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On Monday, South Africa retail giant, Shoprite, announced the commencement of a formal process to discontinue its operation in Nigeria.

Shoprite Holdings Limited made the announcement in its operational and voluntary trading update for the year ended June 28, 2020.

The multi-national retail group, which announced a 6.4 per cent increase (R156.9billion) in total sales of merchandise for the outgoing year despite the challenges posed by the COVID-19 pandemic, announced that it took the decision to discontinue its Nigeria operation “following approaches from various potential investors, and in line with our re-evaluation of the group’s operating model in Nigeria.”

“The Board has decided to initiate a formal process to consider the potential sale of all, or a majority stake, in Retail Supermarkets Nigeria Limited, a subsidiary of Shoprite International Limited. As such, Retail Supermarkets Nigeria Limited may be classified as a discontinued operation when Shoprite reports its results for the year. Any further updates will be provided to the market at the appropriate time,” the company stated.

Why Exit?

Details of its financial statements showed that although the company’s total sales of merchandise may be on the rise, it is struggling outside South Africa.

According to the financial statement released Monday, the non-South Africa supermarket operation of the company, excluding Nigeria, contributed a paltry 11.6 per cent to the group sales. Its non-South Africa sales also declined by 1.4 per cent in the year under review.

The company blamed this decline on the lockdown announced in several African countries due to the coronavirus pandemic.

“Second half constant currency sales growth of 6.3% was significantly impacted by lockdown regulations across the 14 African countries in which we trade. Lockdown restrictions pertaining to store closures; social distancing; transport restrictions; the movement of people; trading hours; workforce limitations and trade in alcohol impacted various regions to differing degrees at different times.”

Shoprite Nigeria operates about 25 outlets across the country and employs over 2,000 employees. A substantial number of the employees are Nigerians.

Meanwhile, beyond the reasons given for its planned exit, PREMIUM TIMES analysis of the statement showed that Nigeria’s currency fluctuation concern may not be unconnected to the new development.

1. Currency Fluctuation

In its currency disclosure details, Shoprite said unaudited Constant Currency information shows the Supermarkets Non-South African operating segment performance in terms of sales growth, excluding the effect of foreign currency fluctuations. It thereafter presented the current year sales for entities reporting in currencies other than South African Rand by converting from local currency actuals into the Rand, at the prior year’s actual average exchange rates.

In accounting and finance, Constant Currency refers to the adoption of a fixed exchange rate that eliminates fluctuations when calculating financial performance figures. Companies with significant operations in other countries often represent their earnings in constant currency terms since floating exchange rates can mask true performance.

Details of the sales conversion figures showed that Nigeria’s naira performed poorly in the countries within which the company operates, with percentage change in sales of -12.3% for the year under consideration. It was trailed by the Angolan Kwanza, which also recorded a negative (-1.2%) change in sales.

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Meanwhile, for the year ended 28 June 2020, the company said the Angolan was assessed not to be hyperinflationary, whilst it was assessed to be hyperinflationary during the prior year ended 30 June 2019. “As such, in respect of Angola, the constant currency information has been prepared excluding the impact of hyperinflation,” it added.

On the other hand, the Zambian Kwacha and Mozambique Metical recorded positive (15.7% and 3.8%) change in sales, respectively.


Although the company said the information contained in the announcement has not been reviewed or reported on by the Group’s external auditors, it could as well give an insight into the company’s decisions, including its planned exit of the Nigerian market.

Nigeria’s Naira

Over the years, businesses and investors operating in Nigeria have had to combat currency fluctuations, amid incessant devaluation efforts.

In June, the Central Bank of Nigeria adjusted the value of the naira to exchange to the dollar at N381, as part of measures to converge the nation’s multiple exchange rates and ensure stability. Although the CBN did not officially make its position known, obtained on the website of FMDQ OTC Securities Exchange on the CBN official rate showed a 5.54 per cent change from N360/$ to N381/$.

The new rate is believed to be in line with the apex bank’s efforts to unify the exchange rate as the foreign exchange spot. On Tuesday, the dollar was quoted at N380.69k at the Secondary Market Intervention Sales (SMIS), where importers access foreign currencies.

