What next for trou­bled Uchumi and Naku­matt?

Sup­pli­ers com­plain that funds owed to them by the su­per­mar­ket chains could force them out of busi­ness

The East African - - MARKETS - A JOINT RE­PORT The Eastafrican

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 de­abt 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 last weekend, 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.

Last week, 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.

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.

Pic­ture: File

Uchumi Su­per­mar­ket em­ploy­ees protest de­lays in pay­ment of their salaries.

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