In an illustration of the challenging economic climate facing businesses in Nigeria, Shoprite, one of Africa’s largest retail chains, has announced the imminent closure of its Wuse branch in Abuja. The store, located in Novare Central Mall, will cease operations on June 30, 2024, marking another casualty in the retail sector’s struggle against harsh economic conditions.
Dr. Folakemi Fadahunsi, Chief Executive Officer of Shoprite Nigeria, communicated the decision in a circular on Monday to vendors, stating, “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. This decision has been made after a thorough evaluation of the store’s financial situation and the current business climate.”
The closure of the Abuja branch follows a similar move in Kano, where Shoprite shuttered its operations in January 2024. These closures underscore the broader economic challenges facing businesses in Nigeria, including currency devaluation, rising energy costs, and the ripple effects of subsidy removals.
Shoprite, which entered the Nigerian market in 2005, has been a significant player in the country’s retail landscape. The company’s decision to close stores reflects the increasingly difficult operating environment for both local and international businesses.
The retail giant’s struggles are not isolated. In recent months, Nigeria has witnessed a concerning trend of business closures and scaling down of operations, particularly among multinational corporations. Companies such as Diageo, Unilever Nigeria PLC, Procter & Gamble Nigeria, and GlaxoSmithKline Consumer Nigeria Ltd have either sold their stakes or significantly reduced their presence in the country.
The economic factors driving these decisions are multifaceted. Nigeria’s currency, the naira, has experienced significant depreciation, making imports more expensive and squeezing profit margins. Additionally, the removal of fuel subsidies has led to increased transportation costs, further burdening businesses and consumers alike.
Energy costs have also played a crucial role in the challenging business environment.
“Nigeria is battling the impact of a weakening local currency, the effect of the ‘removal’ of petrol subsidy as well as skyrocketing energy prices, including electricity, diesel and gas costs, which have more than doubled in the last one year of the current administration,” noted an industry analyst familiar with the situation.
The closure of Shoprite’s Wuse branch will inevitably lead to job losses, adding to the country’s unemployment concerns. While the company has not disclosed the number of employees affected, retail outlets typically employ a significant workforce, including both direct employees and those in the supply chain.
In its communication with vendors, Shoprite emphasized its commitment to settling outstanding balances, stating, “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.”
As Nigeria grapples with these economic challenges, the closure of established retail outlets like Shoprite serves as a stark reminder of the urgent need for economic reforms and policies that can create a more sustainable business environment.
The coming months will be critical in determining whether the country can stem the tide of business closures and job losses, or if more companies will be forced to make similar difficult decisions.