South Africa’s Pick n Pay plans Nigeria exit amid inflation, naira crisis

• South Africa’s Pick n Pay is planning to exit Nigeria
• The retailer recently sold 51 per cent of its stake in a joint venture
• High inflation and the naira crisis are driving the exit of many companies from Nigeria

Amid high inflation and the naira crisis, South African grocery retailer, Pick n Pay, is planning to exit Nigeria.

According to its CEO, Sean Summers, per Reuters, the retailer recently sold 51 per cent of its stake in a joint venture as part of a broader restructuring strategy outside its home market.

Despite the odds, the brand came into the Nigerian market about five years ago through a partnership with A.G. Leventis and currently operates two stores in the country.

High inflation and the naira crisis have driven consumer goods companies out of the market

The high inflation rate coupled with a depreciating naira has impacted the operations of many consumer goods companies and multinationals, leading to their exit from the Nigerian market.

The financials of many companies, including PZ Cussons, Diageo, GSK, Procter & Gamble, Sanofi, Kimberly-Clark and another South African retailer, Shoprite, have been affected by macroeconomic headwinds that are discouraging their continued stay.

Nigerians’ purchasing power is affected by the inflation rate, which has been on an upward trend. The rate soared to a new 28-year all-time high of 34.19 per cent in June. It, however, tapered in July after 19 months, declining to 33.40 per cent. The rate declined further for the second consecutive month in August to 32.15 per cent before increasing to 32.70 per cent in September 2024.

The naira is also facing pressure as the currency has continued to depreciate. It lost 40 per cent of its value in the first half of 2024 and recently depreciated by 43 per cent and is one of the worst-performing currencies on the African continent.

Since the floating of the naira in June 2023, which allowed market forces to determine the currency’s value on a willing-buyer-willing-seller model, the naira has been on a downward trend.

The currency has since depreciated, sliding from the N769.25/$ it traded on June 30, 2023, at the Investors and Exporters (I&E) window to N1,601.20/$ as of October 25, 2024. On the other hand, in the parallel market, the currency moved from N770/$ in June 2023 to N1,730/$ as of October 25, 2024.

10 companies that have exited Nigeria in the last 2 years

Meanwhile, TheRadar reported that due to economic instability in Nigeria, many businesses have exited the country, adding to the unemployment statistics and the burden of Nigerians’ daily lives.

TheRadar spotlights 10 companies that have left Nigeria in the last two years.