Uche Usim, Abuja
Following the planned exit of Shoprite, Africa’s biggest grocery retailer from Nigeria, economic experts have urged startled Nigerians not to lose sleep over the matter, reassuring that the country remains an investors’ haven with huge potential and market size that the world cannot ignore.
Nigeria’s first professor of the capital market and former Finance Commissioner, Imo State, Prof Uche Uwaleke, told Daily Sun that while the departure of Shoprite or any other foreign business should ordinarily be a cause for concern, especially for a country in need of foreign direct investments, the bigger issue to interrogate is the net contribution of the company to the Nigerian economy.
‘The importance of foreign direct investment, especially in the area of job creation cannot be overemphasized. With particular reference to Shoprite, the big question is: what is the net contribution of the company to the Nigerian economy?’ he asked.
‘Beyond the menial jobs, how many Nigerians are in the employ of the South African firm?
‘Aside the crowding-out effect of Shoprite on local competitors, its operations in Nigeria have also contributed to dwindling foreign reserves through imports that serve to satisfy the appetite of wealthy Nigerians for foreign goods.
‘So, I think the type and quality of FDIs should matter for Nigeria. What the country needs now are foreign direct investments in manufacturing, agriculture value chain, telecoms and IT and not businesses that promote the consumption of foreign goods and perpetually leave us import-dependent. Which is why I think Nigerians should not lose sleep over the exit of Shoprite,’ the don stated.
Uwaleke added that where possible, the company should be bought over by Nigerians.
‘As Shoprite is exiting, some other companies are waiting to berth. The right business environment post-COVID-19 will bring this about.
‘The country’s economic potential and market size are such that the world cannot ignore,’ said.
Also commenting on the issue, a Developmental Economist, Odilim Enwegbara, said: ‘One of the invisible emperors plundering our consumer economy is leaving our shores without anyone chasing it.’
Shoprite announced on Monday that it was exiting Nigeria after 15 years.
The Cape Town-based retailer has started a formal process to consider the potential sale of all or a majority stake in its supermarkets in Nigeria, it said in a trading statement for the 52 weeks to end June released on Monday.
South African retailers have struggled in the Nigeria market and most recently Mr Price has exited the market after Woolworths did the same six years ago.
In the statement, Shoprite said the results for the year do not reflect any of their operations in Nigeria as it will be classified as a discontinued operation.
International supermarkets (excluding Nigeria) contributed 11.6% to group sales and reported 1.4% decline in sales from 2018. South African operations contributed 78% of overall sales and saw an 8.7% rise for the year.
As a result of the COVID-19 lockdown, customer visits declined 7.4% but the average basket spends increased by 18.4%.