Wednesday, June 3, 2020

Choppies caught in Zimbabwe crossfire

By Bonnie Modiakgotla

Botswana’s leading grocer, Choppies Enterprises, has been caught in the ongoing protests in Zimbabwe as some of its supermarkets have been looted and vandalized.

Once the food basket of Southern Africa, Zimbabwe has been trapped in an economic crisis, stretching from early 2000.

Prospects that the economy will improve under Emmerson Mnangagwa ÔÇô who in late 2017 toppled long term ruler Robert Mugabe aided and abetted by the army ÔÇô were dashed last Sunday when Zimbabweans woke to news of a 150 percent hike in fuel prices to $3.11 (about P30) a liter, making it the world’s most expensive, sparking violent protests on Monday.

The protests over the country’s economic conditions have been so far restrained to the nation’s capital Harare and the biggest city Bulawayo. The protests have been met with brutal force from the government security agencies, with multiple casualties reported.

The government has reportedly asked the country’s leading mobile operator, Econet Wireless, to shut down the internet ÔÇô something that the government has been heavily criticized for.

There are fears that such blackout will allow the government to continue with the mass arrests and brutality without drawing attention from observers outside the country.

In the ensuing protests, Choppies stores located in the suburbs of Harare and Bulawayo were targeted, with many looted and at least two stores burnt to the ground.

With over 212 stores across seven countries, Zimbabwe is Choppies’ third biggest market with about 33 stores in the country.

The Botswana born company made its sojourn in Zimbabwe’s tough operating environment in 2013 and the company is yet to make a profit there.

Ramachandran Ottapathu, Choppies CEO, confirmed to the Sunday Standard that several of their stores have been looted. He said all other Choppies stores remain open except for the looted ones which remain closed.

“We are still busy with damage assessment. A few of our stores have been looted in the suburbs,” he said.

Meanwhile, amid the looting and vandalizing of its stores, Choppies troubles in Zimbabwe have lessened after the giant retailer resolved and settled issues surrounding their shareholding structure in Zimbabwe. Choppies has been embroiled in a nasty fight with its Zimbabwean shareholders since last year, who accused the company of trying to undercut them.

When it made its entry in the Zimbabwen market, Choppies partnered with Phelekezela Mphoko ÔÇô then Zimbabwe Vice-President who was once the country’s ambassador to Botswana.

Through an investment vehicle called Nanavac Investments Private Limited, the company registration records show that Mphoko owned 51 percent while Choppies Enterprises had a 49 percent stake.

This was done to satisfy the Indigenization Act which prevented foreigners from owning more than 49 percent shareholding in local businesses.

The law was scrapped after Mnangagwa became president, prompting Choppies to want to formalize the shareholding to reflect the actual deal done behind closed doors.

This kick-started a fallout between former partners, with Mphoko accusing the Botswana retailer of muscling him out as the major shareholder as he no longer had any political power.

Choppies strongly denied Mphoko’s version of events, and maintained that the true deal is they own and control 93 percent of economic interest in Nanavac while the Mphokos have only 7 percent.

Now it appears that the Mphoko family has thrown in the towel in a fight that has negatively affected both parties. On Thursday, Mphoko and his son Siqokoqela Mphoko said in a joint statement that they have exited from their shareholding and have no interest in the company.

“We have been instructed by our clients Choppies Entreprise, Hon. Phelekezela Mphoko and Mr. Siqokoqela Mphoko to advise the public and all staff of Nanavac Investments that the shareholders and directors have amicably resolved and settled all issues, matters, cases and disputes between them and amongst themselves so that there are no longer any outstanding between our respective clients, who further advise that the Mphokos have dis-invested  from Nanavac Investments T/A as Choppies Supermarkets Zimbabwe and have no further interests in the company and its business, ” they said in a  joint statement released on Thursday by Welshman Ncube and the lawyer for Choppies Enterprise Munyaradzi Nzarayapenga.

The shareholding fight in Zimbabwe had several repercussions for the dual listed company after it failed to publish its audited financial results last year, forcing both the Botswana Stock Exchange and the Johannesburg Stock Exchange to suspend the trading of its shares in October.

The company has cited the shareholding dispute as part of the reasons why it has not finalized its financial results. Besides the trading suspension, the company’s share price has plummeted by over 70 percent in both stock exchanges as investors were spooked by new developments. Choppies is yet to release its audited full year results.

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