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Johannesburg - Africa's biggest grocer, Shoprite Holdings Ltd, plans to start trading in the Democratic Republic of Congo (DRC) by the end of 2010 or early 2011 after investing R350m to R400m.
"(We) would definitely be (starting to trade by) end of 2010 or early 2011. The first two shops (will be in) ... Kinshasa and Lubumbashi," chief executive Whitey Basson told Reuters on Monday.
"We think they are the best two cities to test the waters in. DRC, we think, is quite a wealthy country. It's quite stable at the moment. It's got a lot of resources ... We know that we can trade there (though) it's obviously unchartered waters," Basson said.
Following elections in 2006, investors have poured funds into Congo's mining sector, encouraged by surging metal prices. The country, which is rich in minerals and dependent on revenue from its copper and cobalt mines, saw its once healthy economy ravaged by war between 1998 and 2003.
Basson could not comment on the turnover and market share Shoprite hoped to generate in the DRC.
The group, which operates supermarkets in more than 10 African countries, said in its 2009 annual report that turnover in non-South African supermarkets had grown by 39.9%.
Basson said the group was considering projects in other African countries, but the problem was getting sites.
He added that the group, which has a store in India, was not keen on opening more stores in that country.
"We are in a situation where the laws in Asia have not changed for foreign direct investments. It depends on whether the ... government allows foreign direct investment to open hundreds of stores or (not)," Basson said.
"At this point there's no indication that (the Indian government is) going to open up foreign investment in retail."
Shoprite reported a 30.9% rise in full-year earnings in the year to June 30, but warned of a tough year ahead amid South Africa's first recession in 17 years.
Basson said market conditions in South Africa had not changed substantially except for inflation coming down.
Shoprite shares have risen by more than 30% since last year and outperformed the Johannesburg Top-40 index by about 3% in the year-to-date.
The company has refused to comment on speculation over a possible tie-up with furniture maker Steinhoff.
- Reuters
