Anxiety As Largest African Food Retailer Sells Its Nigerian Operations To Local Investors

Anxiety may have enveloped the consumer subsector as
Shoprite Holdings Ltd., Africa’s largest food retailer has made good its threats recently and have sold its Nigerian operations to local investors 16 years after it opened its first outlet in the continent’s most populous country.

The company sold its stake to Ketron Investment Ltd., a Nigerian company owned by a group of local investors led by property firm Persianas Investment Ltd., Ketron said in an emailed statement.

According to Bloomberg Shoprite would only retain its presence through a franchise model.

The action, it was gathered was among others, due to alleged disruptions in chain distribution and problems with repatriation of funds abroad due to scarcity of foreign exchange.

Central Bank of Nigeria (CBN) is said to be targeting elimination of multiple rates and wider margin between the official and parallel market rates through the current devaluation of the local currency and other measures like naira for dollar policy.

Godwin Emefiele, CBN had acknowledged recently the backlog and promised to expedite action of the regulatory bank to tackle scarcity of foreign exchange.

Foreign portfolio investors (FPIs) have been facing challenges of repatraiting capital and profits due to acute shortage of the greenback, with backlog of demand in the market said to be above $2 billion.

However, Ketron, the New investor is ready to add the 25 stores it’s acquiring from Shoprite to its business, with a promise to continue with the tradition
Shoprite is changing its strategy “from an ownership model to a franchise model,” Ketron said. The acquisition has been approved by Nigeria’s federal competition and consumer protection commission.

But, some analysts say the development will be viewed with cautious Optimism as expectations are very high considering the quality of products and services at the Shoprite.
With the sale, Shoprite becomes the latest South African business to exit the West African nation in the last decade. The retailer operated 25 outlets in eight states across Africa’s biggest economy but had been struggling with disruptions. Ketron said it plans to keep open new ones and display more Nigerian-made products.

“We look forward to building an even stronger company following our acquisition,” said Tayo Amusan, Ketron’s chairman.

Shoprite, which operates 2,843 supermarkets in 15 countries, serving 35 million customers in Africa and the Indian Ocean Islands, has struggled with supply-chain disruptions and repatriation of funds — both familiar problems to foreign businesses in the Nigerian market.

Such logjams prompted other South African retailers including Woolworths Holdings Ltd., Truworths International Ltd. and Mr Price Group Ltd. to quit Nigeria.