African Multinationals Are Dumping Multi-Country Lustre & Retreating Home

By  |  August 11, 2020

The year 2020 has not been one of the best years for so many reasons. There’s a viral pandemic that has wreaked havoc across the globe, financial markets have gone through a low ebb, entire industries have been battered, businesses have suffered, and job cuts have left individuals in dire straits.

However, one of the less obvious fallouts of the economic roller coasters that have shaped this year on the African continent is the accelerated resignation of several African multinationals to shedding the “multi” part of their identity.

It’s been that sort of year when many African businesses that, until now, have been regarded as borderless and rapidly expanding made some tough calls after reading the handwriting on the wall. 

This year, African firms (especially those in retail) are increasingly giving up the lustre of multi-country presence and retreating to only their performing markets; their home country, in many cases.

It may have begun with relatively smaller brands but now even big multinational firms like Africa’s largest telco, MTN Group, and the continent’s biggest supermarket chain, Shoprite, are expressing intentions to ditch markets outside home turf.

It’s only been five days since South African-born mobile operator, MTN, announced plans to burn the bridges that connect it with the Middle East.

To focus more on Africa, the billion-dollar telco will sell its businesses in countries like Syria and Yemen. In the region, the business is losing money on falling regional currencies, volatile geopolitics, and problems with western sanctions.

It’s been reported that the telco is also looking to trim down its assets with plans to sell its stake in African e-tailer, Jumia, while speaking of selling its 29 percent stake in telecom tower company, IHS Towers, in the future.

Just days earlier, a similar announcement came from Botswana-born retailer, Choppies Enterprises Ltd., which signalled that the company was exiting South Africa and other African markets.

As Bloomberg reported, Choppies will close its supermarkets in several African nations to concentrate on growth in Botswana, where it’s listed.

The Gaborone-based retailer plans to close supermarkets in South Africa, Kenya, Tanzania and Mozambique because they aren’t profitable, according to Chief Executive Officer, Ramachandran Ottapathu. Instead, it will add stores in Botswana this year and explore new markets.

Last week, Shoprite Holdings Ltd., which has already shut two of its three stores in Kenya, took the same steps when it announced that it was ready to dump its stake in its Nigerian retail business which it has operated for 15 years and boasts 25 corporate stores.

This followed the company’s earlier statement which hinted at abandoning non-performing markets and intensifying growth in its South African business which, by itself, accounts for up to 80 percent of its profits across 15 countries.

It would seem that South African retailers with multi-country presence are especially retreating as this has largely been the case in the last 18 months or so.

About 10 months ago, South African fashion retailer TFG, first hinted that it would be reviewing its operations in Ghana and Kenya, where it has at least six stores each. In June this year, it finally did leave.

Last year, Pepkor Holdings sold off its remaining Power Sales outlets in Zimbabwe after suffering a loss of ZAR 70 Mn (USD 3.9 Mn). The devaluation of the local currency and the well documented economic troubles in Zimbabwe had made trading in the country difficult. And these forced the company to flee the market, as Pepkor revealed in its financial results for the year to September 2019.

After quitting Poland and Australia, popular clothing store chain, Mr Price, packed its bags and left Nigeria in June this year. 

Regarding its departure from Nigeria, Mr Price’s CEO, Mark Blair, had been quoted as saying: “Quite frankly I’m not prepared to invest any further whether it’s investment in time or in money into a country that is volatile as it is. In the early days, we were making money but now we just came up against too many roadblocks, whether it’s getting the money out, etc”.

It turns out that just as Mr Price found out, several African businesses are starting to rethink the lure of international expansion across borders, as such endeavours have mostly turned up empty and watered down the effort that could have been put into more promising markets — generally in their home ground.

Featured Image Courtesy: The Guardian

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