INTRODUCTION
I woke today to the news item that Shoprite was leaving Nigeria, not because it’s not doing well here, but the profits lose value when changed to the South African Rand, and transferred to South Africa. And then we saw another release saying Shoprite wasn’t leaving, but was considering a few options to help them manage the same challenge. To be fair, the retailer has the liberty. If transferring your profits will reduce them to a loss because of the exchange rate, then it’s time to cut the same losses and implement your exit plan. The only thing Shoprite will not tell us is that in the last 14 years it’s made uncommon profits in Nigeria, encouraging the rapid opening of branches all over. The only time we hear the complaint is when the business is bad; no one says anything when carting the profits away.
This got me thinking and I decided to do this lengthy piece on my further perspectives on the Shoprite situation and what as Nigerians we can learn from it. I will treat it as a lecture, give it chapters and present my position. I will be prepared to receive opinions on it when someone has read it. I am afraid it a long one.
CHAPTER 1
I will like to spool back and take our minds to many years ago when we had the Leventis, Kingsway, UTC etc., very vibrant and successful retail outlets, aka supermarkets in Nigeria. They sold everything including the “moinmoin” which I faithfully went to eat at Kingsway. The shops were well stocked and everything worked well. And the point I am coming to is that they were largely managed by Nigerians.
Take Kingsway. The Merchandise Manager was a Nigerian, a certain Ayo Ajayi who would become the MD/CEO of the UAC Group. I was in Lintas, and he was my Client and I interacted with him very regularly. Being the Merchandise Manager meant he was in charge of what Kingsway stored and sold, an awesome task. He interacted with suppliers, agreed prices and commissions etc. I am sure the same thing happened in the other stores.
What am I saying, the Kingsways of this world produced many experienced Nigerians like Ayo Ajayi. We will come back to this.
CHAPTER 2
Then the era of import licences came and with massive corruption. Girl friends of those in power were casually given the licences while UAC, and Kingsway were frustrated because they refused to bribe. They could have bought the ones given to the girlfriends, but not UAC, the owners of Kingsway; they believed in high ethical standards. So the stores, Kingsway, UTC and the rest of them fell victims and died. That the government would allow this to happen is part of our unhappy history and story in terms of policy management. The same government should have encouraged local producers to fill the gaps created when importation was stopped. As soon as oil became our top earner we opened the floodgates to imported items again.
Other entrepreneurs tried to fill the gap that the exit of Kingsway and co created; no more megastores, but plenty of smaller supermarkets. Welcome to their era. Again they were well managed by Nigerians.
CHAPTER 3
Fast forward to the last 15/20 years. Shoprite and others came in. Suddenly South Africa found out its companies could make a lot of money in Nigeria and indeed dominate this market. And they have made money. Plenty of it. However, in the last two years or so, the Nigerian economy slowed down, even as the biggest economy in Africa. But it didn’t slow down our consumption taste. Most times, Shoprite and GAME and SPAR are still brimming; with goods and customers. Cash register still ringing. But now transferring profits out has become an issue because of our exchange rate. A huge profit in Naira would usually lose substantial value when transferred to the Dollar. While a company like Shoprite would be awash with Naira here, the money wouldn’t amount to much when taken out where it’s really needed. This is the point where we are.
CHAPTER 4
I have been scanning the environment. Some local supermarkets have been doing very well. Ebeano is one. It started as a corner shop where it couldn’t accommodate more than a few customers at a time; the rest of us stood outside! In the last 10 years its grown and expanded into many branches, easily holding its own with the GAMES, Shoprites, SPARS etc. Its fully Nigerian owned and managed; no expatriate at all. So I am thinking. Why will Nigerian entrepreneurs fold our hands, and allow foreign supermarket brands dominate such a huge market? Surely it cannot be for the lack of capital; Ebeano has proven this. And at any rate, the money bags spend more on Private Jets, Rolls Royces, apartments in Dubai, Europe and the US than what it would cost to set up a shop like Shoprite. Why can’t we have more Ebeanos? What is the owner of SPAR doing that many experienced Nigerians who managed Kingsway and UTC and Leventis stores cannot do? Where are all the Nigerian billionaires flying PJs all over the place and changing Rolls Royces every few months? Why can’t one of them, or a group come together, use the experienced services of an Ayo Ajayi to consult for them, and set up chains of these stores? It should be good business, and they will not have to worry about the repatriation of profits like Shoprite.
CHAPTER 5
I have done some research of this market. Most of the supermarkets don’t even have to import too many items directly. Many of them have products from the local Unilever, PZ, WAMCO, Cadbury, Nestle etc. Whatever they can’t source locally, they depend on suppliers who agree prices and then bring them in. I have therefore always wondered why we don’t have more of the Ebeanos in this promising market!
FINALLY…
Friends, until we begin to think this way, we may be subjected to manipulations of foreign “investors”, and those whose principal aim and objective is to cart away as much of the profits as possible. When this is not happening, like now, they simply pack their bags and go. Ebeano has nowhere to go. When more Nigerians begin to see what Indians, South Africans, Chinese etc. see, and are prepared to be serious entrepreneurs, then things will begin to change in this country. We are even prepared to forgive those who steal money, if they will at least invest here to create employment and wealth, and not simply buying PJs and transferring the monies to London and Dubai to fund the property markets. Plus, we will be in a better position to call the bluffs of those who will be quiet when they make mega profits, but become crybabies when things slip.
May God help us and give us direction!
