Shoprite, a popular South African retail chain operating in Nigeria, has announced its decision to cease operations at its Novare Central Mall branch in Wuse Zone 5, Abuja, effective June 30, 2024.
The decision comes after a “thorough evaluation of the store’s financial situation and the current business climate,” according to a circular signed by Dr Folakemi Fadahunsi, CEO of Retail Supermarkets Nigeria Limited, which operates Shoprite stores in the country.
The circular addressed to vendors stated, “We regret to inform you that as of June 30, 2024, Retail Supermarkets Nigeria Limited will be closing its Wuse Store located in Novare Wuse Central Mall, Abuja.
Also Read: Inflation Is knocking Titus Sardine off Nigerian Tables
“This decision has been made after a thorough evaluation of the store’s financial situation and the current business climate. We believe this is the best course of action for our organization’s long-term growth.”
The notification also informed vendors that their services would no longer be required, and existing service contracts would terminate for the store.
The circular added, “Effective June 30, 2024, our company will no longer operate in Wuse, Abuja, and we will no longer require your services for the Novare Wuse Central Mall Store. Please note that all existing service contracts will also terminate for the store.”
Shoprite, however, assured vendors that it would review its accounting records over the next 60 days to settle any outstanding balances.
“If your services are specifically tied to the Novare Wuse Central Mall Store and if there is an outstanding balance between our companies, we will carefully review our accounting records over the next 60 days. We will then promptly contact you to confirm the amount owed and discuss a suitable payment schedule.”
The circular concluded with an expression of gratitude, “We would like to express our gratitude for your past business. It has been a pleasure working with you and your team. If you have any questions or concerns, or if there is anything we can do to assist you during this challenging transition, please do not hesitate to reach out to us.”
Economic Impact and Broader Context
The closure of Shoprite’s branch is part of a broader trend of exodus of multinational companies from the Nigerian market.
Also read: Tolaram Group to Acquire Majority Shares in Guinness Nigeria as Diageo Exits
Recently, Diageo sold its 58.02 per cent shareholding in Guinness Nigeria to the Tolaram Group on June 11, 2024. This exodus of multinationals has significantly impacted the Nigerian economy.
Dr Vincent Nwani, an economist and former Director of Research and Advocacy at the Lagos Chamber of Commerce and Industry, highlighted in his findings in a recent research that Nigeria has experienced a loss of N94 trillion in output over five years due to the departure of multinational companies.
He noted that in 2020, over 10 companies, including Standard Biscuits Nigeria Ltd and NASCO Fibre Product Ltd, shut down operations. The trend continued in subsequent years, with notable exits including Tower Aluminium Nigeria PLC in 2021, Universal Rubber Company Ltd in 2022, and Unilever Nigeria PLC in 2023.
Also read: Exodus: Asian, Turkish and local firms step in as Western multinationals exit Nigeria
In the first half of 2024 alone, five major companies have left Nigeria, including Microsoft Nigeria, TotalEnergies Nigeria, PZ Cussons Nigeria PLC, Kimberly-Clark Nigeria, and Diageo PLC. This pattern reflects ongoing challenges in the Nigerian business environment, prompting multinational companies to reassess their operations in the country.
Shoprite’s closure will likely have a negative impact on employees and vendors who relied on the store for their livelihood. It also raises concerns about the overall health of the Nigerian business environment and its attractiveness to foreign investors.
