Monday, June 1, 2020

WHAT ARE THE KEY LESSONS FROM CHOPPIES FOR BOTSWANA?

Just about two weeks back I was part of a discussion on a Johannesburg based radio station – PowerFM. The topic of discussion on the segment was on the growth of a local retail company – Choppies Enterprise.

From the discussion, it would seem the radio station had wanted us to focus much on the positive lessons from the expansion of Choppies into the African retail market. Infact the PowerFM segment on the issue was inspired by a newspaper in-depth article that had appeared on South Africa’s Mail & Guardian under the heading – Rise and stall of Southern Africa’s most remarkable supermarket chain.

As we all might be aware, following the expansion into the African continent – Choppies has been classified amongst the notable success stories out of Botswana. The question remains though whether this assertion can be declared as the gospel truth. Is Choppies really a true Botswana success story, partially success story or does not deserve the title at all? What constitute a true Botswana success story and what are some of the lessons that one can pick from Choppies that could make it either a true success story, partial success or a wolf behind a sheep skin kind of success?

While we resist the temptation to answer this one question, we cannot resist spelling out some of the key lessons that came from the “growth” of Choppies Enterprise.

All the way from Lobatse to Nairobi Kenya, Choppies began life as a struggling general dealer but now boast of about 250 stores in eight African countries. But this rag-to-riches story is on the brink of an unhappy ending, atleast if the forensic audit report of the company is anything to go with. Whilst we wait to know the fate of this giant retailer one cannot help but pick a few key lessons for everyone. Choppies has a lesson for workers, trade unionists, ministers, capital markets players, regulators and even consumers.

For instance, when Choppies’s first store outside of Botswana was opened in Zeerus, South Africa in 2008 there were a few lessons that Botswana as a country learnt. Choppies was intent on taking the fight to the major South African retailers such as Pick n Pay, Shoprite and Spar in their own backyard.

As expected the SA retailers tried their best to make it hard for Choppies over the years and as we learnt from the cautionary statement issued this past week the local retailer is considering pulling out. The pulling out might be as a result of what transpired behind closed doors at Choppies but we believe that it is also motivated by the resistance by SA multinationals to let competition in their shores. By his own admission, the suspended Choppies CEO – Ram did mention in the Mail & Guardian story that South African companies put pressure on suppliers to withdraw products from Choppies stores, blocked the retailer from obtaining prime premises and threatened to stop doing business with clearing agents who were moving Choppies trucks across borders. This says a lot about South Africa’s attitude towards countries such as Botswana which she regards as “small”. There should a key lesson that regional countries more especially member state of SACU can learn from the Choppies expansion.

Apart from SACU/Botswana one other beneficiary of lessons in terms of the Choppies story should be Competition Authority. The agency played a critical role in the growth of the company. They are approved some of the acquisitions that Choppies undertook. One wonder if they (Competition Authority) regret some of the decisions they made in the past given what the forensic audit is currently showing. What if they let SuperSave supermarkets are? The Competition Authority also made a ruling on the Choppies – Payless buying group. Surely the outcome of the Forensic Audit relating to the buying group says a lot about the extent of the Competition Authority powers. To what extent can the Authority ensure that decisions they make are implemented by giant players such as Choppies?

The Authority aside, the law and policy makers more especially those responsible for helping the locals create wealth for themselves and future generations should also have picked something from the Choppies story. According to Forbes magazine, at some point Ram had hired atleast 500 people from his native country – India as managers of some of the Choppies stores. To date, we know of a few Batswana who have been elevated to those positions. On the other hand we know that a majority of Choppies employees are Batswana. Not only do they get peanuts as pay but their general conditions of service as workers are below par. What’s interesting though is the admission by the suspended CEO during an interview with one of the radio stations that the company can afford to pay the storekeepers more than what they are getting now. Infact he pegged the salary at just around P3000 but said the salaries were motivated by first the government set minimum wage and also the sector wage trend. In other words, Choppies and other retailers – mostly South African have chosen to keep their wages just around the government set minimum wage rates. So what does this say to people who have been given the responsibility to determine sectoral minimum wages?

Speaking low Choppies wages, we learnt just about a week ago about the loss of case by the employees who had taken the retailer to court over unfair dismissal. The former employees in question should be a lesson to those who are still in the Choppies payroll (and all other non-unionised retail sector workers) to consider starting workers union or joining the one that already exist and ensure that it signs a recognition agreement with their employer. As it stands, should Choppies collapse, no one would speak with chest out on behalf of Choppies due to the absence of a recognition agreement between the retailer and the retailers’ workers union. The Botswana Stock Exchange Limited where Choppies has its primary listing should also have a story to tell. Choppies has been on suspension for almost a year now. This speaks directly to ordinary shareholders who bought the Choppies shares at P1.00 and had the shares shut out of the market at a low price of P0.60. Local producers and service providers should also get their share to express how they feel about this giant. Have they been supported enough or maybe there is more Choppies could have done to help them with sales. In a setup where Choppies owned warehouses, trucks, produced in-house products and opened shops in each and every available Kasi space what can expert of trade tell us?

How beneficial was it for the locals to have one big company participating at each and every level of the supply chain. Produce own tomato, use your truck to take to your warehouse, pass it on to your store and have it compete with other tomatoes producers at a lower price. Is this ideal and sustainable? There are just many questions that come to head when one think about the Choppies story but the #Bottomline is that we all have a lesson from it. Lets how we can use the story to build an ideal set up where everyone benefits and not just one man and his few political friends.

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Sunday Standard May 24 – 30

Digital copy of Sunday Standard issue of May 24 - 30, 2020.