Nakumatt cleared to take over Dar Shoprite stores

Thursday May 29 2014

The Tanzanian competition watchdog has cleared Nakumatt’s bid to take over three stores owned by South African retailer Shoprite in Dar es Salaam and Arusha, moving the buyout closer to conclusion.

The Fair Competition Commission (FCC) of Tanzania Wednesday confirmed that it had given a green light for the transaction that will see Nakumatt stores in Tanzania increase to four, in addition to its Moshi outlet opened in 2011.

The acquisition has been valued at about Sh4 billion.

‘’We granted the approval to Nakumatt on Monday. There were no much issues to deal with  after Tanzania Union of Industrial and Commercial Workers which had filed the case  to block the buyout  by Nakumatt settled their grievances with their employer,’’ said the Tanzanian Fair Competition Commission public relations manager Frank Mdimi in a telephone interview.

Shoprite employees had moved to court two months ago blocking the buyout by Nakumatt, over fears that they would lose their terminal benefits with changes in ownership of the retail stores.

‘‘The approval has been granted with strict conditions to Nakumatt on how they should operate in Tanzania and the protocol to be observed when buying or importing their products,’’ added Mr Mdimi. 


READ: Nakumatt edges closer to Shoprite buy

Under the new guidelines, Nakumatt will be expected to employ a certain percentage of the locals in their stores and sign a pact with the government detailing how much they will be buying from Tanzanian manufacturers and disclosing the bulk they will be buying from Kenya.

Nakumatt Holdings’ head of strategy and operations Thiagarajan Ramamurthy last month told Business Daily that the retail chain has already figured out how to address this concern, which is said to have been the main reason behind Shoprite’s exit from Tanzania.

“Our focus will be to support local manufactures by buying most products from them,’’ said Mr Ramamurthy in an earlier interview with the Business Daily.

Shoprite exited Tanzania after about 12 years in the country after being accused of importing the bulk of its products from its mother company in South Africa.

The Nakumatt Holdings managing director Atul Shah Wednesday said the approval was a big win for the retailer which now plans to start operations in the next three to four weeks to come.

‘‘We are ready for the Tanzanian market, we will start operations in less than a month or so,’’ said Mr Shah.

ALSO READ: Nakumatt to open stores in Dar, Juba and Bujumbura

Nakumatt will rebrand the three Shoprite stores.

Mr Shah said former Shoprite employees who are willing to work for Nakumatt will be absorbed.

‘‘We are not downsizing, but instead we are ready to work with former Shoprite employees on new terms. We understand that they are about 250 employees and this is a good number to start off with,’’ said the Nakumatt MD.

Already, Nakumatt has contracted Hipora Business Solutions East Africa Ltd, a Kenyan logistics firm specialising in verification of supermarket supplies, to advise on efficiency and recruit personnel for the three stores.

Wednesday, the firm said it been instructed by Nakumatt to lay the ground for a possible opening of one of the Shoprite branches by mid next month.

“We have been informed (by Nakumatt) that we should be ready by  mid next month to start operations at Shoprite Arusha branch as they plan to open  the rest,’’ said  one of the senior directors  of Hipora Business Solutions East Africa on phone from Tanzania.

The Shoprite Group is one of Africa’s largest retailers. It operates 1,334 corporate and 406 franchise outlets in 17 countries across the continent and the Indian Ocean Islands.

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Shoprite was previously the biggest retailer in Tanzania ahead of rivals such as Shreejis Supermarket, Shoppers Supermarket and the high-end Village Supermarkets.