Sun International,a South African hotel and gaming group and operators of the Federal Palace Hotel, Lagos, has disclosed that it would exit Nigeria due to weak economic growth and clashes with regulators.
The company, which has significant investment in Tourist Company of Nigeria, TCN, was in January, subjected to a probe by the Economic and Financial Crimes Commission (EFCC), with four of its South African staff detained.
The EFCC had stated that the investigation was over issues surrounding Sun International initial investment in the Tourist Company of Nigeria (TCN).
“The Board has decided to exit Nigeria and steps will be taken to achieve this in a manner that does not erode further value. Continued setbacks in Nigeria as well as the ongoing shareholder dispute have frustrated all attempts to develop and improve the property,” Sun International said in a statement.
Sun International is the latest South African company to clash with Nigerian authorities after telecommunications group MTN was fined for failing to disconnect users with unregistered SIM cards.
Sun International’s decision to exit Nigeria follows food and clothing retailer Woolworths and Tiger Brands, which sold its loss-making Nigerian division to Dangote Industries.
Shares in Sun International were down 0.7 percent by 0855 GMT.
Reporting its results, the company said poor economic conditions and general negative sentiment in its home market of South Africa resulted in revenue growth at casinos of only 0.8 percent at 7 billion rand ($514.78 million).
“In South Africa, the economic environment remains a serious concern. We do not anticipate any meaningful growth in gaming revenue until there is a recovery in the economy and renewed consumer confidence,” Chief Executive Graeme Stephens said.
The South African Reserve Bank expects economic growth at zero percent this year, due to a severe drought and falling commodity prices.
The Sun International Company had for example sometime not long ago sacked some of its staff following which those staff reported to their unions and the Labour Council intervened, piquet the company.
It had also at another moment being subjected to EFCC investigation and arrest of three of its senior managers but who were released later.
However,a major problem could be Nigeria’s current economic policies which is making forex acquisition and repatriation very tight for foreigners in the country.