Earlier in March, the CBN had adjusted the official exchange rate to N360/$ from N307/$ and abolished the N325 and N330 concessionary rates.

Godwin Emefiele, the apex bank governor, recently explained that the bank is making efforts towards a unification of the multiple exchange rates.

The fluctuation and multiple exchange rates have had an enormous impact on businesses and industry, especially those who rely essentially on importation.

Nigeria routinely goes through a shortage of U.S. dollars, amid weak oil prices and devaluation exercises.

In August 2019, Shoprite said a decline in local currencies against the dollar and rising inflation in Nigeria and other African countries impacted its full-year financial results. Although despite this, reported significantly improved growth in the second half of 2019, driven by South Africa operation with group sales rising 74.9 per cent.

Earlier in February of the same year, the company said currency devaluations in markets such as Angola, its biggest operation outside South Africa, and Nigeria, have made it difficult to operate profitably elsewhere on the continent.

Interestingly, Shoprite’s two biggest non-SA markets, Angola and Nigeria, are oil-dependent and under immense pressure.

2. Profit Repatriation

There are also probable concerns over profit repatriation, closely linked to the exchange rate fluctuation challenge.

For example, in its unaudited results for the 26 weeks ended 30, December 2018, Shoprite said the main increase in cash at the reporting date is due to month-end cut-off for accounts payable as well as the increase in long-term borrowings.

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“This was offset by the investment in capital expenditure and investment in USD Index-Linked Angola Government Bonds to hedge against the possible further devaluation of the Angola kwanza,” the company said.

During the period under review, the company said the Angolan operations managed to repatriate USD67 million which had a positive impact on the cash flow of the Group.

Analysts said at the time that Shoprite was not getting much cash, in the form of repatriated profits, out of its African operations, with suggestions that it will only continue to use local profits to fund expansion.

In Nigeria, it remains unclear whether there are concerns around profit repatriation for the company.

But another company of South African origin, , has had a running battle with the Nigerian government over profit repatriation.

The central bank on August 29, 2018, ordered MTN and the four Nigerian banks to bring $8.1 billion back into Nigeria. The apex bank alleged that the telecoms firm sent the funds abroad in breach of foreign exchange regulations. The development affected shares in MTN which fell nearly a third in Johannesburg stock market after the announcement.

The apex bank thereafter fined and debited the four banks including Standard Chartered PLC, fined 2.4 billion naira ($7.86 million); Stanbic IBTC Bank PLC, fined 1.8 billion naira; Citibank, fined 1.2 billion naira; and Diamond Bank PLC, fined 250 million naira.

The banks, in separate statements, denied wrongdoings.

MTN also denied any wrongdoing.

Shortly after the development, Nigeria’s attorney general, Abubakar Malami, imposed a $2 billion tax bill on the telecoms firm. In response to the tax demand, MTN filed a lawsuit, accusing Mr Malami of exceeding his powers. The development has created ripples among experts, with concerns raised around the state of Nigeria’s environment.

3. Logistics Concerns

Industry sources have also raised issues over the concerns around the logistics and operation of Nigerian ports.

Stakeholders in the maritime industry have raised concerns over a number of issues, including delay experienced at Nigerian ports amid huge cost of clearing consignments and securing vessels.

For instance, there has been disquiet over the Secure Anchorage Area, a security outfit said to be providing security at a high cost in USD to vessels at the ports. The Secure Anchorage Area Contract is an area outside the port that the Nigerian Navy, with a private company, has defined as a secure place where vessels can anchor safely from the threat of pirate attack. Industry experts express worry over the arrangement, which allots huge sums to the private company, with a ripple effect on consumers who purchase the goods brought in by businesses operating vessels.

Earlier in the year, the Nigerian government suspended the Secure Anchorage Area contract, describing it as “illegal.

Reports said the transport minister, Rotimi Amaechi, said the project was “false and projected that it is not possible that an individual can protect a country.” The Nigerian Ports Authorities (NPA) has also come out to call for the cancellation of the arrangement.

But the arrangement has remained in place, despite the controversies.

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There are claims that vessels pay over $2,000 at the anchorage, and they could be stuck there for weeks, due to avoidable delays.

