the same as the rest of Africa.. Some of our Africa stores still can’t make targets.”
@Vumington: “Not just in Nigeria. Famous brands flopped in UK, Woolies been flopping in Australia, Sasol Flopped in the US. The fact is that the SA Market on its own is unique and has special characteristics that make it profitable. Unfortunately the corporates aren’t loyal & invest abroad.
@Musa160477: “Most ordinary Nigerians source their goods from the market. Affluent and aspirational ones will go to Shoprite. But the Nigerian market is not easy nor certain. Rules can change after u have made your investment. Another challenge is that you may have to accommodate the new political mandarins every time there is a change of Administration. Shoprite was making money there under the Jonathan Administration and expanding. It’s really crazy that they are now exiting that market.”
