Cash-strapped Nakumatt seeks financial rescue

A Nakumatt outlet at the Victoria Mall in Entebbe, Uganda. PHOTO | FILE 

By MARK KEITH MUHUMUZA in Kampala

In Summary

• Nakumatt said that it is engaging financiers to provide bridge financing options for the company to stay afloat.
• Last year, Uchumi another Kenya-based supermarket closed its operations in Uganda, plunging unpaid suppliers into loss and protracted talks.

Empty stalls at several Nakumatt outlets in Kampala have sparked speculation over the future of the largest supermarket chain in East Africa.

Several suppliers are said to have stopped placing products on the shelves of Nakumatt at least until payments are made for previous supplies.

On Thursday, Nakumatt Holdings, the holding company that owns the supermarket chains in Kenya, Uganda, Tanzania and Rwanda admitted in a statement that it was in the red and was seeking a rescue.

“Like any other business operating in this market, Nakumatt Holdings has faced a number of unforeseen business challenges. These challenges range from a depressed economy, higher operating costs and extraneous factors including risk management due to prevailing security threats, among others,” the statement signed by Managing Director Atul Shah reads in part.

He notes that due to these factors, the retailer is faced with cash-flow problems, which has brought about a stalemate with suppliers who have opted to keep their products off the shelves. The statement adds: “…we have been actively engaging our current suppliers to review the current supply terms.”

Furthermore, the company said it was also restructuring the business at management level.

There are also new terms being introduced for the suppliers. This has delayed supplies getting back on the shelves, the firm said.

Nakumatt operates nine outlets in Uganda, but most of the shelves at Oasis Mall, Metroplex Mall, Mbarara, and Bukoto have largely been empty. The supermarket is facing similar challenges in its home market in Kenya.

Nakumatt said that it was engaging financiers to provide bridge financing options for the company to stay afloat.

“We are conscious that such financial restructuring remains a key imperative, thus our focus on long-term solutions, which are aligned to the overall business strategy. With the ongoing financial re-engineering engagements focused on accessing significant capital injection, we are confident that overall debt will further reduce once the process is concluded in the coming day,” the statement adds.

Last year, Uchumi, another Kenya-based supermarket closed its operations in Uganda, plunging unpaid suppliers into loss and protracted talks.

READ: Uchumi Supermarkets goods go under the hammer in Ugand