Together with Standard Bank and MTN, supermarket group Shoprite is often credited as one of the first large South African companies to see the opportunities in the rest of the continent. In 1995, long before the current hype about doing business in Africa, Shoprite opened its first supermarket in Zambia.
The group has a presence in 17 African countries. Shoprite is seeing significant potential in the Nigerian market, where it currently has four outlets. Shoprite believes there is scope for 700 stores in Nigeria. Despite Nigeria’s population of over 160 million, it is estimated that 61% of Nigerians live on less than US$1 a day. Shoprite CEO Whitey Basson, however, doesn’t seem too concerned. “Even if you have 60% of the population living in poverty, 40% of the Nigerian population is still bigger than the South African population,” he told Reuters.
Despite its relatively large African footprint, Shoprite could be in for some strong competition in the coming years, most notably from US supermarket giant Wal-Mart, which recently acquired South African retailer Massmart. Pick n Pay, another one of Shoprite’s competitors in South Africa, has also expanded beyond the country’s borders with store openings in Zambia, Mozambique and Mauritius. In addition, Kenyan-based Nakumatt, which has a strong presence in the east African market, has plans to become a pan-African player.
Africa’s mobile telecommunications sector has experienced an astonishing rise over the past decade. It is estimated that the continent currently has over half a billion mobile subscribers.
Since MTN’s start in South Africa in 1994, the company has expanded to become a pan-African mobile telecoms giant with operations in at least 16 markets on the continent. MTN’s early investment in Nigeria is seen as a stroke of brilliance. At first considered a risky investment, MTN closely studied the Nigerian market for three years before it entered the country in 2001. Today MTN Nigeria has over 40 million subscribers, its biggest market out of all the countries where it operates.
With revenues from voice falling rapidly, most mobile network operators need to find new ways to generate profit, such as from data and other services. However, despite what the future holds for mobile telecoms in Africa, MTN is likely to continue to be one of the major players.
8. Mr Price
Fashion retailer Mr Price currently has 45 corporate-owned stores and 28 franchised outlets in the rest of Africa. In its most recent annual report Mr Price says that the emergence of a sizeable middle class will provide fuel for consumer booms in many African countries. However, overcoming obstacles, such as poor infrastructure, will prove challenging, “but potentially very rewarding”.
In March this year Mr Price opened its first Nigerian outlet in the new Ikeja Mall in Lagos. Although it is still early days, the store is performing better than initial feasibility studies indicated. A brand new outlet is also expected to open in Ghana’s Accra Mall this month.
For its expansion into Africa, Mr Price’s strategic focus is on corporate-owned stores in areas where critical mass can be achieved. The group has however said that growth into the rest of the continent will be slowed by a lack of suitable properties.