This and other concerns at the ports cause many big companies to groan under the pressure of needless expenses, making the business environment rather unfriendly.

4. Sundry Issues

Apart from currency fluctuation, fund repatriation and logistics, other concerns that could impact the company’s operations are increased competition and gradual movement of consumers to online shopping.

Shoprite opened its first store in Nigeria in December 2005 and now has a total of 26 stores across eight states in the country including Federal Capital Territory, Abuja. The company also claims to have employed more than 2,000 people in Nigeria, of which 99 per cent of them are Nigerians.

Shoprite also claimed to have built more with over 300 Nigeria suppliers, small businesses and farmers.

In the period that the company debuted in Nigeria, the nation has witnessed a surge in online shopping platforms, many of which have done well in swaying customers’ buying habits away from the big malls like Shoprite.

5. COVID-19 and Purchasing Power

The Group in its financial statement on Monday said it believes it is appropriate to highlight the COVID-19 costs incurred pertaining to compliance with national lockdown regulations together with managing and protecting its employees, customers, stores, inventory and distribution infrastructure.

“In this regard,” it said, “the Group has incurred a net total of R327.2 million spent across the areas of health and safety, security, clinics, personal protective equipment, temperature scanners, store and distribution centre sanitation, employee meals, communication costs and remote network access for employees. The most significant spend pertained to R116.9 million paid to our employees, inclusive of an appreciation bonus to assist them with the difficulties we anticipated would accompany the nationwide lockdown.”

Beyond the resources put in place to cushion the effect of the pandemic, another probable effect if the coronavirus is the shrinking purchasing power of the regular consumer, especially in developing countries of the world.

In Nigeria, the coronavirus and the attendant nationwide lockdown have had an enormous impact on businesses and households, with many struggling to feed and shelter themselves. There have also been job losses, slashed salaries and depleting incomes. These, in effect, have had an impact on consumers’ purchasing power, and, by implication, sustained operation of many big companies, including Shoprite.

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Sept 28 Strike: Nigerian govt, Labour meeting postponed




The meeting between the Federal Government and the Organised Labour over the hike in fuel price and electricity tariff has been postponed till Monday September 28.

Labour unions had fixed the same day to commence a nationwide strike.

Both parties met in Abuja on Thursday but did not reach an agreement.

Ayuba Wabba, President of the Congress (NLC), confirmed that discussions would continue.

“The discussions will continue on Monday, by 3 p.m,” NAN quoted him as saying.

However, the National Industrial Court has granted an interim injunction restraining the Nigeria Labour Congress (NLC) and Trade Union Congress (TUC) from embarking on an industrial action.


Justice Ibrahim Galadima granted the order pending the hearing and determination of the Motion on Notice.

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He restrained the unions, their officers, affiliates, privies from preventing workers and other Nigerians from accessing their offices.

Galadima ordered the Inspector General of Police and the Director General, Department of State Services (DSS), to protect workers at offices from harassment by NLC and TUC.

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Fuel, Electricity Price Increase, Decision Taken In Nigerians’ Interest, Says Buhari




President Muhammadu Buhari declared on Thursday that the decisions to increase both the fuel pump price and the electricity tariff have been taken in the utmost interest of all Nigerians and the working class.

The President also added that there is no decision taken by his government that is intended to cause any pain or harm to Nigerians.

President Buhari told the Organised Labour at the opening of negotiation between the Federal Government and the leadership of Labour Congress (NLC) and the Trade Union Congress (TUC), held at the Banquet Hall of Presidential Villa.

The Secretary to the Government of the Federation, Mr Boss Mustapha, who delivered President Buhari’s message also made it known, emphatically to the Organised Labour that deregulation, removal of subsidy with its attendance fuel and electricity price increases have become imperative, adding that the decision cannot be escaped.

“It is a decision that must have been painfully considered,” he added.

Speaking, Mr Mustapha said: “The President has said that no government decision taken is intended to cause any pain or harm. The decisions that have been taken, are in the utmost interest of all people and the working class.

