Shoprite Planned Exit Triggers Experts Reaction
Experts have expressed their concerns over the decision of Shoprite Holding Limited to exit the Nigerian Market, Africa’s largest economy, at a period that unemployment is projected to hit 39.4 million.
On Monday, Africa’s largest retail company, Shoprite, announced it would commence a former process of exiting the Nigerian market or sell a major stake to willing investors that it claimed have started approaching its organisation for a possible partnership.
Experts, who spoke with our correspondents, said the decision would worsen Nigeria’s present economic position, especially with Osinbajo-led committee predicting that unemployment could hit 39.4 million in 2020.
Dr. Musa Yusuf, the Director-General, Lagos Chamber of Commerce and Industry, said the Shoprite move would impact investors’ interest in Nigeria. Yusuf is likely making reference to a series of other factors hurting Nigeria’s economic outlook in recent months.
Barely a month ago, OPay, one of Nigeria’s promising startups started by a Chinese company, announced it will be shutting down some of its business units in Nigeria due to harsh business environment and other COVID-19 related issues. That was a company that raised about $270 million about a year ago.
The series of uncertainties hurting businesses amid unclear economic path have left many investors and businesses seeking exit plan. Even at that, several of the foreign-owned businesses and investments are stuck in the country with their owners unable to access foreign exchange to repatriate their funds.
A recent report showed the Central Bank of Nigeria has over $5 billion forex backlog, yet the nation’s external reserves is hovering around $36 billion since plunging from $45 billion in June 2019.
Prof. Uche Uwalaka, a professor of Capital Market at Nasarawa State University in Keffi, said, “The exit of Shoprite, or any other foreign business for that matter, ordinarily should be a cause for concern especially for a country like Nigeria that is in dire need of foreign direct investment.”
“The importance of Foreign Direct investment, especially in the area of job creation cannot be overemphasised.”
Speaking on the matter, Samed Olukoya, CEO/Founder Investors King Ltd, explained that “Shoprite just upped Nigeria’s economic uncertainties barely a month after OPay and other foreign-owned companies commenced their process of shutting down or have already shut down part or most of their operations in Nigeria.
He added that “at this rate, it would be hard to increase capital importation or boost the nation’s Foreign Direct Investment with negative economic outlook and weak investment sentiment.”