Local Vendors Struggle to Maintain Market Share as Foreign Supermarkets Move In


Article Highlights

Nathan Tembo fills up a bag of rice for a customer at his stand in the Kabwata market, an open-air market in Lusaka, Zambia’s capital. Glory Mushinge, GPJ Zambia

The Zambian GDP depends on foreign direct investment in mining, retail and other industries, which support the country’s growing middle class. But as the middle class turns to new and comfortable supermarkets for their grocery shopping, Zambia’s local food vendors feel left behind.

LUSAKA, ZAMBIA – Nathan Tembo sits next to a market stall packed with fruits and vegetables. He has been selling here, at this open-air market in Zambia’s capital city, Lusaka, for the past five years.

He makes an effort to arrive at the market at 7 a.m. each day so that he does not miss customers on their way to work. When he started his business, that kind of dedication earned him repeat business and enough money to take care of his wife and six children. But that has changed.

“There are a lot of shopping malls being built, and this is destroying local businesses,” Tembo says. “We [market vendors] depend on these businesses for our livelihoods, but now, it’s tough.”

Fully stocked, spacious and often air-conditioned supermarkets in Lusaka, such as Cheers, Pick n Pay and Spar, are foreign-owned, and they attract multitudes of shoppers. Local market vendors say they can’t make enough money to support their families and stay in business because their regular customers now opt for supermarkets, where some food items are cheaper. Market vendors are asking the government to develop and enforce policies that prioritize and support Zambian businesses.

Foreign investment is the largest contributor to Zambia’s gross domestic product. The wholesale and retail industry is the second largest recipient of foreign direct investment, just after the mining industry, according to a 2015 government report.

expand image
expand slideshow

A supermarket in one of Lusaka's townships in Zambia. Supermarkets are attracting shoppers, taking away business from local grocers.

Glory Mushinge, GPJ Zambia

Sales from the retail industry will total $19 billion by 2019, according to a 2016 report by PricewaterhouseCoopers, an international accounting and consulting firm. The entry of foreign brands in the market plays a role in this development.

Economist David Goody says it is in the government’s interest to support foreign retail investors because they have enough capital to make significant contributions to Zambia’s economic development. As a result, he says government policies tend to favor investors over local retailers.

The ZDA Act of 2006, developed by the Zambia Development Agency, outlines incentives for local and foreign investors. But incentives are reserved for those who invest at least $500,000 in what the government deems a priority sector or product.

While the Competition and Consumer Protection Act includes mechanisms to investigate unfair business practices, advocates say that competition from larger supermarkets doesn’t constitute an unfair practice.

Goody estimates that about 40 foreign-owned supermarkets have opened in the country in the past year. Most are owned by investors from South Africa and the Netherlands.

Shoprite Holdings, a supermarket group from neighboring South Africa, opened its first outlet in Zambia in 1995. Since then, the company has added 27 more branches.

Goody says foreign-owned supermarkets are capitalizing on the growth of the middle class. Africa’s middle class has tripled in size over the last 30 years, according to a 2012 report from consulting firm Deloitte. The middle class population is expected to reach 1.1 billion people by 2060.

Africa’s middle class has tripled in size over the last 30 years.

In Zambia, this population increase daunts some market vendors.

Tembo says that before the supermarkets opened in the Kabwata township of Lusaka, where he sells, he used to earn up to 500 Zambian kwacha (about $50) a day. But now, he makes only 200 kwacha (about $20) on a good day.

Edinah Kalela, who has worked at Kabwata market for 17 years, says her income has also decreased drastically because many of her customers are now shopping at supermarkets. She says she makes about six times less than she did in the early 2000s.

Golden Machai says his butcher shop used to be crowded with customers, as he glares at the empty storefront.

Machai, who works at JS Butchery, a local butcher shop in Lusaka, says he wishes customers would prioritize the freshness of his product over some of the other conveniences the supermarkets offer.

Given Makanse, a customer, says local markets are often found in old buildings, and some do not have roofs or paved floors. So, when it rains, customers and vendors are exposed. She says she prefers supermarkets.

“I like the prices – they are affordable – and the environment. It’s cleaner in shopping malls,” Makanse says.

Tembo says the government needs to develop zoning laws that will limit the number of supermarkets built in each neighborhood, so that local grocers are not outnumbered by supermarkets.

He also says that the government needs to improve the infrastructure of local markets.

That will bring our customers back, Tembo says.