Reports circulated the social media claiming that the South African Company, ShopRite Holding Limited, is leaving Nigeria after 15 years of operations.
The management of the company said the decision was reached due to the extreme decrease in sales caused by the COVID-19 pandemic.
Reacting to this, the Country Manager for Chastex Consult, Mr. Ini Archibong, disclaimed such reports stressing that ShopRite is not leaving Nigeria.
Archibong said: “We have only just opened to Nigerian investors which we have also been talking to just before now. We are not leaving, who leaves over a $30billion investment and close shop? It doesn’t sound right.
“We only gave this opportunity to Nigeria investors to come in and also help drive our expansion plan in Nigeria. I have tried to say this to many people as I can. There should be no panic at all and all of that. There is no truth in that report.”
Meanwhile, this development has triggered reactions from Nigerians; while some rejoiced over it saying it presents huge opportunities for local investment, some also hinted on the negative impacts such as job losses to Nigerians.
Speaking in an interview on Channels Television, the Head of Research, Afrinvest Securities, Abiodun Keripe, said ShopRite’s exit could have been occasioned by a number of factors aside the stated reason.
Keripe said, “Nigeria is one of the economies that has a large consumer market and that’s why you find most of these retail brands trying to penetrate the Nigerian economy.
“In recent years, consumer purchasing power has fallen. It has been down significantly in tandem with weak economic growth since the last recession in 2016.
“The economy has been trying to crawl back up, but the growth has not been up to the historical average growth of about five to six percent.
“Since 2016, Nigeria has been growing at an average of about two percent every year, which is significantly low. And this speaks to consumer purchasing power, especially when you have a population growth rate outstripping economic growth rate. That means a larger percentage of the population is getting poorer.”
Keripe added that ShopRite’s struggles in Nigeria could have been worsen by the government regulation, including increased taxation and foreign exchange system.
“The last three to four months, the economy has been on a lock-down and not a lot of foot-soldiers have been going to the mall to shop. People have been relying on online orders. That will affect their business model, which is designed around people coming in physically to the mall to shop.”
He noted that ShopRite’s leaving the country will negatively affect the confidence of foreign investors.
“At this point, I don’t think there will be any major investor coming into Nigeria now, particularly when we have the foreign exchange risk hanging over us. That’s a major disincentive for now.
We still have a large population base and growth, but how much can they consume? What is their purchasing power? “If we compare this to some of our African peers, Nigeria still ranks significantly low.”
Also speaking, a business correspondent said the news comes with its merits and demerits, pros and cons, gains and losses but it will in the long run be in favour of the country. He stated that jobs will be lost but the company leaving the shores of Nigeria will give room for local companies to grow.
He said: “Local investors will take over, immediately. Small and Medium Scale Enterprises (SMEs) would thrive more. I can imagine a Dangote or an Otedola opening a shopping mall.
“I don’t feel for ShopRite at all. As a business correspondent, I know how many times staff working for foreigners call me to lament how their foreign employers treat them as slaves.
“To start with, of what benefit is the presence of foreign businesses that cannot increase our Gross Domestic Product (GDP), as they expatriate every kobo to their home country? The local companies will employ our people, if given the enabling environment, especially if the Ease of Doing Business document is re-examined to favour local investments more,” he expressed.
Indeed, ShopRite provides jobs for more than 2,000 Nigerians and has over 25 stores across eight states of the federation including the Federal Capital Territory, Abuja. So, exiting the country will definitely cause an increase in unemployment as many will lose their jobs.
Also, the company started retail outlet in Nigeria and has been the major anchor tenant for shopping mall developers in Nigeria. This suggests that funding for the development of shopping malls in Nigeria may not be feasible as anchor tenants are the major drivers of mall constructions.
However, it is also vital to know that the exit of the company form Nigeria, would open up opportunities for local companies and investors and as well as promote online shopping.