“I have the privilege of working in the Presidential Transition Committee set up by President Buhari and I remember the decisions that were presented to him. One of the decisions by the team considered as low hanging fruit in 2015 was deregulation, and I think President Buhari objected to it.

“Thereafter the issue was reflected in the final . There was the need to consider seriously the issues relating to deregulation of the petroleum sector, and the need to look at energy sufficiency and efficiency, within the power on what needed to be done. When the was submitted to Buhari, his reaction was that the Nigerian people elected him not to inflict pain on them. He said though he considers that economically as a low hanging fruit, he felt that the time was not yet ripe for it. That the important thing is to manage before such decision will ever be taken.

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“Five years down the line, that decision has become imperative and cannot be escaped, it is a decision that must have been painfully considered. I am just sharing this reflection in order to put in perceptive the fact that the decision was never intended to cause great pain and erode the wellbeing of our people.

“But little did we know that we will be confronted in one or two years, that was after the implementation of the minimum, with a pandemic which hit the entire world and has completely disrupted even the strongest of the to the extent of each and every country of the world today are trying to find a solution to the economic disruption COVID-19 has brought to the entire world.

“Nigeria does not survive in isolation. We as a government and as a people and those of you that on the other side of the divide are part of the government because you are leaders in your own right in the places you operate and in the spheres that you exercise influence.”

The Minister of Labour, Dr Chris Ngige, said the government had received the communique from the NLC, that they would be embarking on industrial strike and a nationwide peaceful protest from Monday 28 September.

He, however, assured labour that the government was already addressing the specific items listed in the communique so that the issue of strike and mass protest would not come up.

Dr Ngige said: “It is incumbent on us as the ministry that has the responsibility to manage trade disputes so that they can dialogue and discussed. So today’s meeting, even though it is a bilateral meeting, has a new colouration, in that some specific items have been listed in the communiqué and we will like to assure the labour centres that we have gotten that communiqué and we are addressing the issue.

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“With that, we think that we can resolve issues and nobody will be in the mood to go on strike or go on demonstrations in the street because I want to reiterate that this country belongs to all of us, it is not President Buhari’s country. Boss Mustapha doesn’t own this country and Chris Ngige does not own this country. The country belongs to all of us even the Ayubas, the Ajaeros and the Quadri Olaleyes, we all owned here.”

In his comment, the TUC President, Comrade Quadri Olaleye, said the are ready to engage with the government but he regretted that if the government had engaged and negotiated with Nigerians, including labour before the increase, it would not have ended like that and degenerated.

He stated that the TUC position, like that of Organised Labour, remains the same and insisted on a total reversal of the fuel and electricity prices.

“As I mentioned in the last meeting we had here that if we have been having constructive engagement in the past, maybe we would have been able to solve some of these problems. But the government turned a deaf ear to us even before,” he said.

The TUC President added: “Let us continue the meeting then we listen to the government, let us know what solution you are bringing on board. But I have to reiterate that the submission of TUC as at last week still remains, that you reverse all those increases then you can come up with economic recovery solutions that you have.

“I know that many times we have advised you to diversify the economy and we even mentioned the introduction of modular refineries and we have never had any feedback from the government. So we are here to listen to the feedback.

“This hardship is getting too much, so whatever solution we are bringing, must be holistic, something that everybody will feel that the country belongs to all of us.”

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The NLC President, Comrade Ayuba Wabba also blamed the government for its failure to negotiate with Nigerians and workers before unilaterally taken the decision.

He said: “We have always said the best way to address challenges, whether social economy or labour issues is to try to proactively engage Labour and have the perspective of labour. We are here to continue with the dialogue that started last week. As you are aware, after the dialogue, we were able to update all our members.

“We are here to find a lasting solution to the perennial issue of the twin challenges of the increase in pump price in the name of deregulation and also the issue electricity tariff increase, which we have explained the impact on Nigerian workers, but importantly the larger Nigerian society.

“The last time we were here, we also had a lot of discussion about what we expect that should have been done. We have been on the same issue for over 30 years.”

Wabba added: “Clearly, part of the challenges is that this new increase has also reduced our purchasing power and eroded the gains that we have been able to make with the minimum wage, where, as we speak, many states are yet to implement.”

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