South Africa’s grocery retailer Shoprite on Monday announced plans to exit Nigeria amid an economic crisis caused by a shrinking middle class, a fall in oil prices, a raging coronavirus pandemic as well as gargantuan corruption ravaging the country and mismanaged loans that have paralyzed the economic activity.
The announcement was made in the operational and voluntary trading update filed at the Johannesburg Stock Exchange by the company on Monday morning.
Shoprite said it is considering an outright sale of its operations or a sale of a majority stake in its Nigerian subsidiary, 15 years after it opened its first store in Lagos in 2005.
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Shoprite’s planned exit from Nigeria comes after South African Mr. Price and Opera discontinued some or all of their operations in Nigeria.
The company has said it has been approached by potential investors looking to take over its Nigerian operations. It said that it be considering an outright or majority sale of its stake in the Nigerian subsidiary.
Large retailers like Shoprite and Mr. Price need a strong middle class to growth. But, Nigeria has not seen consumer market growth since President Muhammadu Buhari came to power in 2015.
Despite billions of loans the administration has secured this year alone to fight COVID-19 and save jobs, the International Monetary Fund forecast last June that the Nigerian economy would contract by at least 3.4 percent in 2020. Things could worsen further if there is a second wave of the deadly virus.
With gargantuan corruption under the Buhari administration, in addition to growing insecurity and the lack of a clear national plan to bolster the economy, the Nigerian Trade Union Congress has just announced that it would be embarking on a nationwide strike to protest against President Muhammadu Buhari’s inability to fight corruption.
The Nigerian economy went into a recession in 2015, recovered in 2018 and slumped again in 2019. Massive corruption and the coronavirus pandemic made things worse in 2020, wiping out all the little gains made over the past two years.
With no money to spend, large retailers and other international brands are simply exiting the country. Shoprite is just the latest exit.