News / National
Choppies mulls Zimbabwe exit
29 Oct 2024 at 07:48hrs | Views
Botswana-based retailer Choppies Enterprise Limited is contemplating a withdrawal from the Zimbabwean market, citing significant financial pressure stemming from the instability of the newly introduced Zimbabwe Gold (ZiG) currency.
Choppies holds a 100% stake in Nanavac Investments (Pvt) Limited, which operates as Choppies Zimbabwe. The company reported in its annual report for the fiscal year ending June 30, 2024, that its operations in Zimbabwe have become increasingly challenging due to ongoing economic turmoil.
"The new ZiG currency, which replaced the Zimbabwean dollar, has not yet stabilized the economy," the report stated, highlighting a decline in the performance of its Zimbabwean operations. Choppies acknowledged the broader economic issues affecting the country, including high inflation, unemployment, and a persistent shortage of foreign currency.
"Operations in Zambia remain fairly stable and should improve significantly, following the ending of the drought and El Niño conditions which affected hydroelectric generation resulting in power cuts. However, Zimbabwe continues to be a challenging environment," Choppies noted.
Choppies operates 30 stores in Zimbabwe, employing 1,051 people (567 male and 484 female). Should the company decide to exit the market, these employees could face job losses. The retailer has expressed its long-term strategy to reduce debt and has already exited other loss-making ventures, with Zimbabwe being the last area under consideration.
Choppies CEO Ramachandran Ottapathu remarked, "The economic challenges in Zimbabwe continue to impact our operations. Given the stress on the group's financials, we are weighing various options in Zimbabwe."
As of June 30, 2024, Choppies reported BWP128 million in assets against liabilities of BWP122 million, indicating a precarious financial position primarily reliant on debt. The company is facing economic headwinds, with Zimbabwe's GDP growth projected at just 1.9% for 2024, a significant decline from an estimated 5.0% in 2023. This downturn is attributed to declining agricultural output, ongoing exchange rate instability, and persistent power outages.
Choppies emphasized the impact of severe drought conditions, which have drastically reduced maize output, a staple crop, by 77% compared to 2023 levels. This decline threatens the livelihoods of farmers, who constitute 53% of Zimbabwe's workforce, further straining the economy.
With 45.3% of the population requiring food assistance and rising food prices, consumer spending is expected to stagnate. Choppies forecast that while government consumption may increase by 4.7%, it will not offset the challenges of lower growth rates compared to previous years.
As the situation unfolds, Choppies is left to navigate a complex economic landscape, weighing the possibility of exiting Zimbabwe while striving to stabilize its overall financial performance.
Choppies holds a 100% stake in Nanavac Investments (Pvt) Limited, which operates as Choppies Zimbabwe. The company reported in its annual report for the fiscal year ending June 30, 2024, that its operations in Zimbabwe have become increasingly challenging due to ongoing economic turmoil.
"The new ZiG currency, which replaced the Zimbabwean dollar, has not yet stabilized the economy," the report stated, highlighting a decline in the performance of its Zimbabwean operations. Choppies acknowledged the broader economic issues affecting the country, including high inflation, unemployment, and a persistent shortage of foreign currency.
"Operations in Zambia remain fairly stable and should improve significantly, following the ending of the drought and El Niño conditions which affected hydroelectric generation resulting in power cuts. However, Zimbabwe continues to be a challenging environment," Choppies noted.
Choppies operates 30 stores in Zimbabwe, employing 1,051 people (567 male and 484 female). Should the company decide to exit the market, these employees could face job losses. The retailer has expressed its long-term strategy to reduce debt and has already exited other loss-making ventures, with Zimbabwe being the last area under consideration.
As of June 30, 2024, Choppies reported BWP128 million in assets against liabilities of BWP122 million, indicating a precarious financial position primarily reliant on debt. The company is facing economic headwinds, with Zimbabwe's GDP growth projected at just 1.9% for 2024, a significant decline from an estimated 5.0% in 2023. This downturn is attributed to declining agricultural output, ongoing exchange rate instability, and persistent power outages.
Choppies emphasized the impact of severe drought conditions, which have drastically reduced maize output, a staple crop, by 77% compared to 2023 levels. This decline threatens the livelihoods of farmers, who constitute 53% of Zimbabwe's workforce, further straining the economy.
With 45.3% of the population requiring food assistance and rising food prices, consumer spending is expected to stagnate. Choppies forecast that while government consumption may increase by 4.7%, it will not offset the challenges of lower growth rates compared to previous years.
As the situation unfolds, Choppies is left to navigate a complex economic landscape, weighing the possibility of exiting Zimbabwe while striving to stabilize its overall financial performance.
Source - newsday
