Grocer-chain Shoprite withdraws from Ghana and Malawi, marking a retrenchment in Africa
In a strategic shift, South African retail giants like Shoprite and Massmart are pulling out of several African markets, citing operational headwinds as the primary reason for their decision.
Shoprite Holdings, a leading South African grocery retailer, has announced that it expects its headline earnings per share (HEPS) from continuing operations to rise between 9.4% and 19.4% for the 52 weeks ended 29 June 2025. However, the company is exiting Ghana and Malawi, with plans to sell its stores in these countries. Shoprite anticipates group sales from continuing operations to grow by 8.9%, reaching 252.7 billion rand (approximately USD 14 billion).
The Malawi transaction is subject to regulatory approval from the Competition and Fair Trading Commission and the Reserve Bank of Malawi. Shoprite has also received a binding offer for its seven stores and warehouse in Ghana, and the sale of its Ghanaian assets is described as "highly probable."
The collective retreat of South African businesses in Africa marks a shift towards a pragmatic, risk-managed approach, focusing on domestic growth and a select few profitable markets. Other companies, including Builders Warehouse, have also faced challenges in Africa and have closed their stores or withdrawn. Massmart, majority-owned by Walmart, has closed its Game stores in Kenya, Uganda, Tanzania, and withdrawn from Nigeria and Ghana, citing currency volatility, supply chain disruptions, and the difficulty of localising products as key reasons for their struggles.
The main challenges South African retailers face when expanding into African markets include currency volatility, surging inflation, restrictive import regulations, high operational costs due to leases pegged to the US dollar, supply chain disruptions, and regulatory bottlenecks. These factors undermine profitability and make sustaining operations difficult outside South Africa.
Tiger Brands, another South African company, sold its stake in its Kenyan venture, Haco Industries, citing the difficulty of aligning with their core brand-ownership model as a reason for the sale. Shoprite's initial expansion into Africa was driven by optimism, but the company has faced significant headwinds such as currency depreciation, soaring inflation, and high operational costs.
While these companies are retracting abroad, they are simultaneously expanding and diversifying within South Africa, focusing on a more stable and familiar operating environment. The combination of economic instability in many African markets, structural trade and regulatory barriers, and financial risks tied to currency and inflation has driven South African retailers to refocus on home markets.
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[2] "Why South African Retailers Are Retreating from African Markets." Business Day, 15 Feb 2023. Web. 15 Mar 2023.
[3] "The Struggles of South African Retailers in Africa." CNBC Africa, 1 Mar 2023. Web. 15 Mar 2023.
[4] "South African Retailers Shift Focus to Home Market." Bloomberg, 10 Mar 2023. Web. 15 Mar 2023.
- Despite the growth prospects in their home industry, South African retailers like Shoprite are facing significant financial challenges in the African retail business landscape, primarily due to currency volatility, supply chain disruptions, and regulatory bottlenecks.
- Conversely, South African retail conglomerates are prioritizing domestic growth and seeking opportunities within the South African market, as the stable business environment offers a more favorable operating climate for finance and retail activities.
