Will the Choppies Success Story be a Fact or Fiction?

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Choppies enterprises listed on Botswana Stock Exchange in January 2012, with an Initial Public Offering of 1.2 billion shares being listed at an offer price of P1.15 per share. The IPO was said to be the largest on the BSE history, raising P350 million. Choppies enterprises exponential growth is unprecedented in retail business in Botswana, with stores in every town and major village and a market share of 30%.


The enterprise expanded its operations to South Africa owning a subsidiary there, Choppies Supermarkets South Africa (PTY) Ltd, which has operations in four provinces there; North West, Gauteng, Free State and Limpopo. In an interview with The Voice newspaper, the Group CEO said that they were looking at a target of 100 outlets in South Africa. The enterprise operates superstores, hyper stores and hardware stores selling a wide range of products including pharmaceutical products.


In Botswana the Choppies brand has become a symbol of national pride, especially after penetrating international markets. Batswana are looking up to Choppies to diversify its investment activities and create more jobs especially in the manufacturing sector more so that it’s now a public company with corporate social responsibilities.


However, The Board Room is concerned that without proper codes of best practice and strict regulatory regimes that emphasize principles of good corporate governance such as accountability, responsibility and transparency; we may at the end find ourselves with hearts filled with grief and great disappointment. We need to establish these regulatory regimes now, and avoid scandals and setbacks.


It’s clear that Choppies’s achieve- ments are due to the company’s ability to lure investors and heighten their confidence in the company but how they do it, no one knows except company executives and owners. And this is what worries The Board Room. It has become common practice for directors to disguise the true financial performance of their companies by dressing up the published accounts and giving less than honest statements. These window dressed accounts make it difficult for inves- tors to reach a reasoned judgment about the financial position of a company.


No one wishes to see our own ‘Choppies’ go the Enron way. Enron was formed in the mid 1980’s and became by the end of the 1990’s the seventh largest company in rev- enue terms in the US. However, this concealed the fact that it had overstated its profits by more than $500 million-falling into bankruptcy (the largest in US Corporate History) in 2001. Again in 2003 Ahold, the world’s third largest grocer re- ported that its earnings for the past two years were overstated by more than $500 million as a result of local managers recording promotional allowances provided by suppliers to promote their goods at a figure greater than the cash received.


In India, it was later on discovered that Satyam, a leading Indian outsourcing company, had with the help of auditors significantly inflated its earnings and asserts over a number of years. The list of stories of large ‘successful’ companies with dubious financial and accounting practices is endless.


The Board Room hopes and prays that the ‘Choppies success’ will at the end be a true and inspirational story and not fiction.