With at least 20,000 jobs at risk, Shoprite’s decision to join 10 other major multinationals exit out of Africa’s largest market after 16 years is a clear signal of how bad Nigeria’s unemployment rate will be in the coming months ahead.
The decision comes at a time Nigeria’s economy is struggling as jobless rate has more than quadrupled over the last five years while the minority who have the spending power to shop at Shoprite have seen their finances take a battering because of orthodox government policies and impact of the coronavirus pandemic.
Shoprite’s decision to leave Nigeria means over 3,000 direct jobs and over 17,000 indirect jobs are at risk, a development that means doom to the country’s misery index, which has deteriorated beyond crisis levels, and ought to be the government’s top concern as it has social implications.
For Africa’s largest grocery retailer Shoprite, established 40 years ago with over 500 stores across the continent, Nigeria has neither favourable business climate, nor high purchasing power to sustain their business operations so much that they can no longer cover Shoprite’s cost of doing business.
“Shoprite sees Nigeria’s economy as a sinking ship,” Remi Adekoya, a Polish-Nigerian writer and commentator on politics and current affairs, focusing on Europe and West Africa tweeted on Wednesday.
The company first announced in August 2020 that it was discontinuing operations in Nigeria, citing a revaluation of its operating model.
The planned exit of Shoprite and other major multinationals means more existential risks for millions of jobless young Nigerians, who are victims of an economic crisis that is driving up poverty and sowing insecurity across Africa’s most populous country, which has just barely emerged from its second recession in five years.
About 19million Nigerians entered the labour force in the past five years or 300,000 every month, according to World Bank estimates, but just 3.5million jobs were created during the period, meaning 80 per cent of new workers ended up unemployed.
“Defensive we-don’t-cares attitude can’t change that reality, only sound economic policy,” Adekoya tweeted.
Nigerian Economic Summit Group (NESG), an independent, non-partisan, non-sectarian organisation, says Nigeria needs a high, robust and sustained economic growth that delivers a significant reduction in unemployment and poverty.
The group noted that “to address the challenge of unemployment, Nigeria’s private sector has to be the engine room while the government sets the agenda and addresses key bottlenecks facing the business environment.”
“The devastating impacts of the twin phenomenon of poverty and unemployment are being felt across several parts of the country as manifested in the level of insecurity – kidnappings, theft, and other social vices,” NESG noted.
BusinessDay analysis took a closer look at international companies who have completely shut down their operations in Nigeria and their reasons for leaving.