Financial experts have bemoaned the decision of Shoprite, a South African retail giant, to end its operations in Nigeria.
Shoprite, in its operational and voluntary trading update published on Monday, said the board decided to formally exit its operations in Nigeria over unfavourable market conditions.
However, some experts have told Daily Trust that the exit of Shoprite was a bad sign for Nigeria’s business climate.
A Financial Economist and Professor of Capital Market at Nasarawa State University – Keffi, Uche Uwaleke, said the exit of Shoprite or any other foreign business should be a cause for concern, as it affects Foreign Direct Investment (FDI).
However, the expert said 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.
He said where possible, the company should be bought over by Nigerians.
“As Shoprite is exiting, some other companies are waiting to berth.
“The country’s economic potential and market size are such that the World cannot ignore,” he said.
An economist, Edward Okoukoni Okojie, said new investors would have to “work extra to maintain the momentum and patronage” the popular brand Shoprite had established.
He also made the case for local supermarkets to merge, acquire Shoprite and then position themselves as the new market leaders.
An Abuja based economist, Samson Simon Galadima, said the move was not good because some things must have been really in terrible shape for them to do that, noting that it will send the wrong signal to investors.
“Other investors would be wary of coming in or expanding.
“This would diminish investors’ confidence with a concomitant dampening of general enthusiasm within the economy,” he noted.
Equally, an Economics lecturer at Yobe State University, Dr Binta Yahaya, said that would be unfortunate.
She was not hopeful on Nigerians managing the stakes, saying Nigerian business management is not effective due to favouritism (man-knows-man), which could lead to crumbling of the business.
An investor and Managing Director of Qeeva Advisory Limited, Matthew Ogagavworia, said: “They said they are closing because of profitability.
“The issue of a new core investor is secondary.
“The issue of profitability may not be a decision about last year and this year alone.
“A lot of companies are folding.
“It is nothing new.
The COVID-19 has had a major impact on big brands across the world.
A legal practitioner, Barrister Moses Obetta, said: ‘This is how many multinational companies leave this country.
“The business and legal environment in the country is not favourable to businesses.
“Aside from inflation, forex problems coupled with the COVID-19 pandemic, there is multiple taxation of businesses.”
Shoprite has operated in Nigeria for nearly 15 years since December 2005.
It maintains presence in about seven states and in Abuja with 25 sales stores in these areas.