Pintail, a company owned by businessman and Deputy Industry Minister Raj Modi, will pay US$260,000 to take over Choppies Zimbabwe, which withdrew from the local market last year.
Choppies entered Zimbabwe in 2013 by taking over 10 SPAR outlets from Modi’s SAI Enterprises for about $22 million. Choppies then grew its footprint to 30 stores in Zimbabwe, and has 1,000 workers. But the collapse of formal retailers in Zimbabwe forced the company to exit the market. In a notice on the Botswana Stock Exchange, Choppies said it had agreed on a sale price of US$260,000 for the business.
“While Choppies believe in Zimbabwe’s long-term viability, for the Zimbabwean operations to be profitable, Choppies as a group will need to invest more capital to support its Zimbabwean operations for extended periods. Supporting the Zimbabwean operations further will not be economically viable for the Choppies group at this time,” Choppies says.
At the time of the sale, Choppies Zimbabwe held property, plant, and equipment valued at US$2 million, as well as stock worth US$1.4 million. The company has booked a US$1 million loss on the sale.
Zimbabwe’s formal retail sector has been squeezed by government exchange rate policies that compel retailers to transact at the official exchange rate, making their goods more expensive than those sold by informal traders. Informal sellers often avoid taxes and offer smuggled goods at lower prices, giving them an advantage over supermarkets.
Announcing its exit last year, Choppies said: “In Zimbabwe, over the last two years, there has been a significant shift to the informal retail sector, leaving the formal retail sector to battle a reduction of up to 30% in footfall and having to compete with the informal sector.”
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