Tuesday, October 13, 2009

Shoprite Scraps Plan to Pursue OK Zimbabwe Investment

By Nasreen Seria
Oct. 12 (Bloomberg) -- Shoprite Holdings Ltd., South Africa’s biggest food retailer, said it won’t pursue investment in Zimbabwe, citing political and economic “uncertainty.”
“Due to the current socio-economic and political uncertainty in Zimbabwe,” Shoprite “has decided not to engage in further investment opportunities in that country in the short to medium term,” the retailer said today in a statement.
Cape Town-based Shoprite was responding to media reports that it may buy OK Zimbabwe Ltd., the country’s second-biggest supermarket chain. Shoprite said on Aug. 28 it would “consider” buying businesses in Zimbabwe to expand its operations to the rest of the continent. Calls to OK Zimbabwe’s offices in the capital Harare didn’t connect.
Zimbabwean President Robert Mugabe signed a power-sharing agreement with opposition leader Morgan Tsvangirai in February, with the aim of drawing up a new constitution and holding elections within two years of that. The country is struggling to attract foreign investment to help the economy recover from a decade of recession. Mugabe’s program of seizing commercial farmland in 2000 to give to blacks slashed export earnings, caused shortages of food and foreign exchange, and turned the country into sub-Saharan Africa’s top corn importer.
‘High Risk’
Kingdom Meikles Africa Ltd., owner of Zimbabwe’s largest food retailer TM Supermarkets (Pvt) Ltd., was placed under state administration by the government on Sept. 18 under anti- corruption laws. Sternford Moyo, a lawyer for the company, said the move was illegal and Gilbert Muponda, a Zimbabwean investment analyst based in London, said the seizure indicates that Zimbabwe remains a “high risk investment destination.”
Shoprite, which posted a 27 percent jump in profit in the year through June, operates 102 stores in 16 countries outside of South Africa, including a grocery outlet in Zimbabwe’s second-biggest city, Bulawayo.
The retailer’s shares rose 71 cents, or 1.1 percent, to 63.20 rand as of 5:10 p.m. in Johannesburg today, taking its gain in the past six months to 21 percent.
To contact the reporter on this story: Nasreen Seria in Johannesburg at nseria@bloomberg.net;

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