What next for troubled Uchumi and Nakumatt?
Friday September 22 2017
Kenya has now asked troubled retailers Nakumatt and Uchumi to provide detailed analyses of their debt by the end of October.
The two retailers, that had in the past few years expanded across the region, have of late been straddled with debt of more than $180 million.
The debt threatens to bring down a chain of small and medium enterprises in Kenya, Uganda and Tanzania. Uchumi owes $3.8 million to Tanzanian suppliers while Nakumatt owes its suppliers over $700,000.
Kenya’s Trade Principal Secretary Dr Chris Kiptoo, while meeting his Tanzanian counterpart a week ago, said the government had asked the two supermarkets for a detailed debt analysis.
“We have asked for these detailed debt analyses so that we can try and see what to do to help them out. We would like to see them flourish, not just here in Kenya but across the region,” Dr Kiptoo said.
Tanzania indicated that it would support Kenya on the two retailers to safeguard the interests of small and medium enterprises owed money by the supermarkets.
“It is important for Kenya to assist these firms, especially Nakumatt. Already, we have calculated that Nakumatt owes its suppliers $704,881. It may seem like a small amount compared with its debt in other countries but since the suppliers are largely small scale producers, the debts mean a lot to them,” said Prof Adolf Mkenda, Tanzania’s Permanent Secretary in the Ministry of Industry, Trade and Investment.
The Nakumatt Tanzania unit last November wrote to the Fair Competition Commission (FCC) seeking to offload 51 per cent of its stake to Ascent Investment Ltd.
Recently, Kenya’s Trade Cabinet Secretary Adan Mohammed called for patience among suppliers and financiers of the two retailers, saying that the government was working on a plan to support them.
“We are working with the retailers on how to repay these debts,” Mr Mohammed told a retail sector status meeting in his office.
Last year, Uchumi closed business in Uganda without paying 800 workers and suppliers and had filed a case for insolvency in Ugandan courts.
Uchumi ceased its regional operations in 2015 by closing down 10 outlets — four in Tanzania and six in Uganda following a prolonged period of loss-making.
READ: Uchumi, Nakumatt review regional expansion strategy
Shut down branches
The firm also shut down several branches in Kenya to curb financial bleeding.
Prior to the closing of Tanzania and Ugandan subsidiaries, Uchumi had not made any profit for over five years despite the branches accounting for 4.75 per cent of the firm’s operations.
During the meeting, Tanzania expressed concerns that Uchumi has failed to pay Tanzanian suppliers.
“Despite several followup and communication efforts made by Tanzania High Commission in Kenya, Julius Kipng’etich, chief executive of Uchumi Supermarkets provided no tangible commitments and remains unresponsive to the mentioned claims,” said Tanzania in a report of the deliberations.