There are strong indications that aside the surface excuse of low Return on Investments (ROI) as its major reason for wanting to exit Nigeria, one major reason the South African conglomerate maybe divesting from its biggest African market (Nigeria) might be as a result of a recent Appeal Court ruling which affirmed the judgment of a Lagos High Court that awarded $10 million damages against Shoprite Checkers (PTY) Limited in a suit filed by AIC Limited that the retail giant breached an agreement
The South African supermarket chain, Shoprite Holdings Limited is said to be calling it quits in Nigeria after dorminating the retail sector for 15 years.
Specifically the South African retailer (operating in Nigeria as Retail Supermarkets Nigeria Limited) had in a statement released on Monday, revealed it has started a formal process to consider the potential sale of all or a majority stake in its supermarkets in Nigeriav
The announcement sent tongues wagging as most Nigerians seem to be enjoying the services rendered in their huge outlets spread in major cities with assorted goods.
According to Quick News Africa, an online platform in 2018, a Lagos High Court presided over by Justice Lateef Lawal-Akapo, awarded damages in the sum of $10 million against Shoprite Stores in Nigeria, Shoprite Checkers (PTY) Limited and Retail Supermarkets Nigeria Limited for breach of contract entered with A.I.C. Limited.
In the judgment delivered by the court, Justice Lawal-Akapo also established and held that contrary to the opinions of the defendants in the suit (Shoprite Checkers and Retail Supermarkets), “there exists a contract between the claimant and the 1st Defendant which contract is still subsisting till date”.
According to the court which also awarded a cost of N1 million to the Claimant against the Defendants, the $10million damages must include “interest at the rate of 10% per annum effective from the date of judgment, until final liquidation of the entire sum.”
In a certified true copy of the judgment by Justice Lawal-Akapo, the court also established that the defendants were in a breach when they went behind, “incorporated a company, established the outlet (Shoprite) in 2005 and was running the same without recourse to the Claimant”(A.I.C. Limited).
Already, the Defendants have appealed against the judgment of the trial court, wherein, they were praying the appellate court to set aside the judgment of the lower court.
The Claimant in the suit No: LD/488/2010, where hearing commenced in 2012 urged the court among other prayers to declare that, “by virtue of the agreement between the Claimant and 1st Defendant, the joint venture to be formed by the Claimant and 1st Defendant is entitled to exclusively operate and manage 1st Defendant’s Shoprite Brand in Nigeria and elsewhere in the coast of West Africa, except Ghana.”
Besides, the claimant prayed the court for an order for specific performance of the said agreement for joint venture between the parties for the operation of Shoprite Supermarket across the country.
It further prayed the court among other things for payment of $2.2million Dollars and N13. 6 million as special damages suffered by the claimant as a result of the breach of agreement as well as an order for payment of $92.3, “being loss of profit suffered by the claimant as a result of the said incorporation of the 2nd Defendant by 1st Defendant to operate 1st Defendant’s Shoprite brand in a breach of agreement between the parties”.
The Claimant also urged the court to grant to it a sum of $250million.
In an unanimous judgment delivered on May 21, 2020 the court’s three-man panel affirmed the award against Shoprite Group, thus upholding the decision of the lower court that Shoprite Group breached contract in its dealing with AIC.
Consequently, some analysts are linking the alleged planned exit of the multi-million dollar company from Nigeria to the judgement.
“Is the company insisting that the court was wrong to have found that it breached an agreement it had with another party?, asks an analyst
However, in a swift turn-around late on Monday, Ini Archibong, the country director of the company handling the retail giant’s public relations, Chastest Consult, insisted that everyone got it wrong.
“Shoprite has invested over $30million in Nigeria and will not leave the country. 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 $30 billion investment and close shop? It doesn’t sound right.
“We’ve only just given this opportunity to Nigeria investors to come in and also help drive our expansion plan in Nigeria. So we are not leaving. 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.”
A memo dated July 31 from Shoprite General Manager Carl Erickson also dwelled on the company’s plans to expand its business.
“The expansion of the food retail business in Nigeria to a greater consumer market should remain everybody’s shared vision. It has, however, become apparent that the best manner in which to do this is by engaging Nigerian investors who share in this vision. In so doing, we will be creating a truly Nigerian business run and owned by Nigerians for the Nigerian market,” the memo said.
But doubts remain as to the company’s true intentions for the exit of the retail giant which began operations in Nigeria in 2005 and has over 25 outlets in the country.
According to one of the analysts, “It remains to be seen what will become of the sudden drive to get Nigerian investors into the mix by selling off some of its investments. Is it a long-term plan for a gradual pull-out? Well, Nigeria is not the market it once was for them so it is easy to see why they want to pull out. “
