Michael Chudi Ejekam, Expert Retail Developer, Comments on Shoprite’s strategy to be successful in Nigeria’s emerging market.
New York, NY, United states – May 3, 2016 /PressCable/ —
Chudi Ejekam, a recognized authority in retail real estate investment, comments on the resilience of Shoprite’s Nigeria earnings despite foreign exchange controls and a sharp drop in crude oil prices. Shoprite is Nigeria’s largest hypermarket by sales volume.
According to the Bloomberg article, derived from Shoprite Holdings half year financial results for the period ending Dec 31st 2015: “Nigeria showed healthy sales growth despite a slump in the price of crude oil and foreign exchange controls”, Basson said.
The retailer plans to open six Nigerian stores by December, adding to the 16 currently trading, and will also set up a distribution center in Lagos in the next couple of months to improve product availability. The Nigerian government depends on crude oil for over 70% of its revenues and over 90% of its foreign exchange earnings – therefore; the steep drop in crude oil prices had dealt a major blow to the country’s foreign reserves and had put the Naira under great pressure versus the U.S. dollar.
As explains, “as a countermeasure, beginning in June 2015, the Central Bank of Nigeria (CBN) introduced a ban on the ability to access foreign exchange via the official exchange rate to purchase 41 items. The CBN also introduced other measures to essentially ration foreign reserves, making it more difficult for many businesses in Nigeria to secure U.S. Dollars to import key inputs. Many retailers, especially those that were import-dependent were hit hard, and have had challenges securing the Dollars to replenish their stock. Further, the sharp drop in the parallel market Naira exchange rate, meant that certain retailers effective dollar revenues from Nigeria sales would be reduced, with many being compelled to raise their prices materially. Shoprite on the other hand, secures 76% of the items that it sells in Nigeria from local suppliers, of which 38% are manufactured locally. Therefore, Shoprite’s results have been relatively insulated from the foreign exchange shocks and Shoprite avoided material price increases. The resulting earnings, demonstrate that Shoprite’s business model is smart and defensive and well suited for an emerging market like Nigeria. Other retailers should pay close attention…and learn!”
About Michael Chudi Ejekam
Michael Chudi Ejekam is a renowned leader in the “retail revolution”. He is a widely quoted retail thought leader, with strong local business and government relationships. Michael Chudi Ejekam served as Director Real Estate for W Africa for Actis, a $7.5 B private equity firm- most active retail developer in Sub-Saharan Africa (ex SA) for 7+ years. Ejekam originated $700+M in retail projects. Projects include $100MIkeja City Mall Lagos, $120M Jabi Lake Mall Abuja and Accra Mall. Other projects include Heritage Place, Nigeria’s first green certified commercial building. Originated three upcoming Nigeria malls ranging from $150-185M each totaling over 40,000m2 each, which would be largest in the region.
Michael Chudi Ejekam started his career on Wall Street, as an investment banker at Merrill Lynch in New York.
He graduated with Honors from the Wharton School, University of Pennsylvania, with BSc in Economics with a Concentration in Finance. He received the Howard E Mitchell Award for academic excellence and extracurricular contributions. Learn more about Michael Chudi Ejekam .
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