Choppies not afraid to expand African stores

While some retailers are fleeing from foundering African economies, a few brave ones are sticking it out and expanding on the continent. Not only is Choppies Enterprises adding stores in the region, it has even dared to tackle countries that leading retailers such as Shoprite and Spar have failed to make work. These include Zimbabwe, Kenya and Tanzania.

Zimbabwe in particular presents difficulties for foreign companies trying to make money there. Choppies buys its stock from SA, which is still the main purchasing base for retailers, but the Zimbabwean government has banned certain imports from the country. This means the availability of stock is a constant problem. And trying to source goods locally comes with its own set of difficulties.

Despite these troubles, Choppies reported a substantial increase in interim profit from doing business north of SA’s borders and CEO Ram Ottapathu says he remains optimistic about the prospects of trade in Zimbabwe

East Africa is no pushover either. Over the past decade, new players have entered the sector, riding on consumer attachment to local and regional brands. Choppies has not let that little fact stop it from expanding there. At the end of December 2016, Choppies had nine stores operating in Kenya. The grocer commenced operations in Tanzania with one store in September 2016. More stores are to be opened by the end of 2017.

If anything, Choppies seems to have come to the conclusion that while there might be temporary setbacks in each of the countries in which it operates, now is always the perfect time to enter a market.

Despite economic setbacks and slow growth, retail in sub-Saharan Africa is still the next big thing, as US-based management consulting firm AT Kearney puts it. There is a serious desire and need for formal retail players in the region. Ultimately, the retailer that stays the course will gain the most.

PPC Zimbabwe’s new $82m plant in Harare has opened to what can only be described as a poor market.

The new plant brings PPC’s capacity in the country to 1.4million tonnes a year. PPC Zimbabwe MD Kelibone Masiyane says the commodities rout has cooled demand in Mozambique, Malawi and Zambia, while domestic demand is tepid.

But revived interest in commodities bodes well for PPC in the region, even as mining has slumped, as have oil and gas prospects in Mozambique.

Mozambique also has a sovereign debt crisis, which has made cement imports from Zimbabwe extremely expensive after the metical plunged against the dollar, which is Zimbabwe’s main currency.

And resource-rich Zambia has a currency crisis of its own.

In addition, hydro-electricity production at the Kariba Dam fell by two thirds due to low water levels, causing widespread blackouts. Zimbabwe is negotiating a continuation of deals to import power. Fortunately, PPC in Zimbabwe has a guaranteed power supply.

But it remains a tricky time for PPC, which is finalising and commissioning costly plants in the Democratic Republic of Congo, Ethiopia and Rwanda. To this end, it is now considering an offer to merge with Afrisam, having rejected its earlier advances. This would help the two groups to fend off predators in regional cement markets.