HERE’S WHAT WE THINK ABOUT SHOPRITE’S PLAN TO EXIT NIGERIA
Africa’s retail giant, Shoprite is making plans to leave the Nigerian market. News making the rounds suggests that Shoprite International, the parent company of Retail Supermarkets, Nigeria (the company’s Nigerian retail arm) is planning to sell a majority or whole of its business in Nigeria.
“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 company said in a trading update filed at the Johannesburg Stock Exchange (JSE) today.
According to the company, it has continuously recorded losses in Nigeria which prompted its decision to discontinue operations in the region.
Recall that Shoprite established in Nigeria in 2005 and (according to The Cable) has grown to more than 25 retail stores in the country.
We would like to believe that its business has been affected by the present competition in the retail business in Nigeria as opposed to the time the company launched when there were only a handful of competing brands. The after-effect of the Covid-19 pandemic on foreign exchange, imports, etc and high overhead costs which is characteristic of running a business in Nigeria must have contributed as well.
While this is bad news for both the company and Nigeria, it is an opportunity for Nigeria and its government to begin to think locally and support local entrepreneurs and manufacturers while giving basic infrastructures and social amenities a major boost.